The Whole Story

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A nonprofit client with a departing COO found itself in need of an interim CFO with the experience and skills to navigate a challenging budget season and a new, ambitious strategic plan. 

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For years, this organization had an operational COO with responsibility for operations, finance, technology, human resources and facilities. Human Resources had been broken out the year before to report directly to the President of the organization, and the COO’s departure opened a window to consider the overall business support structure of the organization. 

 

Stanton Blackwell’s Role

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A key transition moment.

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The scope of the interim role included finance, controller functions, budgeting, forecasting, payroll, accounts payable, accounts receivable, banking relationships, and the annual audit. In addition, the interim was accountable for moving the organization’s offices across the country and was asked to collaborate closely with the fundraising and human resources leaders. 

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We had the fortune of a good transition with the outgoing COO, who generously communicated key details about the inner workings of the operational and finance functions. The finance team was distributed geographically with a matrix reporting structure. In the initial assessment, it became apparent the team was short-handed and wasn’t as effective as it needed to be, in part because of a lack of communication from the top of the organization. 

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The President of the organization needed strong financial advice, forward-looking financial planning and analysis and stability in the finance organization. Specifically, near-term and long-range views of the organization’s financial position were required quickly as business leaders made difficult and ambitious choices about the enterprise’s future strategy. 

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Order of operations and action plan.

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Within 2 weeks of arriving, we discovered an unfortunate structural deficit that brought into question strategic plans shared with the board to invest $250M over the coming years. Projected cash flows did not support the plan. After building a simplified, high-level model, it turned out that there was an investment gap in year 3 that threw the whole plan into question. After looking carefully at the different sources of operating funding, we were able to work through changes to strategic spending and funding via the organization’s endowment, reserve, and operating funds. In addition, we pulled $1M in cost savings from the administrative functions of the organization while simultaneously increasing efficiency. This included converting consulting resources to contractors or employees and implementing a shared services model. The changes resulted in closing a large portion of the structural gap. 

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The model also supported the organization’s ambitious strategy. In the course of running out projections, a theme emerged…future strategic success required a ramp-up of fundraising capability. The organization now knew what it needed to fundraise and the timeline; the financial plan created the time for fundraising to build its operations and execute.

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Future structure.

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This months-long assignment also revealed some important legacy structural deficits in the finance function that had existed prior to the President joining the organization. He was an operations rather than a finance leader and sought a recommendation on how to best support the operational and financial needs of the organization. Because of his background and the new strategic goals, it became apparent within a month that the enterprise required a strategic CFO, someone with a stronger long-term financial planning background, rather than an operational head running finance. 

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How to find the right finance leader quickly using an executive search firm.

 

 Executive search firms can be terrific at sourcing talented candidates, but they can also be expensive if an organization is unclear about the type of candidate they seek and their capabilities. We were clear from the beginning that an interim was not in the organization’s long-term interest - the organization needed strong, permanent leadership. To accelerate the process, we partnered with the head of HR - a Stanton Blackwell alum - and worked closely to draft a job description that would attract a candidate with the right finance experience. After clearing it with the President, we reviewed it in detail with the search firm - including contextual examples and focused conversations on what the right candidate would look like. 

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We invested time in the first round of vetting before sending candidates along to the President. As a result of careful conversation and collaboration with the search firm, we had a clear leader on the first slate and universal confidence about her suitability for the role. Because she had a competing offer, we were able to accelerate the interview process with the board of directors and key staff members. She accepted the offer within weeks.

 

The transition from Interim to Permanent is key.

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A key board meeting was looming as the organization made the offer to the permanent CFO. She accepted the offer with her start date a mere 6 weeks before this critical board discussion. To accelerate the transition and ensure her strong start, we completed the budget, created the board materials, and spent those final days refining the documents to her specifications. This allowed her to step in and successfully present to the board early in her tenure. 

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Lessons Learned

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An interim CFO has to strike the right balance between providing outside guidance and collaborating closely with insiders to build trust and credibility.

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A quick financial and organizational assessment drives key learnings for the executive team and puts leadership in the best position to execute change.

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Making process changes as an outsider, in collaboration with other leaders, sets the new CFO up for success.

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There are different types of CFOs - figuring out the right skill set to support the strategy is key to setting the organization up for long-term success.

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Overlap in the transition with the new CFO means a smooth transition, continuity of business operations, and ultimately success for the permanent hire.