How can you test a candidate's ability to manage finances and budgets?

Solve a case study with them. My entire recruiting strategy changed when I started solving live case studies with potential candidates. And no, I don’t mean hypothetical case studies, real case studies. Take 2-3 actual business problems that you have in present day and solve them with the candidate. These are the top things I would watch for as they solve the case: 1: Openness to feedback 2: Ability to pivot 3: Ability to handle challenges and curve balls 4: Openness to say no when they don’t know something or feel stuck. Asking is not enough. You have to solve real world problems with these candidates, so what better way than to solve a real world problem before you hire them.

As a finance hiring manager, I would use comprehensive assessment that evaluates the candidate’s financial accounting, problem-solving, and Excel skills. It consists of various types of questions, such as audio, multiple-choice, spreadsheet, text, and video. The candidate has to demonstrate their ability to create and analyze financial reports, track and manage data, and make informed decisions. I would also consider other factors, such as the candidate’s experience, education, personality, and fit with my organization’s culture and values.

In my role as a finance hiring manager, I prioritize examining candidates' previous roles, especially those involving financial management and budgeting. This deep dive into their past experiences helps me assess their practical skills. I follow this with probing questions designed to test their understanding and separate theoretical knowledge from real-world expertise. My own experience in this field guides me in identifying which competencies are gained through hands-on work, ensuring I select candidates who demonstrate more than just basic theoretical understanding.

It can easily be assessed based on below approach - by asking about his background experience in budgets and finances - by testing his technical and practical knowledge about finances and budgets through scenario based questions - by exploring about his professional qualifications etc

I ask them about their personal finances . . . whether they have a budget . . . how they use it . . . what type of things they borrow money on . . . how they make decisions and manage their finances with their significant others. I also ask if they save. If they don't do it for themselves, they are not likely going to be committed to doing it well for us.

𝗧𝗵𝗲 𝗰𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲: From interviewing 80+ candidates in Sales, Marketing, Expansion and Operations I learned that scenario interviewing has 𝗺𝗮𝗻𝘆 𝗽𝗶𝘁𝗳𝗮𝗹𝗹𝘀: - 𝗙𝗼𝗿𝗰𝗲 𝗜𝗺𝗽𝗿𝗼𝘃𝗶𝘀𝗮𝘁𝗶𝗼𝗻 - a startup is a time constrained environment and you need the agile thinker. - 𝗧𝗿𝗶𝗽𝗹𝗲 𝗰𝗹𝗶𝗰𝗸 - test candidates capacity to dig deeper several times. You don’t want a presentation, you want a discussion - 𝗕𝗲 𝗯𝗼𝗿𝗶𝗻𝗴𝗹𝘆 𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲𝗱 - to eliminate bias you need to repeat the same “sequence of improvisation” - 𝗕𝗲 𝘄𝗮𝗿𝗺-𝗰𝗼𝗹𝗱-𝘄𝗮𝗿𝗺 - make the candidate feel at comfort but be analytical and distant during the case discussion.

The approach outlined in the article is highly effective, especially when tailored to real-life situations a company faces, like managing a budget deficit. In a recent interview I conducted, I presented the candidate with our company’s actual scenario of a budget deficit. This not only tested the candidate’s financial acumen and adaptability but also provided insight into their ability to work with existing resources and tools. Such practical, scenario-based questions are invaluable for evaluating a candidate’s real-world problem-solving skills and their potential to contribute effectively to the company’s financial health.

I think providing candidates with realistic financial scenarios is a highly effective way to assess their ability to manage finances and budgets. It provides a practical and comprehensive evaluation of their competence in handling financial matters, making it a reliable method for selecting candidates who can contribute to an organization's fiscal success.

I get the way to give the candidate a realistic scenario that relates the business or industry will help better to own view.

I love these ideas. Simulations sometimes can be the most effective ways to test someones beliefs and behaviors in a situation. Other than the military, few corporations have the "laboratory" to observe someone performing in the field, even under stress. Simulations are a way to discern someone's capabilities.

I ask them for examples of achievements and how they achieved them. What obstacles did they have to overcome and how did they do it?

One of the most important things is to ensure a strong sense of mission and cultural fit. Establish a series of alternatives and have them rate which alternative they feel closest to. The series of alternatives should reflect the company's mission and cultural values.

𝗚𝘂𝗶𝗹𝘁𝘆❗ I have fallen into the trap of not going deep enough, once with massive impact. So: 1. 𝗧𝗿𝗶𝗽𝗹𝗲 𝗖𝗹𝗶𝗰𝗸 - ask the candidate to dig deeper, deeper, and deeper again seeking if they understand “the why to the what” 2. 𝗙𝗿𝗼𝗺 𝗦𝗽𝗲𝗰𝗶𝗳𝗶𝗰 𝘁𝗼 𝗔𝗯𝘀𝘁𝗿𝗮𝗰𝘁𝗶𝗼𝗻 General knowledge is a start, however, they need to be able to understand the 𝙎𝙥𝙚𝙘𝙞𝙛𝙞𝙘𝙨. Then can they 𝘼𝙗𝙨𝙩𝙧𝙖𝙘𝙩 the implications for the business 3. 𝗛𝗼𝘄 𝘁𝗵𝗲𝘆 𝗹𝗲𝗮𝗿𝗻: ask how they learned what they know

Really helpful would be to ask them for the accounting treatment of a recent change, let's say 2-3 years ago, of a standard, i.e. IFRS 16 in order to see if he/she follows the updates in the finance and accounting rules

Budgeting isn't just about numbers; it's about judgment. As a CEO here is how I assess them in 4 steps , 1. I throw candidates into the deep end: give them a complex budget to analyze cold. 2. I look for insights, not just data regurgitation. 3. A role-play on allocating limited funds across competing departments reveals their negotiation skills and ability to make tough calls. 4. Finally, their past budget management speaks volumes. so I ask for specific instances where they saved costs or optimized investments. Real-life stories often separate the wheat from the chaff.

A nuanced perspective on assessing a candidate's financial management abilities goes beyond technical skills to evaluate adaptability, foresight, and strategic thinking. It considers how well a candidate anticipates and responds to market changes, balances risk with opportunity, and integrates ethical considerations into financial decision-making. This approach focuses on the candidate's potential for long-term value creation and their alignment with modern corporate governance standards.

Actually you test your candidates from practical and case study but before that discussion with him to see feedback of finance , accounting , ability to solve problem face on budget or forecasting , you can test business acumen , sensitivity to figure then you can discuss with him in actual or hypothetically case after that you can vaulted ability of any candidate to solve problem