Sector experience is the mantra of many recruiters and clients when recruiting senior finance staff.
What would you do if you wanted to hire a financial controller or finance director for your business? Would you insist that they had sector experience?
For a few of our clients, hiring someone with relevant sector experience is essential, whilst others are open-minded and prepared to consider candidates from other sectors. Indeed, clients who insist on recruiting someone with sector experience may have had a bad experience and recruited someone without sector experience who did not work out.
So does that mean that financial controllers who lack sector experience will be less able to do the job than those who do? Not necessarily! Not only that; focusing on sector experience alone, will almost certainly reduce the number of potential candidates to choose from.
So why are people so hung up on sector experience when they are limiting their options? In this article I look at the pros and cons of hiring someone with or without sector experience and how other factors are also come in to play.
But what do I mean by sector? Mainly, business or industry sector which might include advertising marketing, media and PR, banking and financial services, business management and HR, wholesale and retail, construction and property, consulting as well as training and education, public sector, charity and many more. There will also be numerous sub-sectors.
Sector is not only based on industry; it can also be about business size and turnover – i.e. SME or larger.
So industry sector and business size, are definitely differentiators when selecting applicants who are suitable for the role. After all, financial controller of a large business may have little knowledge of the day-to-day working of an SME business and vice versa. Experience and accounting knowledge gained in retail is different from that gained in a construction or manufacturing company.
A financial controller with sector knowledge and experience will understand the business environment and drivers. They will most certainly possess good knowledge of day-to-day operations and processes as well as key suppliers, customers and clients. Having knowledge of the accounting including appropriate key performance indicators and reporting will be extremely important. They will hit the ground running which will lead to faster on-boarding thus saving time and cost.
Another benefit of sector experience is that they are also likely to be a good cultural fit as people do tend to migrate to organisations which share their values and culture.
However, familiarity is not always a good thing. There may be some risk of pre-conceived ideas and assumptions and tunnel vision sticking to tried and tested methods.
Lack of sector knowledge will lead to a much steeper learning curve and may provide unforeseen challenges. It will be necessary to learn about the business model and processes as well as the accounting and reporting.
Getting to know, suppliers, customers and clients and getting internal staff on-side may be a major factor. These stakeholders may be suspicious of someone who is not from the sector and it will take longer to form new relationships and understand the business environment.
However a lack of sector knowledge and experience could also be an advantage, because the financial controller may have transferable knowledge, skills and experience. This may well provide a ‘fresh eye ’perspective opening up the possibility of new ideas or elimination of practices that no longer add value.
The middle ground
As we can see there definitely benefits to be had from employing by sector and for certain industries such as banking and insurance, and professional practice, having sector experience may be essential. In fact the more complex the business, the more care needs to be exercised when employing someone from outside the sector. However, in many areas, there may be a lot of benefit to be gained from employing a non-sector specialist who may have a fresh approach.
Let’s take the media sector as an example. A marketing agency accounting and culture is likely to be similar to that of PR agency, graphic design agency or any other creative industry, so the skills and experience are readily transferable between these segments.
In a retail business where management of stock is crucial, considering applicants from another retail/stock-based business experience may be the obvious choice. However, what about recruiting someone from the media sector?
Although a media company is unlikely to carry much stock, it does have to pay attention to work-in -progress which has a similar effect in the accounts. So it is easy to see that a financial controller with media industry experience would bring a lot of relevant experience and understanding to a retail business – especially if it was in a creative segment. Or vice versa.
We could also see how the same financial controller could apply their knowledge and experience of stock in wholesale business. Once you start to examine each sector and its segments, there is not such a difference between them and in many cases skill sets can be applied to difference sectors.
So, there is a middle ground. There is much cross-over between sectors especially when there are similarities of accounting treatment or other characteristics such as values and culture.
Flexibility is the key
Too much emphasis on sector background, to the exclusion of other important factors when recruiting could result in weaknesses in other key areas. For example, appropriate technical accounting skills and ability to manage and control the company finances and cash are crucial to success, as is an ability to manage cash, create budgets, management information and KPIs. Forming relationships both internally and externally will also be essential. Sector knowledge and expertise is only one of a number of variables to consider.
An open mind to approach to recruiting will almost certainly increase chance of getting the best person for the job and that includes being innovative and flexible, yet realistic on sector. By creating a robust job description and person specification with both preferred and desirable candidate characteristics the net can be widened so the best fit for the role can be found.
At RGDuncan we understand the issues involved and solutions required so we can work together with clients to introduce someone who fits the role.
Roy Duncan FCCA
RG Duncan Senior Finance Recruitment Specialists, 33 St James’s Square, London SW1Y 4JS
T: 020 7930 4401