How to Select a High-Impact Fractional CFO

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Financial Advisor
HOW TO SELECT A
HIGH-IMPACT FRACTIONAL CFO
Aleksey Krylov
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Identifying and screening executive candidates
for part-time, high-impact roles like that of
an interim and fractional CFO can be
incredibly challenging and immensely rewarding
for companies and candidates alike. These roles
are gaining visibility and traction in the gig
economy. They often serve an essential need in a
companys lifecycle, particularly for startups
and high-growth companies that are not yet mature
enough for a vast full-time c-suite bench.
The term fractional CFO typically refers to a
part-time financial executive serving on an
as-needed basis as a W-2 employee or 1099
consultant. She can be recruited for short-term
assignments or be a permanent feature of a
startup governance structure.
I have been a CFO for high-growth companies for
six years, and many of my assignments are
fractional. Regardless of the initially
contemplated longevity, I witnessed many CFO
hiring decisions after one 30-minute conversion.
I observed the assessment of the executives
availability, technical skills, and alignment of
the management style is missing during the
interview process. Below I discuss these missing
elements and suggest strategies to flesh out the
compatibility.
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AVAILABILITY / BANDWIDTH
Evaluating a candidates availability for the
role is critical, which requires the hiring
manager to match the companys needs to the CFOs
bandwidth. CFO candidates expect to juggle
multiple clients simultaneously and understand
how their availability ebbs and flows over time.
In my experience, the CFOs appreciate
transparency if you may require their full
attention temporarily.
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For example, when a client is fundraising or
preparing quarterly/annual filings, I prioritize
these activities and that specific client over
other projects because these deliverables are too
important not to get right. However, I make it my
point to manage this temporary bandwidth
limitation via a direct conversation with the
clients CEO. And I commit to picking up the
slack on daily operating items when the crisis
ends.
I learned the hard way that I should limit the
number of clients I work with for my sanity and
the clients benefit. I also learned to
appreciate when my clients proactively screen for
bandwidth during interviews to avoid friction
down the road. And I advise the hiring CEOs to do
so consistently.
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Here are a few questions that may prompt the
fractional CFO candidate to reveal their spare
capacity

• What are you working on these days?
• Tell me about your workload right now. How many
  clients do you work with consistently?
• What are your day-to-day tasks or activities?
• Do you anticipate any short- or medium-term
  changes to your workload?
• Are there any fundraising, IPO or MA you help
  run for your clients?
• How would you manage your other clients if we
  need you to take on fundraising/IPO/MA?

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FINANCIAL ADVISOR
Aleksey Krylov
Chief Financial Officer (CFO)
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ALIGNMENT OF THE MANAGEMENT STYLE
Alignment of personalities or management styles
should be one of many factors in hiring a
fractional CFO. Still, the candidate must have a
positive rapport with the hiring team. Because
the fractional CFO selection is often quick, the
hiring CEO can use being on the same wavelength
as a proxy for future communication and the
finance leads overall effectiveness.
I learned to appreciate that maintaining open
communication is critical to successful
engagement. The client must feel comfortable
sharing the feedback with me, and I should take
it constructively. The reverse is also true When
the company hires a senior executive and a
leader, it should be open to the CFOs ideas,
concerns, and feedback. The two-way communication
will contribute to transparency and the
effectiveness of the CFOs contribution.
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A strong rapport lets me play to my strengths,
interests, and motivations. These elements
empower me to perform at my best, yielding the
most favorable outcome for the hiring company.
Lastly, the management style alignment can
facilitate the resolution of conflicts and
challenges that are inevitable in any working
relationship. If the CEO and I approach conflicts
constructively, empathize with each others
perspectives and commit to seeking mutually
beneficial solutions, we can work collaboratively
to resolve issues.
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Questions to probe during the interview

• Give me an example of how you handled a conflict
  with a colleague, peer, and senior.
• Tell me about an instance where you had to tell
  the CEO he was about to make a mistake.
• What are your 23 strengths, and how do you like
  to play them?
• What are your weaknesses? (Leave it open-ended I
  will want to hear if the candidate goes to
  address how s/he compensates for weaknesses.)
• What leadership style do you practice? What
  leadership style do you respond to best?
• How do you define a positive work environment?

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I credit this observation to _at_markmanson. One of
the simplest mindset shifts you can make to find
greater success is simply to extend your time
horizon. Measure your major decisions not in
months or years but decades.
ALIGNMENT OVER THE LONG TERM
This observation is highly applicable to
fractional CFO recruiting. A hiring CEO must
assess the three elements we discussed above
availability, technical skills, and personal
rapport over quarters and years (not over a few
weeks to solve a critical pain point within the
organization right now). If the candidate passes
the muster on those criteria, then there is a
reasonable likelihood that the fractional CFO may
be a marriage material. Jokes aside, if your
organizations growth requires consistent lender
relations, investor reporting, IPO, or MA, the
part-time commitment from the finance chief will
need to evolve into a full-time job. Why wouldnt
you want to convert to full-time someone who has
proven he can support the company through this
evolution?
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It is excellent if the CEO senses she can work
with the CFO over a long-term horizon. You also
have to assess whether the CFO candidate shares
the sentiment. Good questions to ask to flesh
some of these elements out

• What are your long-term career plans?
• What is your vision for you personally 1824
  months from today?
• What do you find attractive about our company to
  make you slow down and consider this a long-term
  engagement?
• What values are you observing within our
  organization that fit very well within your
  personal value framework?

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In summary, fractional CFOs are popular with
growing companies and can enjoy many benefits of
mature finance leadership in the short term.
However, the value of a great finance lead needs
to be assessed over the long term. Like with a
full-time talent, the fractional CFO is more
valuable to the organization if he/she brings to
the team longevity and continuity in addition to
technical skills.
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Aleksey Krylov is a seasoned Chief Financial
Officer. He works with life sciences and medical
technology companies on fundraising, business
development and MA.
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Financial Advisor
THANK YOU
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Aleksey Krylov
Chief Financial Officer