Have you got the right DNA?

Some of those who enter the accountancy profession aspire to become a finance director or chief financial officer one day. But what does it take to be a successful FD or CFO? And what does the job actually involve?

According to the recent DNA of a Finance Director report from Hays, 45% of FDs have more than 20 years’ experience behind their belts. But, although it may take quite a few years of hard work before you get this top financial job, now is the time to sow the seeds and start acquiring the right set of skills. It’s also necessary that you fully appreciate what the job entails as the FD’s role and responsibilities have evolved in recent years.

Traditionally, FDs and CFOs have been primarily responsible for managing the finance function of their organisations, providing insight and analysis to help their chief executive officers make business decisions based on sound financial criteria.

Nowadays, however, they hold many other responsibilities besides finance and make a bigger contribution to the overall running of the business than they used to.

Finance and beyond

According to EY's DNA of the CFO report, around one-third of CFOs in Europe, the Middle East, India and Africa now play an active role in developing and defining the overall strategy for their organisations. Another trend is for FDs and CFOs to expand their activities across the operations function – nearly a third of FDs surveyed by Hays state that this function is the most important business discipline for them to partner with.
‘The other significant change has been the increasing focus of FDs on risk management – identifying, understanding and measuring risk, then developing a control framework to mitigate it – that’s a natural area to be championed by the FD,’ says Chris Thomas, director at SME Finance Partners, a firm that provides a finance director service to small and medium-sized businesses on a part-time basis.

Paul Venables, Hays Global CFO, has board responsibility for investor relations too. ‘Investor relations sits naturally with finance because you need to understand the business, operations and numbers,’ he says.
These new trends do not mean that the fundamental responsibility for their finance department has become less of a concern for today’s finance chiefs. If anything, the recent financial crisis has reinforced the need for them to pay close attention to cash, cost management and working capital, with a particular focus on strengthening the balance sheet, says Thomas.

‘However, the old perception of the FD being purely "the numbers guy" no longer exists,’ he notes.

Challenges and skills

Such a wide range of responsibilities is a real challenge.

‘An FD needs to maintain the right balance between always looking at the bigger picture and having a good handle on the detail,’ says Thomas. On top of that, you are in charge of what can often be a large team so you must get on with, manage and develop all the people who work for you.’

‘I spend a lot of time with the people who work for me,’ says Venables.
You have to develop significant leadership and influencing skills.

‘Good FDs have just the right mix of technical functional skills and general managerial capabilities including a lot of emotional intelligence in dealing with people,’ says Nadim Choudhury, head of career services and employability at the London School of Business and Finance.

‘The best FDs are, in fact, natural leaders who thrive on leading others and motivating them to achieve results.’ Influencing skills also come in handy when dealing with CEOs.
Another challenge facing FDs is making sure that they are in tune with the commercial environment, says Choudhury. In fact, 36% of the respondents in the Hays survey have said that commercial awareness is the most important attribute for an FD to have.

‘It’s very easy for FDs to get bogged down with the technical particulars of the role, but they need to understand the most recent political, economic, social and technological developments in their industry,’ says Choudhury. ‘Having a strong understanding of their sector and their competitor’s strategy differentiates an excellent FD from a good FD.’ 
Making sure that the finance department runs like clockwork is clearly very important, as are your technical capabilities.

‘You must be a very good financial analyst and must possess technical skills and knowledge of accounting standards, as well as a good understanding of tax and treasury,’ says Venables. Yet these alone are unlikely to make you a successful FD.

‘You’re responsible for all aspects of finance, but you’re here to add commercial value and support the chief executive in running the business. Nobody’s going to hire you simply for your ability to add up the numbers.’ 
Other essential ingredients of a successful finance chief as identified in the EY report include superior planning and organisation skills, experience of running major projects, ability to manage stress and complexity under pressure, language skills, good health and passion. Excellent communication skills and the ability to explain complex issues in a straightforward way are paramount too.

‘For a finance person, being able to communicate well can be the difference between being average and being successful,’ says Venables.

Advice for aspiring FDs

While 75% of the respondents in the Hays survey think that being hard-working has aided their career success as FDs, it is the decisions you make during the early stages of your career that perhaps matter the most – they have a direct impact on your suitability for senior financial roles later on. This is why it’s crucial that you not only gain the required skills and qualifications, but that you also plan and obtain the relevant work experience at every stage of your journey to the top.
‘It’s a given that an aspiring FD should have the necessary intellect and technical skills for the role, but that can only take you so far,’ reiterates Thomas. ‘Real value comes from hands-on experience best gained by either working in different roles within a business, or by working in a number of different businesses and industries – ideally both.’

You need to understand how the business, or businesses, operate.

‘Any aspiring FD needs to immerse themselves in their business to understand the key dynamics – who the key players are in delivering the strategy, what drives value, and where the risks are,’ says Thomas. ‘Likewise, build your rapport and network with external stakeholders – banks, analysts, investors and professional advisers – as the relationship with these figures is a key part of the FD’s role.’ 
You also need to understand the drivers in the wider business and economy, so regularly read the financial, trade and industry press every day. ‘I can’t stress enough the importance of that,’ says Venables.
Whenever you get an opportunity to lead a project, grab it with both hands. ‘It’s a great way to build your network, take ideas forward and demonstrate your ability,’ says Thomas. And once you get to the top, you are likely to find it a very rewarding career. Three-quarters of the respondents in the Hays survey have said that if they had their time all over again, they would still choose the accountancy profession.

"It’s a given that an aspiring FD should have the necessary intellect and technical skills for the role, but that can only take you so far. Real value comes from hands-on experience best gained by either working in different roles within a business, or by working in a number of different businesses and industries – ideally both"

Chris Thomas - SME Finance Partners