Talking Point: Financial clout
What makes an outstanding finance director? I’m sure you will have your own views and I wonder if they will echo the results of a new survey which Grant Thornton commissioned from Directorbank, the executive recruitment specialist.
Earlier this year nearly 350 directors - including chairmen, chief executives and executive directors - were asked to nominate outstanding FDs they’d worked with. Twenty-five of these outstanding FDs were interviewed in depth and asked to give advice to their peers, given the challenges that the current economic conditions present.
I found the resulting report ‘What makes an outstanding FD?’ fascinating reading, reinforcing my own opinion that top class FDs are not only technically adept, but also commercially strong and forward thinking. Add exemplary people and communication skills into the mix and you can appreciate that outstanding FDs need to have a much broader range of skills than ever before. And their time has come, as one outstanding FD in our survey put it: “Right now as an FD, you can have major impact - and if you don’t seize the moment they’ll find somebody else who will.” Aptly put!
We are all aware that the past two years have seen the global economy go through one of the most turbulent periods of modern times, challenging the existence of many businesses and their management teams. The role of the FD has therefore never been more important and, as businesses have fought for survival, FDs’ relationships with their CEOs have been put to the test.
This relationship between the FD and CEO is one of the key factors highlighted in our Directorbank survey. Many respondents say that the FD and CEO should be joined at the hip or ‘speak with one voice’. One FD said: “Number one is that you need to be a business partner with the CEO. There’s got to be trust; you’re very supportive to the CEO but at the same time challenging and prepared to ask the question no-one else is brave enough or in a position to do.”
This ability to ‘stress-test’ the business strategy and influence its development is a vital role for today’s FD. One put this succinctly: “I think it’s someone who is thinking about the future, rather than the past.”
A common denominator with all our outstanding FDs is that they pushed themselves out of their comfort zones, have made mistakes and taken knocks but have bounced back stronger. One said: “Everybody makes mistakes; it’s a question of how you get out of them - that’s the key.” Most critically, the hardest challenges were later seen by many as defining moments in their careers.
So if we know what makes an outstanding FD, what makes an FD ineffective?
A team losing confidence in its FD is the most important warning sign of poor performance. Other strong indicators were poor and late financial reports, lack of attention to detail and below-standard forecasts. Poor communication was consistently seen by our FDs as the one thing which stops an average FD from becoming a valuable member of the senior management team.
Finally, we asked outstanding FDs what their key strategic priorities are and the answers were perhaps surprising, turning the stereotype of FDs being risk-averse on its head. One said: “As everybody else worries about being refinanced and taking costs out, you need to look at how you can benefit from the fact that a number of your competitors will be weak at the moment. Now is the time to be brave.”
David White is a partner at accountancy firm Grant Thornton in Birmingham.
