Tips for Hiring a Controller for a Small Business
Section 1 – Why is the position open? Before hiring, plan. Before planning, reflect.
For any small company, the Controller is a crucial member of the business and leadership team. While larger organizations tend to limit the scope of a Controller’s role, in a smaller business model, the Controller position has the ability to impact the company in many areas.
Our team has placed countless Controllers over the course of many years in the Accounting/Finance recruiting industry. Based on these experiences, we have created a list of questions, talking points, and solutions for a small company to utilize when hiring a Controller.
For purposes of this article, we will define a “small company” here by identifying three criteria: Ownership Structure, Number of Employees, and Annual Revenues. These are the three factors that our company considers internally when referring to the general sizes (small, mid-sized, large, etc.) of our clients in the Austin market. While the definition “small company” can vary from person-to-person and market-to-market, the criteria listed below is a broad but generally accepted definition of a small company in Austin, Texas.
Ownership structure: Privately-held (either single owner, family-owned, VC or Private Equity-owned)
Number of employees: Less than 300
Annual Revenues: Less than $100 million
The first question we like to ask when starting a Controller search is very basic, but can steer the initial focus down various winding paths:
Why is the position open?
- We are growing so fast that our Controller can’t keep up, and we need an upgrade,
- Our Controller just turned in his/her notice and is taking a new job,
- Our CFO has been handling Controller duties but now we need a true Controller,
- We fired the Controller for (insert reason here),
- The person who has been in the Controller role is moving into a VP of (insert title here) position
Let’s talk about the first answer above:
Growth is great! But it also has to be managed properly from many different perspectives. As a company expands, whether it be through organic growth or acquisition (or a combination of the two), the scope of the Controller’s job responsibilities will increase just as much, if not more, than any other position within the company. You need the right person in place from a leadership, technical, and operational standpoint.
A relevant situation (that we will use as an example here) occurred at a Software client of ours in Austin recently. The company’s revenues had almost doubled from $45mm to $80mm over an 18 month period, during which they hired an additional 100 employees to perform various functions in multiple locations. The company had also taken on a Private Equity firm as an investor, so there was not only an increase in business volume, but more frequent and complex financial reporting as required by the PE firm.
Our client made it clear that they needed an upgrade; a more capable, higher-caliber, and proven Controller than who they had at the time (who, by the way, was a great employee and was provided a generous severance package once replaced). The company cited several initiatives that they needed their new Controller to take the lead on. These included:
Enhanced system of Internal controls; Selection and implementation of a new ERP system; More automated processes to create efficiencies; More sophisticated reporting system for both internal and external use; Increased technical accounting knowledge at the request of the new Audit firm; Strong managerial skills due to growth of accounting team; CPA designation necessary to satisfy the PE firm; Integration of newly-acquired entities.
Our client had reached new heights and experienced great success due to the growth of their products and business. However, they made the correct choice (however difficult) of upgrading the Controller position and will benefit from this in the long run.
Next Scenario: Your Controller is leaving to take a new job at a different company
Why in the world is your Controller leaving your company and job in order to work somewhere else? It’s imperative that you find out!! Here are a few questions that you, as a small business executive, need to ask and potentially address before hiring a new Controller:
Is there discord within the company that affected the outgoing Controller? If yes, where is the source? These are tough questions to ask and may be awkward for the outgoing Controller to answer, but they need to be identified and remediated quickly, or your new Controller may experience the same challenge.
Was he/she given the resources and support to succeed in the role? It’s important for the Controller position at your company to have the systems, staff, and authority to be successful in the job they are paid to do. One of the most common issues that I hear from job-seeking Controllers is that their current company will not let them hire enough staff, or the appropriate level of staff.
Was this person paid competitively according to market standards (not just base salary, but also periodic bonus & other incentives, benefits package, 401K match, etc.)? Since you don’t hire a new Controller very often (at least hopefully not), it’s always good to do an in-depth market analysis prior to hiring for this key position. If your outgoing Controller’s compensation package was off-base and not competitive in the market, chances are that you will be going into a hiring situation with highly unprepared. Consult with peers who also own businesses, executive recruiters, CPA firms, and Finance executives that you know in order to be as informed as possible prior to hiring.
Are there growth opportunities within the company for this position, or a clear “next step up”?
Was the outgoing Controller bored, unchallenged, or feeling “stuck” in the position? Did he or she feel like there was no near-term opportunity for advancement or significant pay raise at your company? If so, there may be some options for you to consider, based on the nature and structure of your business.
Which leads us to the next scenario from above…
Does your company have a CFO? And if so, how are the duties divided between the CFO and Controller? Until now, has the CFO been handling the new/incoming Controller’s responsibilities?
Stay tuned for the remainder of Section 1, Tips for Hiring a Controller for a Small Business.
Contact Spencer today: firstname.lastname@example.org