- The history of the CFO is relatively short. This post did not formally exist 50 years ago. According to Investopedia, "This is the senior manager who is responsible for overseeing the financial activities of an entire company. This includes signing checks, monitoring cash flow and financial planning." This person is like a treasurer or controller. Typically, an MBA is the prerequisite for a position with such responsibility. Many years of experience is also a leading consideration. These factors alone can mean that a hiring manager must consider the financial burden it may cause to hire someone with expertise. In most cases, someone with an advanced degree will not be willing to work in a position for a base salary, so this could place a company in a financial quagmire. This is definitely the first con, the expense of hiring and maintaining an expert employee.
- According to Investopedia, "the CFO is responsible for analyzing and reviewing financial data, reporting financial performance, preparing budgets and monitoring expenditures and costs. The CFO is required to present this information to the board of directors at regular intervals and provide this information to shareholders and regulatory bodies such as the Securities and Exchange Commission (SEC). Also usually referred to as a senior vice president, the CFO routinely checks the corporation's financial health and integrity." This is the day-to-day function of the position and this is why it is so vital to the operation of the organization. Thus, this is probably the most sensitive position to hire or fire. In a hands-on environment, these duties would be handled by the CEO and perhaps an accountant employee. The CFO can yield too much authority over the lifeblood of any company. Therefore, this becomes a liability for the CEO and indicates a lack of control. The lack of control may be the largest con of all to hiring a CFO.
- The problems that can arise from hiring a CFO can be unforeseen. The third con is the increased risk of financial scandal. For example, how do you know that the CFO will not take advantage of his or her position? Since no one else in the company has the expertise, it could mean that the CFO sees an opportunity to steal. Unfortunately, this happens more than people may think, and it is not always by huge sums. Over time, someone could steal money or use resources under a false premise. After all, who is able to effectively check? Trust and integrity are very hard to find in any economic time. Therefore, it could take many years to come across the right person.
- The amount of time it may take to get someone prepared for the unique position may outweigh the benefit. The fourth con is due diligence because it can take too much time and effort. The man hours in hiring could lead to more revenue that could have been used better enhancing the company in other ways. This position should not be a simple hiring decision, so this must be completed over a period of time. There should be many interviews and tests to discern the competency. After all, not all MBAs are prepared to handle the rigors of the financial operations of every company. Providing reasons to candidates for not hiring them could become a hassle.
- A CFO does not guarantee that financial issues will be solved or averted. It only provides a person who is supposed to be looking for the best outcome. The problem is that a CFO may not be able to make effective change. Focusing on operations could be a better investment. CFOs may not defer willingly to upper-level decision makers. After all, their expertise is on the line, so this could cause more internal struggle than harmony to grow the company. The title of CFO sounds good, but could lead to disaster in certain types of companies.
