There is no “one size fits all” salary for a chief financial officer. In fact, many things can influence an executive salary. When you are deciding what to pay a CFO, here are five factors you should consider.
1. Your company’s revenue More company revenue means more responsibility for the chief financial officer. Therefore, higher revenue typically leads to a higher the base salary.
2. Your company’s location Where your business is located has a significant impact on salary expectations. In general, jobs in big metro areas such as New York pay more than jobs in rural locations or small cities. If you are unsure how your location affects employee pay, consider the cost of living where your business is located. If the cost of living in your area is higher than the national average, expect to pay all employees more – including the CFO.
3. The candidate’s experience and education Generally, the more experience and education a candidate has, the higher their base salary should be. An experienced, educated chief financial officer brings more ideas and industry knowledge to the position, and can utilize their expertise to revolutionize your business.
When considering a candidate’s education, be sure to include any certifications they may have in addition to a formal degree. Certifications prove that the potential CFO has in-depth industry knowledge, which could be a valuable asset to the company.
4. Your expectations for the position The more responsibilities you expect from the candidate, the more you should be willing to pay him or her. If the candidate needs to have wide range of skills in order to be successful as the company’s chief financial officer, be prepared to compensate accordingly.
5. Other means of compensation Be sure factor in other forms of compensation when deciding what to pay a CFO. Keep future bonuses and raises in mind when selecting a salary, and be sure to acknowledge these benefits at the start of the negotiation process.
If you’re hiring a chief financial officer for a publicly traded company, you may also decide to include stock options as a bonus. Analyze the value of all these benefits when you’re determining what to pay a CFO.
How do you determine what to pay a CFO? Let us know in the comments.
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