The job market is booming, with strong demand for CFOs. However, due to the intense vetting process of working candidates (due diligence), many companies are unable to find qualified applicants. This leaves a widening pool of talent that may not have the skills they need in order to survive or excel within their current position and industry.
Due diligence is a process of investigating the background, qualifications and financial standing of a potential business partner or investment. Due Diligence can be used to determine if someone is trustworthy or not. The “due diligence due diligence” is a job market that has strong demand for CFOs, but it also strains due diligence.
The abrupt departure of Moderna Inc.’s freshly appointed chief financial officer highlights the issues that organizations and recruiters face in a competitive job market, where applicants frequently have several offers, requiring hiring managers to make snap choices.
Jorge Gomez, who joined Moderna as CFO on Monday, left the business on Tuesday with immediate effect, according to the Cambridge, Massachusetts-based firm. He was hired from dental supply company Dentsply Sirona Inc. last month to succeed David Meline, who was set to retire after approximately two years as Moderna’s CFO. Dentsply said on Tuesday that it is conducting a financial inquiry into a number of issues, including financial reporting.
Mr. Meline will continue as CFO while Moderna looks for a permanent successor for Mr. Gomez.
Jorge Gomez, who departed Moderna’s CFO post the day after he began.
Dentsply Sirona Inc. photo
The pandemic and subsequent economic recovery last year raised demand for finance executives, leading many companies to seek new leaders for their finance departments, according to recruiters. Turnover of CFOs at companies in the S&P 500 rose to 18% last year, up from 15% in 2020 and 14% in 2019, according to Russell Reynolds Associates, an executive search firm.
“There is pressure on us to speed up the process, and we need to put that pressure at bay,” said Peter Crist, head of executive search company Crist Kolder Associates. “Our greatest issue is managing expectations.” Crist Kolder was not part of Moderna’s hunt for a new CFO.
Due to the fierce competition for talent, some managers are rushing the hiring process and maybe favoring individuals they already know, according to recruiters. As a consequence, employers may take shortcuts during due diligence and ignore any flaws with a candidate.
Between 1996 and 2005, Mr. Meline and Mr. Gomez both worked at General Motors Co., where Mr. Meline, who joined the Detroit-based automaker in 1986, served as a country and subsequently regional CFO.
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During that period, Mr. Gomez held different executive and managerial roles at GM. Mr. Meline departed in late 2005 to become assistant treasurer at Cardinal Health Inc., but returned in 2008 to become CFO of 3M Co.
Mr. Gomez progressed through the ranks of Cardinal Health, eventually becoming CFO in 2018. He also met Don Casey, who was the company’s medical segment’s chief executive until he resigned in 2018 to become the CEO of Dentsply Sirona. In 2019, Mr. Gomez was recruited as Dentsply’s CFO.
Mr. Casey was sacked by Dentsply on April 19, only days after the business revealed Mr. Gomez’s departure on April 11. He was designated the new financial head of Moderna on the same day. Mr. Gomez’s departure from Dentsply took effect on May 6.
Moderna responded to a request for comment by pointing to its news announcement on Mr. Gomez’s departure, which did not answer issues about the company’s CFO recruiting process. Dentsply’s public filing on Tuesday informed the firm of the internal probe, according to the business.
Dentsply Sirona removed its CEO immediately after Mr. Gomez’s resignation was publicized.
Pavlo Gonchar/Zuma Press photo
Requests for comment from Mr. Gomez, Mr. Meline, and Mr. Casey were not returned. When contacted for comment, Dentsply pointed to public filings and the company’s earnings call this week, both of which provide limited details on the probe.
Potential recruits are frequently thoroughly vetted by recruitment firms and corporations, which includes analyzing publicly accessible information, regulatory filings, and court records. Kroll LLC, an investigative and risk assessment organization, often assists with these activities.
Cathy Logue, head of the CFO practice at Stanton Chase, which was not involved in Mr. Gomez’s hiring, said that recruiters frequently rely on back-channel references, which can include board members at the candidate’s current or former employer—particularly the audit chair—as well as external auditors, accountants, investment bankers, and analysts.
However, getting a whole picture of a candidate from their present job might be challenging, according to Josh Wimberley, founder of executive recruitment company LeadChange LLC, which had no participation in the Moderna CFO search.
Stanton Chase’s CFO practice leader, Cathy Logue.
Stanton Chase (photo)
Recruiters speculate that sitting CFOs may be limited in the information they can give, citing non-disclosure agreements and other clauses that prevent them from discussing internal investigations or future profitability.
Internal investigations at public companies may be difficult to uncover, according to Don McMurchy, managing director of RSR Partners, which was not engaged in Moderna’s CFO search. Mr. Gomez would have been requested to identify any difficulties before his hiring at Moderna, but Mr. McMurchy believes he would have been constrained in what he could reveal about another public business.
Despite this, Peter Thies, president and co-founder of executive consulting company The River Group LLC, said there were indicators something was wrong at Dentsply. Between the time Mr. Gomez was hired by Moderna in April and his appointment as CFO this week, Dentsply’s CEO was fired, and at least two law firms—Ademi LLP and Pomerantz LLP—issued public advisories claiming that they were investigating probable securities fraud at the company.
“From the outside looking in, it seems that those events occurred, and they just allowed Gomez to begin working,” Mr. Thies said. “To me, having him start and complete a day later is worse for a company’s image than saying Mr. Gomez will not begin his stint as CFO because an inquiry is continuing.”
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