Here at RM Recruit, our work with charity clients make up over 50% of our placements each year. Whilst we recruit all level of roles, a trend has become apparent when recruiting Finance Director/Chief Financial Officer roles (Number 1 Finance roles). This is that no internal candidates were in a position to be considered for internal promotion to the post.
Pre-pandemic there was often an internal application for the FD/CFO role who perhaps wasn’t quite there in terms of development and experience. However they were often included in the interview processes as to give them experience of interviewing at this level. When unsuccessful they were confident they had tested themselves against the best external applications and this would leave them satisfied which in turn helped our clients retain them. Now we are seeing a growing pay gap and skill gap between the FD/CFO and their Number 2 (Finance Manager, Financial Controller etc). Now, when hiring, a charity will often opt to attract candidates from another charity environment, leaving that charity in the same situation and ultimately destabilising the sector as a whole. This in turn increases the need to use agencies (and we appreciate our services come at a premium), hire an interim at significant cost and perhaps have to alter the vacancy to reflect the candidate options available in a tough market.
Another trend is that a large proportion of experienced charity FD/CFO are within 5 – 10 years of retirement. Coupled with this, the post pandemic market has also seen a different priority emerge for the average finance professional. Hybrid working and work life balance is now often the priority over salary and career progression. The hybrid working debate will go on for some time but it is often the key negotiation point for us when it comes to offer management. Soon there simply won’t be enough senior finance charity candidates to meet market demand.
What could be the solutions?
Considering hiring from the private sector
There are often a range of great candidates with no charity experience who apply to our senior vacancies. We agree that it can be a big jump from a cultural and operational perspective when joining the charity sector from elsewhere. Ring-Fenced Funding, SORP, Partially Exempt VAT, Charity Commission Liaison are regular aspects of a senior finance role in a charity. Are these accounting activities really something an experienced and qualified accountant can’t adapt to? If the cultural fit is right, and the applicant proved they are not just money-motivated (after all bonus and car allowances etc. will not be available to them) they must be worth meeting. We will take great care in assessing candidates from the private sector to make sure they are aware of the challenges of working in the sector and what exactly their motivations are.
Succession planning to begin from the moment a new FD/CFO is hired
If a new FD/CFO joins then is it worth considering how long they will realistically be with the organisation? Perhaps a discussion about the make-up of their newly inherited team to see if there are any future leaders there. With the right amount of coaching and training from day one, you can prepare for the unexpected.
Portfolio Finance Directors
Many experienced charity FD/CFO candidates do not have the same necessity to earn the same salary levels as before. They often look to build a portfolio of charity clients to whom they can dedicate time to along side other part time roles. It is possible to secure the services of an experienced executive who would be unaffordable for a standard hire. They can often help scope and define a new permanent job profile to help a charity to then subsequently recruit at a more sustainable level whilst remaining on hand to provide consultancy work in the future. This is particularly useful when an organisation loses a long-term hire (10 years + perhaps) and needs to reassess what they need from a new FD/CFO.
Finance + Other Responsibilities
More so now than ever, the average Charity FD/CFO will have a broad remit that can include HR, IT and Operations. Are there internal finance staff who could easily handle the finance aspect of the FD/CFO role but have little to no experience of operational management? Perhaps this is an area of training to focus on to upskill and assess if team members enjoy this type of work.
In Conclusion
Whatever the long-term situation for senior finance hiring in the charity sector, RM Recruit is seeing the Midlands charity market lose 10 – 15 highly experienced Finance Directors per year to retirement. We have a keen eye for the finance leaders of tomorrow but have seen recruitment campaigns (ours, other recruiters and direct adverts) produce just one viable and hireable candidate. We want to work in collaboration with our charity clients to get to the much missed scenario we regularly encountered 5 years ago, 3 appointable candidates at final stage interview that are tough to choose between. A very nice problem to have!