Today’s Finance Directors are striving to contribute more to organisational performance, and FDs have emerged as much more rounded, commercial and strategic business leaders than the traditional role of ‘score keeper’ of yesteryear.
The FD wears three primary hats – first as a finance expert, second as an active member of the management team, and third as leader of the finance function and team. The key point is that the FD has multiple roles and they are working both ‘in’ the business, and ‘on’ the business. The need to get into the business and out of the back room has been a long-standing requirement if they are to add value.
Today’s FD has to be forward looking, a driver of strategic thinking and finding growth opportunities. They must present the business case on growth opportunities, after consideration of the facts and assessment of the risks, to guide the board that now is the time to make brave decisions and to place some well-calculated bets.
The FD still has the role of cautious guardian of the company’s assets, keeping an eye on costs and ensuring cashflow is in good shape, but he is advising the CEO and board to exploit competitive opportunities in the market place and to invest for the future. Whilst having to understand where the money is made, they are also planning ahead more than looking back.
It seems it may finally be time to forget the old stereotype of the timid accountant, dreaming of becoming a lion tamer in the famous Monty Python sketch. At the same time, it isn’t a popularity contest and the tough decisions need to be taken. Whilst technical competence was previously regarded as a given, today’s outstanding FDs place more importance on strategic awareness, commerciality, communication skills and leadership.
Working closely alongside the CEO, almost ‘joined at the hip’, an FD is expected to be the one who will stand up to and challenge the CEO, having an independent mind and an ability to stand back, while at the same time supporting him and the board. In this key relationship, it is important that disagreements and challenges are discussed in private and that publicly, the CEO and FD present a united front. The skill is an ability to build loyalty yet at the same time an ability to challenge
Quoted companies in particular rely on FDs more than anyone else to be their moral compass. They are expected to ‘shine the torch into dark corners’, but they must also be careful not to become the person who always says ‘no’. They have to grasp opportunities, and significantly, they must have the courage to plan for growth whilst ensuring the accounting fundamentals are delivered.
FDs will of course make mistakes, and in many respects, when an FD drops the ball, the consequences can be more serious. That said, an FD needs to experience some scars as part of their development – anyone can manage when the numbers are heading in the right direction. Evidence of experiencing ‘weathered storms’ must be regarded as a positive attribute.
The role of an FD can be lonely, as they are expected to know all the answers, one who will not sit on the fence but who will make decisions quickly. A good FD can combine good analytical skills and intuition, sensing the right thing to do, almost ‘putting two and two together’. Above all, honesty and integrity are vital, no matter how unpalatable the answer may be.
Despite becoming more strategic, forward-looking and commercial, the song remains the same. A clear sense of what drives profit and cash in the business is a pre-requisite for the role. An ability to have a sharp mind that can quickly find the right number to interrogate and interpret from today’s sea of data is essential. An affinity with numbers and the ability to interpret them for others, set against a backdrop of effective risk management and an intrinsic ability to sense and manage cashflow requirements, will always be the core responsibility and skillset.
The importance of character and personality are as important as technical skills, and these can only be developed by exposure to the business. The importance of soft skills such as influencing and listening skills, and the ability to get on with people, are increasingly important.
Owning and architecting the business dashboard of metrics is key – backward looking numbers such as management and statutory accounts, trends, forward-looking projections and maintenance of ‘fit for purpose’ reporting systems that capture and process the organisations data are often a hidden, but vital contribution.
So, looking across the dimensions of roles enacted, what are the key attributes of today’s outstanding FDs?
- Impactful – They have gravitas, creating impact through discussion, debate and action, using narrative to ensure that their point of view is understood and heard.
- Influencing – They have to earn respect, with a tone of voice that gets them heard in honest and difficult conversations, and where their personality and character are strengths.
- Inspiring - They build trust and respect across the organisation, harnessing the skills of everyone to work together to deliver long-term value to the business.
- Innovative – They explore innovative ways to lead and navigate business growth, manage the associated risks and complexities of driving change in today’s business environment.
Upon reflection, perhaps there is no such thing as the role of FD, the role is dictated by circumstances. One day it can be commercial, tomorrow it can be entrepreneurial, the next focused on detail in numbers and data. Whatever the scope, today’s outstanding FD is a vital person in a successful organisation.