What makes a successful FD?

Just how do you set out to become an outstanding finance director (FD)? One thing is certain – today’s top FDs are much more rounded commercial business leaders than their counterparts of 10 or 20 years ago. They are forward-looking and are making tough, brave decisions.

Hence anyone aspiring to be an FD or wanting recognition as ‘outstanding’ in their current FD role should focus on their people and communication skills and gain broad commercial experience early on in their career. These are the clear attributes that lift an ‘average’ finance person into an outstanding FD.

Research conducted by the Directorbank Group in association with Grant Thornton canvassed nearly350 board directors – chairmen, chief executives and executive directors – asking them to nominate outstanding FDs with whom they had worked and to identify the qualities that made them outstanding.

Good communication and relationship skills came through time and again. FDs have to be approachable and trusted in their business so that managers share problems with them, rather than try to cover them up or work around the FD.

Matthew Streets, chief financial officer (CFO) at world-renowned architects Foster + Partners – and a nominated outstanding FD –emphasises this need for good communication skills. He makes the point: ‘You are the expert in numbers but not everyone else is. I realised early on you don’t only do numbers, sometimes you do pictures – graphs, pie charts or whatever – but not just numbers.’

The research included interviews with 25 of the nominated outstanding FDs themselves, looking at their career paths to the top and gaining their insights into the role.

These FDs recognised the balancing act they have to perform between forming a partnership with the chief executive officer (CEO) and supporting them, and at the same time being the one prepared to stand up and challenge that same CEO when required, often when no-one else will.

Even so, all of these outstanding FDs were clear that whatever their differences, the CEO and FD had to present a united front – both internally and to the outside world.

For a fast route to the top, FDs must gain commercial experience and understand where wealth is created in a business. This can be done by taking on divisional roles, working at headquarters, getting involved in mergers and acquisitions or an investor-facing role, working overseas, experiencing adverse conditions and getting close to the customer.

Although technical competence is generally viewed as essential, becoming too much of a technical expert can have a detrimental effect.

Barbara Richmond, group FD at Redrow and another ‘outstanding’ FD herself, believes that having curiosity and understanding the customer are critical: ‘You have to have a curious mind – really wanting to understand what’s behind the numbers. You have to make an effort to become commercial. The starting point is inside your business and generally people are very willing to help you. When you’re sitting in a board meeting trying to make strategic decisions, you need to understand how the customer ticks.'

Are you an FD in waiting?

Develop these skills:

• excellent communication skills – with the board, across the business as awhole, with shareholders and with the outside world;
• wider people skills, particularly the ability to lead a high calibre team;
• commerciality and in-depth understanding of the business, its markets and customers;
• the ability to support and challenge the CEO; and
• an affinity with numbers and the ability to interpret them for others.

And what should you avoid?

Four out of five board directors had worked with an ineffective FD. They said the top signs of a poorly performing FD are:

• poor financial reports;
• loss of your team’s confidence;
• lack of attention to detail;
• late reporting;
• poor forecasts; and
• lack of support from the chief executive.

For more on the signs of poor performance, see Figure 1, ‘Poor FD – the warning signs’.

Top tips

Learning from these role models, career tips to ensure a strong CV include:

• grasp opportunities – even if it means doing projects or roles that are not particularly appealing. This gets you noticed and ear-marked as someone with high potential;
• if you have started in the profession, move into industry as quickly as possible;
• deliberately look for ways to add value to your CV early on;
• build up a variety of experience in a number of roles, sectors and geographies; and
• push yourself out of your comfort zone, even into situations which may seem beyond your capability – often this will be the critical step that makes your career take off.

The directors sampled said that the most obvious signs of a poorly performing FD are inaccurate or incomplete reports or numbers not being produced on time. Often this is preceded by the finance team losing confidence in the FD or different patterns of behaviour which with hindsight should have given cause for concern.

The majority of the outstanding FDs were emphatic in their belief that the main thing which differentiates an ineffective FD from an effective one is their communication skills. Poor communication was consistently seen as the one thing which stops an average divisional FD or controller becoming a valuable member of the senior management team, worthy of the title finance director.

Many of the outstanding FDs were qualified accountants (though there were a few exceptions) and most started their careers in a professional firm. Some had added an MBA which was seen as giving a broader base of understanding than the essential but ‘narrower’ accountancy qualification.

Andrew Gossage, now chief operating officer of Ultimate Products, was very happy working in the profession when his favourite client offered him a job. He said: ‘I had a choice – go for partner in say, five years or take a risk and leave. It proved to be a great opportunity. I was made FD and general manager of an organisation that employed 500 people at the age of 27.’

Many of the FDs talked about learning by watching those around them – spotting what impressive people were doing and adopting these behaviours. A number also talked about seeking out mentors and asking ‘first class people’ to tell them how they were doing.

The final piece of career advice comes from Richard Ashton, group FD, Home Retail Group Plc: ‘You’ve got to stretch yourself as soon as you’re getting to your comfort level. What you really need then is another challenge... and that’s how you get big jobs at an early age.’

• What makes a successful FD?
  Finance & Management magazine, October 2011, p.18-19

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Further reading on successful leadership as an FD or CFO is available through the articles below.