Which C-Suite Jobs Are Essential, Really?
When should a firm hire C-suite executives? Which ones does it need?
These questions have been on the minds of many leaders as they anxiously ride out a new wave of financial turmoil. After the latest banking crisis, experts observed that many small-sized firms—which often don’t prioritize hiring certain C-suite roles—lacked chief financial officers.
According to recent surveys, about 20% of all US firms don’t have chief marketing officers. Ten percent do not have CFOs. Only 7% lack a chief legal officer, and fewer than 1%—just 32 of 32,000 publicly traded US firms—have no CEO. For other C-suite roles, vacancy rates are far higher. Sixty percent of Fortune 500 companies do not have a chief operating officer and 62% of firms overall have no chief human resources officer. When it comes to the timing of a C-suite hire during a firm’s life cycle, “there isn’t really a template,” says Juan Pablo González, a Korn Ferry senior client partner and sector leader in its Professional Services practice.
Determining which C-suite roles to fill often depends on an individual company’s financial structure. Companies backed by private-equity cash often will bring in a CFO—but might hold off on other C-suite hiring. Venture capital-backed firms, however, may opt for a director-level executive primarily responsible for keeping the books clean, says Brad Frank, a senior client partner in Korn Ferry’s Global Technology practice. The founders of companies, Frank says, “are willing to ride it out themselves, because they’re used to handling things themselves.” Indeed, size is often the reasons companies will go without a full complement of C-suite roles. "Some companies are just below the scale, typically $400 million in business or below, and literally can't afford that level of specialty," says Bob Carlson, president of Korn Ferry Executive Interim in North America.
Before businesses really take off, the company’s leaders should do a thorough evaluation of in-house skill sets, says González. If there’s a large gap in expertise, it may be time to fill it. Firms sometimes wait to bring in a new C-suite role until there’s a crisis—when hiring that executive in the first place could have helped avoid trouble.
Another option is to bring in an interim executive who can handle a C-suite role. It's something companies often begin to consider after some sort of event, positive or negative, that an organization does not have the expertise in-house to address, Carlson says. That said, leaders are often divided on the value of bringing in short-term experts. The practice isn’t nearly as common in the United States as it is across the Atlantic Ocean. “Mostly the hesitancy is around expense," Carlson says.
For more information, contact Korn Ferry’s Board & CEO Services practice.