Companies mull benefits of interim CFOs

Interim CFOs can cut through politics to help navigate companies through murky waters, experts say.

As they face financial difficulties, leadership crises or other inter-company developments, many firms have ceded their financial reins to interim executives over recent months.

Retailer Bed, Bath & Beyond quickly named their chief accounting officer as interim CFO following the death of their previous financial head earlier in September, for example, while real estate investment trust (REIT) Tanger’s chief accounting officer also recently served a stint as their interim financial head after the REIT ousted their previous CFO, a 28-year company veteran.

One of the reasons to tap an interim CFO is simply to provide peace of mind for the company and its shareholders while the search to find a more permanent candidate is ongoing, said Shawn Cole, president of boutique executive search firm Cowen Partners in a recent interview.

While some searches are as short as 38 days, the majority of executive searches can take between four to six months, a period where remaining without financial leadership is untenable. Firms seeking interims must still consider several key factors when choosing such an executive, however, Cole said.

Companies seeking external candidates, for example — which can be due to inter-company turmoil or, as is often the case, because the company may lack the bench strength to pull forward an internal candidate, Cole noted — should take care to consider “professional interims” for the position as opposed to an unattached CFO, he advised.

“I would just be very cautious that you are not just hiring an unemployed CFO,” Cole said. “There’s plenty of wonderful professional interim CFOs out there that are excellent at consulting. You don’t necessarily want to get yourself into a position where you are engaging just an unemployed CFO, that needs a job.”

Getting a fresh perspective

Bringing in an external interim can also grant companies benefits they may not see with internal candidates, for that matter, explained Mike Harris, CEO of Patina Solutions. Patina, which focuses primarily on placing interim executvies, was acquired by fellow executive search company Korn Ferry this past April.

It can help other executives, notably the CEO, to get “fresh perspectives and viewpoints,” he said.

“If someone is coming in for six months they can tell it like it is, they can come in and make a quick assessment,” he said. “Candidly, it does take out the politics if you’re in there on a limited basis.”

Similar to Cole, Harris pointed to a growing population of what Harris terms as “career interims,” who are working in that capacity because they enjoy the flexibility of movement — they get to go in and get critical projects done for the company, he said.

Turning to an external interim can also help companies execute on particular goals such as a restructuring, said Harris, nothing that what companies need from someone taking on the position for six months could be “very different” than what firms may be looking for out of a permanent CFO. Their short tenure means interims can be “very objective” and have a “big impact” at a company in a short period of time, he said.

“The reason [interims are] usually coming in there is because they have something in their background that’s going to be very helpful for the situation that company is facing,” he said.

Companies may also take advantage of an interim CFOs’ skills as a sort of mentorship for their existing CFO — the executive in the permanent seat may lack M&A or other key experience, for example, that an interim may be able to provide during their short-term tenure.

Tapping insider knowledge

Pulling forward internal candidates to fill the CFO gap can also have benefits for firms if possible, as such candidates have intimate knowledge of the companies’ status and needs that outside executives may lack.  

This may be the case for struggling payment processor PayPal, another example of a firm who recently appointed an interim CFO — moving Gabrielle Rabinovitch, their SVP of capital markets into the seat for a second time after the newly-minted CFO departed for medical leave.

In PayPal’s case, the company needs “stability” in its financial chair, which has been lacking since the departure of its previous CFO John Rainey to retailer Walmart, said Josh Crist, managing director for Crist|Kolder Associates.

“It may be time to think about a young internal player as an interim,” Crist wrote in an email regarding PayPal’s CFO woes. “Institutional knowledge should be key given strategic issues the company faces.”

Such a candidate may prove to be a permanent fit at the company, for that matter, he said.

“I believe the current interim might actually be correct for the full time gig! I believe they need an internal player who has seen the nuts and bolts/knows the operating and strategic plan and can help execute,” Crist wrote in an email. “I don’t believe they need a high-level strategist.”

The future of the CFO seat

While companies must carefully consider what it is they are seeking out of an interim — or even a permanent — CFO candidate, qualified executives also have their pick of potential options as the market for executive talent grows more competitive.

CFOs who would have potentially retired or left their current roles years earlier, but were stymied by the pandemic, have now begun to do so, contributing to a narrowing of the potential talent pool. For that matter, the list of responsibilities handed to modern CFOs has grown over recent years, but companies may not have fully adjusted their leadership structure accordingly, Cole said.   

“The CFO is no longer the chief accounting officer,” Cole said. “They really effectively should be the right hand to the CEO. While many companies have increased demands of the CFO, they haven’t necessarily brought the CFO into that light. And so I think companies that can show a CFO candidate that they will have a position of significance of their organization, be that strategic business partner to the CEO, I think that goes a long way.”

Benjamin Franklin’s fight against a deadly virus: Colonial America was divided over smallpox inoculation, but he championed science to skeptics

Benjamin Franklin's fight against a deadly virus: Colonial America was divided  over smallpox inoculation, but he championed science to skeptics

Exactly 300 years ago, in 1721, Benjamin Franklin and his fellow American colonists faced a deadly smallpox outbreak. Their varying responses constitute an eerily prescient object lesson for today’s world, similarly devastated by a virus and divided over vaccination three centuries later.

As a microbiologist and a Franklin scholar, we see some parallels between then and now that could help governments, journalists and the rest of us cope with the coronavirus pandemic and future threats.

Smallpox strikes Boston

Smallpox was nothing new in 1721. Known to have affected people for at least 3,000 years, it ran rampant in Boston, eventually striking more than half the city’s population. The virus killed about 1 in 13 residents – but the death toll was probably more, since the lack of sophisticated epidemiology made it impossible to identify the cause of all deaths.

What was new, at least to Boston, was a simple procedure that could protect people from the disease. It was known as “variolation” or “inoculation,” and involved deliberately exposing someone to the smallpox “matter” from a victim’s scabs or pus, injecting the material into the skin using a needle. This approach typically caused a mild disease and induced a state of “immunity” against smallpox.

Even today, the exact mechanism is poorly understood and not much research on variolation has been done. Inoculation through the skin seems to activate an immune response that leads to milder symptoms and less transmission, possibly because of the route of infection and the lower dose. Since it relies on activating the immune response with live smallpox variola virus, inoculation is different from the modern vaccination that eradicated smallpox using the much less harmful but related vaccinia virus.

The inoculation treatment, which originated in Asia and Africa, came to be known in Boston thanks to a man named Onesimus. By 1721, Onesimus was enslaved, owned by the most influential man in all of Boston, the Rev. Cotton Mather.

etching of an 18th century man in white wig
Cotton Mather heard about variolation from an enslaved West African man in his household named Onesimus. Bettman via Getty Images

Known primarily as a Congregational minister, Mather was also a scientist with a special interest in biology. He paid attention when Onesimus told him “he had undergone an operation, which had given him something of the smallpox and would forever preserve him from it; adding that it was often used” in West Africa, where he was from.

Inspired by this information from Onesimus, Mather teamed up with a Boston physician, Zabdiel Boylston, to conduct a scientific study of inoculation’s effectiveness worthy of 21st-century praise. They found that of the approximately 300 people Boylston had inoculated, 2% had died, compared with almost 15% of those who contracted smallpox from nature.

The findings seemed clear: Inoculation could help in the fight against smallpox. Science won out in this clergyman’s mind. But others were not convinced.

Stirring up controversy

A local newspaper editor named James Franklin had his own affliction – namely an insatiable hunger for controversy. Franklin, who was no fan of Mather, set about attacking inoculation in his newspaper, The New-England Courant.

frontpage of a 1721 newspaper
From its first edition, The New-England Courant covered inoculation. Wikimedia Commons

One article from August 1721 tried to guilt readers into resisting inoculation. If someone gets inoculated and then spreads the disease to someone else, who in turn dies of it, the article asked, “at whose hands shall their Blood be required?” The same article went on to say that “Epidemeal Distempers” such as smallpox come “as Judgments from an angry and displeased God.”

In contrast to Mather and Boylston’s research, the Courant’s articles were designed not to discover, but to sow doubt and distrust. The argument that inoculation might help to spread the disease posits something that was theoretically possible – at least if simple precautions were not taken – but it seems beside the point. If inoculation worked, wouldn’t it be worth this small risk, especially since widespread inoculations would dramatically decrease the likelihood that one person would infect another?

Franklin, the Courant’s editor, had a kid brother apprenticed to him at the time – a teenager by the name of Benjamin.

Historians don’t know which side the younger Franklin took in 1721 – or whether he took a side at all – but his subsequent approach to inoculation years later has lessons for the world’s current encounter with a deadly virus and a divided response to a vaccine.

Independent thought

You might expect that James’ little brother would have been inclined to oppose inoculation as well. After all, thinking like family members and others you identify with is a common human tendency.

That he was capable of overcoming this inclination shows Benjamin Franklin’s capacity for independent thought, an asset that would serve him well throughout his life as a writer, scientist and statesman. While sticking with social expectations confers certain advantages in certain settings, being able to shake off these norms when they are dangerous is also valuable. We believe the most successful people are the ones who, like Franklin, have the intellectual flexibility to choose between adherence and independence.

Truth, not victory

etching of Franklin standing at a table in a lab
Franklin matured into a well-known scientist and statesman, with many successes aided by his open mind. Universal History Archive/Universal Images Group via Getty Images

What happened next shows that Franklin, unlike his brother – and plenty of pundits and politicians in the 21st century – was more interested in discovering the truth than in proving he was right.

Perhaps the inoculation controversy of 1721 had helped him to understand an unfortunate phenomenon that continues to plague the U.S. in 2021: When people take sides, progress suffersTribes, whether long-standing or newly formed around an issue, can devote their energies to demonizing the other side and rallying their own. Instead of attacking the problem, they attack each other.

Franklin, in fact, became convinced that inoculation was a sound approach to preventing smallpox. Years later he intended to have his son Francis inoculated after recovering from a case of diarrhea. But before inoculation took place, the 4-year-old boy contracted smallpox and died in 1736. Citing a rumor that Francis had died because of inoculation and noting that such a rumor might deter parents from exposing their children to this procedure, Franklin made a point of setting the record straight, explaining that the child had “receiv’d the Distemper in the common Way of Infection.”

Writing his autobiography in 1771, Franklin reflected on the tragedy and used it to advocate for inoculation. He explained that he “regretted bitterly and still regret” not inoculating the boy, adding, “This I mention for the sake of parents who omit that operation, on the supposition that they should never forgive themselves if a child died under it; my example showing that the regret may be the same either way, and that, therefore, the safer should be chosen.”

A scientific perspective

A final lesson from 1721 has to do with the importance of a truly scientific perspective, one that embraces science, facts and objectivity.

19th-century photo of a smallpox patient
Smallpox was characterized by fever and aches and pustules all over the body. Before eradication, the virus killed about 30% of those it infected, according to the U.S. Centers for Disease Control and Prevention. Sepia Times/Universal Images Group via Getty Images

Inoculation was a relatively new procedure for Bostonians in 1721, and this lifesaving method was not without deadly risks. To address this paradox, several physicians meticulously collected data and compared the number of those who died because of natural smallpox with deaths after smallpox inoculation. Boylston essentially carried out what today’s researchers would call a clinical study on the efficacy of inoculation. Knowing he needed to demonstrate the usefulness of inoculation in a diverse population, he reported in a short book how he inoculated nearly 300 individuals and carefully noted their symptoms and conditions over days and weeks.

The recent emergency-use authorization of mRNA-based and viral-vector vaccines for COVID-19 has produced a vast array of hoaxes, false claims and conspiracy theories, especially in various social media. Like 18th-century inoculations, these vaccines represent new scientific approaches to vaccination, but ones that are based on decades of scientific research and clinical studies.

We suspect that if he were alive today, Benjamin Franklin would want his example to guide modern scientists, politicians, journalists and everyone else making personal health decisions. Like Mather and Boylston, Franklin was a scientist with a respect for evidence and ultimately for truth.

When it comes to a deadly virus and a divided response to a preventive treatment, Franklin was clear what he would do. It doesn’t take a visionary like Franklin to accept the evidence of medical science today.