By Adrian Lawrence FCA
Growing businesses tend to make their senior finance hire either too small or too big. Adrian Lawrence FCA argues that the role in between, the Head of Finance, is the one most often misunderstood and most often mispriced.
There is a point in the life of most growing businesses when the finance function stops keeping up. The month-end takes longer. The bank asks questions nobody can answer quickly. The owner finds themselves checking numbers they no longer fully trust. Everyone agrees that a more senior finance hire is needed. The disagreement is about what kind.
The usual choice is framed as a binary: hire a stronger Financial Controller, or bring in a Finance Director. One looks affordable but may not be enough. The other looks like the grown-up answer but costs a great deal and may be more than the business can use. Between the two sits a role that many owners and boards overlook, or recruit for under the wrong brief: the Head of Finance.
I have seen this decision from both sides, first as a Finance Director, including in a private-equity-backed buy-out, and now running a group of recruitment firms that fills senior finance roles at every level. Getting it wrong is expensive in both directions. Getting it right often comes down to being honest about what the business actually needs over the next two or three years, rather than the title that sounds most reassuring.
Three ways the decision goes wrong
- Hiring a Financial Controller and calling them Head of Finance. The title has become fashionable, and many businesses use it for what is really a controllership role: accurate accounts, a reliable close, good controls. There is nothing wrong with that role, but it is not the same job. A genuine Head of Finance runs the whole function, works directly with the managing director on the business plan, cash and pricing, and is the person the bank, the auditor and any investor deal with. Advertise a controller’s job under a Head of Finance title and you attract candidates who expect the broader remit, then lose them within a year when it never arrives.
- Hiring a Finance Director too early. A strong FD brings board-level judgement, investor and lender relationships, and experience of funding rounds, acquisitions and exits. If the business is not yet doing those things, much of that experience goes unused, and an expensive appointment spends its time running the month-end. FDs hired too early often leave because there is not enough FD work, or stay and become frustrated. Where a business genuinely needs board-level finance input but not every day, a part-time or fractional FD working above a capable Head of Finance is often the better combination.
- Underpricing the role. Because the title sits between two familiar benchmarks, it is easy to anchor on the controller’s salary and add a little. In practice, Head of Finance pay in London runs from roughly £70,000 to £85,000 for a first senior finance hire in a business of £5m to £15m turnover, rising to £95,000 to £120,000 in larger or investor-backed businesses, usually with a bonus on top. Pitch the role below the market for its real scope, and the strongest candidates simply do not apply.
What a Head of Finance is actually for
The clearest way to think about the role is by the size and stage of the business, because the same title describes quite different jobs as a company grows.
- Around £5m to £15m turnover. The Head of Finance is often the first senior finance hire and the only qualified accountant in the building. They take the numbers off the owner’s desk: a reliable month-end, a cash forecast that can be believed, a sensible relationship with the bank and the auditor, and a small transactional team that knows what it is doing. The value here is trust. For the first time, the managing director can make decisions on numbers they did not have to check themselves.
- Around £15m to £40m. A small team usually exists beneath the role, perhaps a management accountant and an assistant, and the job shifts from doing to leading and reviewing. The Head of Finance should now be in the room for pricing, investment and hiring decisions, building the budget with the operational managers rather than for them, and preparing the business for the scrutiny that comes with larger lenders or outside investors.
- Above £40m or so. Either the Head of Finance leads a fuller function with specialists beneath them, or the business has appointed a Finance Director and the Head of Finance runs operational finance underneath. Both models work. What does not work is leaving the question unanswered, with a Head of Finance doing half an FD’s job without the authority or pay to do it properly.
The common thread is that a Head of Finance owns the whole finance function and works directly to the top of the business, but does not, or not yet, carry the board seat, the investor relationships and the transaction work that define a Finance Director. The Financial Controller, by contrast, is defined by control and accuracy, and usually reports to someone else in finance.
Three questions to ask before you choose
Before writing a job description, it is worth the owner or the board answering three questions honestly.
What will this person be doing in eighteen months? Not the job on day one, but the job once the backlog is cleared. If the answer includes raising capital, negotiating with investors, leading an acquisition or sitting on the board, you need a Finance Director, now or soon. If the answer is running the function well, partnering the managing director on decisions and getting the business ready for those things later, a Head of Finance is the right hire, and often the better one.
Who will they work for, and who will work for them? A Head of Finance reporting directly to the managing director, with a small team beneath them, is a different proposition from one reporting to a group Finance Director. The reporting line shapes the candidates who will be interested and the salary that will secure them. Be explicit about it in the brief, because the strongest candidates will ask.
What would make the appointment a success? A faster close, a cash forecast the bank accepts, a clean audit, a finance system that works, a budget the operational managers actually own. Writing down three or four outcomes forces clarity about the level of the role, and gives you a much better basis for interviewing than a list of qualifications. Specialist Head of Finance recruitment usually starts from exactly these outcomes and works back to the candidate profile, which is why the shortlist tends to look different from a pile of applications to an advert.
One further point: if the answers are uncertain, an interim Head of Finance can be a sensible first step. An experienced interim can stabilise the function, show what the permanent role needs to be, and help recruit the right person for it, without committing the business to a permanent salary before it knows what it is buying.
Scope, not title
The Head of Finance is not a compromise between a controller and a director. Hired for the right reasons, it is the role that turns a growing business’s finance function from a source of anxiety into a source of confidence, and prepares the ground for a Finance Director when the business is genuinely ready for one.
The businesses that get it wrong usually do so because they chose a title first and a scope second. The ones that get it right decide what they need the role to achieve, pay for that scope at its market rate, and are honest when the answer is a Finance Director after all. Titles are cheap. A mis-hire at this level, in lost time, lost confidence and a second search, is not.
