by: Steven Haug and Tony Topoleski
Selecting the right search firm can make all the difference for organizations seeking a top CFO. According to multiple studies, over 40% of senior executive placements fail within the first 18 months. High turnover in top leadership not only requires a massive dedication of resources to ameliorate, but it is also a burden on the entire organization as it struggles along without sound leadership.
A poor choice of leadership compounds existing problems and can deteriorate the confidence of customers, employees, shareholders and investors. A top executive search firm skilled in CFO searches can help avoid these dangers. Let’s discuss the key factors one should consider when choosing an executive search firm to find your next CFO.
How to Choose a Search Firm to Find Your Next CFO
Time to Placement
This is one of the most important metrics (some would even say the most important factor). Loss of leadership or a long gap without strong financial leadership can stunt growth.
Opportunity cost is another reason speed is important when choosing a CFO search firm. According to industry experts, CFOs consistently add significant value to businesses even within the first year.
An extended search time for a CFO can delay your plans to grow or exit a PortCo significantly. Avoid this difficulty by relying on a CFO search firm with a shorter placement time.
Success Rate
Success rate—by which we mean the rate at which an executive firm successfully places a qualified candidate within the agreed upon timeframe—is an obvious metric to consider. If you’re paying a pretty penny for a top-notch executive search firm to find your next CFO, you do not want them to fail.
Not all executive search firms specializing in CFO recruitment publish their success rate. However, it behooves you to try to find this key metric not just to avoid the annoyance of extending the time expected to find your next CFO but also because it is indicative of further problems in the agency.
Low success rates are signs of potential troubles down the road, and it could mean that the firm is not dedicating enough resources to fully vetting candidates. This process must include considerations of culture fit, geography, motivation, and more in order to avoid poor placement. If a firm has low success rates, it is likely that they also have less apparent problems hiding under the surface (e.g., unhappy placements)
Client Loyalty (Repeat Clients)
Another important metric is client loyalty. How often do their clients return to them for future searches? If a search firm executes a CFO search successfully, it is likely that their client will want to reuse their service.
Like success rate, firms are not always willing to share this data. If possible, seek out this data from your contact at the firm. (ECA makes this data publicly available.)
Candidate Network
Executive search firms rely on their networks to place top talent efficiently. A strong network is key to identifying passive talent, that is, candidates who are not actively looking for their next role. Since these candidates aren’t actively looking (and so may not have even updated their LinkedIn profile), networking is the only way to reach them.
You would think, therefore, that a bigger search firm leads to a bigger talent pool. Oddly, this is not the case.
Search firms are bound by non-solicit agreements that prohibit them from contacting people in companies where they have recently placed someone. For example, if a search firm placed Apple’s CFO, they will be bound by a non-solicit agreement with Apple prohibiting them from reaching out to current Apple employees
For large search firms, this means that they are restricted by a number of non-solicit agreements. Smaller firms, however, have more liberty in this regard, and so have access to a larger talent pool.
Now that we’ve covered the key factors to consider when choosing a search firm to find your next CFO, we will cover some of the top CFO search firms for Private Equity. In the following, we examine the five leading executive search firms, comparing their performance, specialties, and key metrics in CFO recruitment in order to help you make a decision when you are looking to hire your next CFO.
The Top 5 Executive Search Firms
1. ECA Partners
A frontrunner in the executive search industry, ECA Partners has established itself as the most efficient and successful firm for CFO placements. With an average search time of 10 weeks for executive searches and a 99% success rate, they are faster and more accurate than their competitors. ECA fuses the efficiency and acumen of ex-consultants from top management consulting firms like McKinsey, LEK and Oliver Wyman with the expertise of a research team of PhDs.
ECA works closely with their Private Equity clients to create value for their portfolio companies by identifying and retaining top talent. Over the past 10 years, ECA has emerged as the most efficient and accurate solution in executive search for Private Equity.
In addition to being a top CFO executive search firm, ECA also places interim CFOs and other interim executives in as little as 1-2 weeks.
Their extraordinarily high success rate sets them apart in an industry where failed placements are a significant concern. ECA Partners has built their reputation on quick turnaround times without compromising the quality of their placements.
- Search Duration: Remarkably efficient 2-3 months for CFO placements
- Client Loyalty: An outstanding 85% repeat client rate
- Success Rate: Near-perfect 99% placement success
- Distinguishing Factor: Consistently delivering rapid, reliable executive search solutions with an impressive track record of client satisfaction
2. Russell Reynolds Associates
Founded in 1969, Russell Reynolds Associates has built its reputation on comprehensive talent acquisition strategies and is now widely considered one of the top five executive search firms. Their approach combines traditional executive search methods with innovative succession planning services, making them a strategic partner for organizations looking beyond immediate placement needs. Their high client satisfaction scores reflect their commitment to understanding and meeting client expectations at a deep level.
While they have a longer search period for CFO searches than a boutique firm like ECA, they also provide talent solutions for public and government service, including the police and fire chiefs of Houston.
- Search Duration: As quick as 14 weeks for executive placements
- Client Satisfaction: An impressive 96% client satisfaction score
- Specialties: Leadership search and succession planning
- Approach: Known for comprehensive global talent acquisition strategies
3. Spencer Stuart
Based in Chicago, Spencer Stuart was founded in 1956 as a boutique executive search firm by a former employee of Heidrick & Struggles. Today, it is one of the largest in the world, with a presence in over 33 countries. They regularly work with F500 companies to place executives, advise on leadership transitions, and provide executive coaching.
In addition to these capabilities, they have recently expanded their advisory practice to include strategic planning and digital transformation. Moreover, they are seen as trusted advisors on DEI initiatives and CEO succession planning.
They also have a long history of working closely with public partners, like the US federal government. According to The Wall Street Journal, in the wake of the 2009 government bailouts of major US corporations, Spencer Stuart was contracted to replace executives and board members.
Their comprehensive approach to executive search is reflected in their varied retention rates across industries, demonstrating their ability to adapt their strategies to different sector requirements. While their search timelines may be longer, their thorough methodology focuses on ensuring precise matches for specific industry needs.
- Search Timeline: 6 months or longer
- Industry-Specific Retention Rates:
- Strength: Diverse industry expertise with deep understanding of sector-specific leadership requirements
4. Heidrick & Struggles
A well-established name in executive search, Heidrick & Struggles is based in Chicago and was founded in 1953 by Gardner Heidrick and John E. Struggles, two former employees of Booz Allen Hamilton. Today, they are a massive, publicly traded company with a presence on 6 continents and see over 5,000 executive searches a year.
In recent years, they have focused on expanding into international markets. For example, they have expanded their climate and sustainability practice in Europe and brought on a new CFO with a significant background in financial leadership for global ventures.
Their global reach and extensive network allow them to access top-tier talent across international markets. While their search duration might be longer than some competitors, their thorough process reflects their commitment to finding the right fit for both the role and the organization’s culture.
- Search Duration: 4-6 months for executive roles
- Focus: Methodical and thorough approach to leadership recruitment
- Global Presence: A leader in international executive recruitment for CFOs and other C-Suite leadership.
5. Korn Ferry
Based out of Los Angeles, Korn Ferry is consistently rated as a top executive search firm in the US. A publicly traded executive search firm with an international presence, they have recently been expanding their digital talent search capabilities in Europe, the Middle East and Africa.
With an average search time of about 5 months, they have a longer search time than their smaller competitors. However, they are a well-established player and were pioneers in introducing video-conferencing systems to enable virtual interviews for their CFO and other executive search processes.
Apart from their executive search business, they also provide management consulting services and advise on digital transformations. Since 2019, they’ve also been the official umbrella sponsor of the PGA Tour, a move that significantly increased their brand awareness.
- Search Duration: Approximately 20 weeks (5 months)
- Success Rate: Details unpublished
- Reputation: Well-established player in the executive recruitment market
Key Takeaways
Not all firms, as we’ve seen, offer the same capabilities or work on the same timeline. It’s good to have a sense of the relative pros and cons of each firm before choosing one to run your CFO search.
For example, a company that needs a CFO located in Europe or Asia might turn to a player with a large international presence. In this case, Korn Ferry or Spencer Stuart would be a natural choice.
For succession planning, many might turn to Spencer Stuart given their experience in this area. Large, Fortune 500 companies might seek the services of Korn Ferry or Heidrick & Struggles due to their experience finding these heavy hitters.
However, choosing a larger firm will come at the expense of efficiency and will usually involve much higher fees. As you can see in the following table, a smaller firm like ECA executes CFO searches much faster than their larger competitors:
Conclusion – Why a “Shrek” Firm Isn’t Your Best Bet for a CFO Search
Now that we’ve provided an overview of the top 5 CFO search firms, let’s discuss the pros and cons of using a large executive search firm to find your next CFO. To do this, we will apply the criteria discussed above: time to placement, success rate, client loyalty and candidate network.
You might think that the five “SHREK” companies would be the best choice given their size. The term “SHREK firms” refers to the five largest executive search firms in the world (Spencer Stuart, Heidrick & Struggles, Russell Reynolds, Egon Zehnder, and Korn Ferry). Their size, however, makes them less agile and efficient at executing CFO searches.
Why? Well, these firms are much slower than their smaller competitors like ECA Partners at finding a CFO or other executive (see the table below). Many of them take as long as six months to find an executive.
Moreover, their completion rates are suprisingly low. Most of them do not publish data on their completion rates or retention rates. Those that do, as we saw above, are much lower than smaller CFO search firms for Private Equity like ECA Partners
SHREK firms also sacrifice quality by handing off searches to junior team members after selling the search. On the other hand, ECA’s Managing Directors are involved in the execution of every search and personally interview each CFO candidate presented to their clients.
At the end of the day, choosing a search firm to find your next CFO is a tough decision. Large public companies and public entities like the federal government often partner with SHREK firms. However, for Private Equity looking for both speed and accuracy, a smaller partner like ECA can provide more satisfactory results for CFO and other executive searches.
Steven Haug is a Managing Director at ECA Partners. He can be reached at [email protected]. Tony Topoleski is a Director at ECA Partners. He can be reached at [email protected].
