October, 2010For many executive directors, hiring an accountant is fraught with anxiety. How will we find the right person? How can I tell if someone really knows accounting? Will an accountant fit in with the rest of us? As difficult as it is to hire a good accountant, hiring an incompetent or incompatible person is even worse. Here are some FAQs on hiring accountants for nonprofits, including what to do if you're having an impossible time of it:
Where do we recruit applicants?
You may spend more time recruiting good applicants for your finance team than you may spend for program staff; after all, accounting skills are often more marketable across sectors than program skills. Competition for strong candidates can be challenging.
Who should be in the interview?
In the interviews you will want to assess the technical skills of the applicants, but also their ability to communicate with you, other staff, and perhaps the board. For a chief financial officer (CFO) or finance director, involve the executive director, program director, and board treasurer or chair. If your organization is smaller, the executive director and board treasurer might be appropriate. Board members often have finance and accounting skills as well as experience hiring finance staff.
A question often asked in larger organizations is whether the current accounting staff should be brought into the process when hiring a CFO. Since the ultimate hiring decision lies with the executive director, staff members shouldn’t have a "vote" for their favorite candidate, but do set up a system where they can provide input and share their thoughts on the candidates.
How can I test for technical knowledge when I don't have it myself?
In most situations you will need to spend time on reference checks to be sure that a candidate both knows accounting and is able to get tasks done competently and on time (more on this below). For manager-level positions, be sure that you ask about nonprofit accounting experience as there are significant differences from for-profit accounting (just one example: restricted funds).
Consider having a case study where you give the candidates 20 minutes to look over some financial statements (such as yours) and ask them to walk you through the statements and explain the highlights to you. Did you understand the explanations? When you asked questions about the statements, did you like the manner and level at which the candidate responded?
It's also useful to know if an applicant is already familiar with your accounting software. While new software can be learned, prior experience will shorten the learning curve.
What should I look for besides technical knowledge and good reference checks?
Even the most technically proficient accountant will need to communicate well with others, including organizational stakeholders who may not understand accounting. The accounting team often has to get staff to conform to disliked procedures (such as timesheet submission) and to participate in planning discussions (such as budget preparation for a grant proposal). Ask candidates about an experience where there was a conflict over accounting to how they handled the situation. Do they have the patience and understanding to work with you on tough challenges?
If cash flow is a significant problem in your organization, discuss it with the finalists. Some accountants can take recurring cash flow problems in stride, while others would rather quit before having to ask a creditor for another 30 days.
How do we decide what to pay?
Start by calling other organizations and ask what they are paying. Many executive directors are happy to share this information, especially if you offer to send them all the salary information you gather (with the organization names removed). You can also look at the Form 990 of organizations similar to yours at Guidestar; if the CFO is making over $100,000 the salary will be listed in Part VII. As with any survey of compensation, you will need to balance what accountants are making elsewhere with your own pay scale.
Ask your auditor for advice on how much to pay. In some communities a nonprofit compensation survey is conducted; ask around to see who might be producing such a survey in your region.
What are some tips for reference checks?
Ask for references and call them. But be cautious: not many people will give you a reference that is unfavorable. Ask about technical skills, about timeliness of task completion, about communication and people skills. Listen carefully to how the reference responds to you. Our favorite question: "If I were to hire this person, what advice would you give me on how best to work with him or her?"
Since this person will be managing your internal controls and accounts, also consider performing a background check. See "Criminal Records Checks for Prospective Staff and Volunteers" in Blue Avocado for more.
How can I sell an accountant on our organization, especially at a lower salary than he or she has been making up to now?
One of the biggest mistakes an organization can make when hiring an accountant is to not talk up its missions. For many accountants, doing meaningful work is exactly why they responded to your job announcement in the first place. Talk up your mission, your impact, your goals, your connection to your constituencies. Many an accountant is working at a nonprofit in domestic violence, children's services, the environment, music, and civil rights because of a personal involvement with the issue.
In addition, everyone in your organization needs to believe in the work you do, including the accounting staff! There may be stressful times such as cash flow crunches where a shared involvement with the mission will form an important basis for teamwork.
If I hire someone and it doesn't seem to be working out, how can I fire that person without leaving myself in the lurch?
Even with the best planning and hiring processes, sometimes it just doesn’t work out. Either the person isn’t a fit with the organization or, worse, he or she just doesn't perform. While the thought of firing your accountant and starting the search process again may be overwhelming, it is far better than keeping someone in the position who you know isn’t right for you or your organization.
But how do you cover your organizational accounting needs until you find the right person? Depending on the level of accountant, there are different options.
There are many "right" ways to hire a great accountant, and as you do so remember to balance your need for technical proficiency with someone who will help you strategize about how best to use your organization’s assets. If you have other ideas or suggestions we’d love for you to share them in the Comments section.
Steve Zimmerman, C.P.A., is principal of Spectrum Nonprofit Services in Milwaukee, where he consults to nonprofits in financial management, strategy, and business planning. With Jeanne Bell and Jan Masaoka, he is co-author of Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, available from publisher Jossey-Bass in November 2010. Steve has both hired accountants and been hired as an accountant, and has wild stories to tell from both sides.
Thank you to the Blue Avocado -
Jan Masaoka is editor of Blue Avocado magazine. She has negotiated executive director salaries from both sides of the table. With Jeanne Bell and Steve Zimmerman she recently co-authored Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, which will be available in November 2010 from Jossey-Bass.