The exit interview

27th Jul 21

RY Contemporary FD low

What does it take to be a bril­liant finance exec­u­tive in the 2020s? After 23 years of inter­view­ing FDs (as well as my fair share of CFOs – a title that was hen’s teeth rare in the UK in 1998 – FCs, COOs, CEOs, chairs, turn­around experts, trea­sur­ers, inter­nal audi­tors, pri­vate equi­ty GPs and just about every type of busi­nessper­son you can imag­ine), I can only mis­quote US Supreme Court Jus­tice Pot­ter Stew­art in 1964.

Justice Stewart was presiding in an obscenity case, but I’ll adapt his ruling (about hardcore pornography): “I shall not today attempt further to define the kinds of executive I understand to be embraced within that shorthand description ["brilliant finance executive"], and perhaps I could never succeed in intelligibly doing so. But I know it when I see it.”

I’m leaving this beat soon, and very happy that this EquityFD blog is the last thing I’m writing (professionally, anyway) - it's been the most fun to write of my regular gigs. So I thought a few reflections on financial management – and what that tells us about being a great finance exec – might be in order.

I’ve very rarely encountered actual bad FDs. But I’ve interviewed a fair few whose businesses went bust or suffered catastrophic failures of financial discipline – which would make them, in some sense, failures. More often than not, tough situations are made saveable by a great FD – working in harmony with shareholders and fellow managers. Sometimes they've gone down with the ship...

What about the more creative FDs – and the ones in successful companies? I add the adjective ‘creative’ (in the positive sense, not the negative one) because it’s a common feature of being an effective finance leader in a growing business, where an ability to fuel and direct entrepreneurial energy (without letting it spin out of control) is critical.

So here are 20 lessons from two decades covering financial management.

  1. Lean into the numbers. No, that doesn’t make you a bean-counter. But get them wrong and all credibility is shot when you need to add value elsewhere.
  2. Maintain visibility. I profiled a FTSE 100 FD who regretted outsourcing credit control – losing a valuable on-hand ‘feeler’ for what was going on the business.
  3. Be wary of outsourcing. There’s a balance between cost and control; agility and ownership. Fragmented value chains create more diverse and less-visible risk.
  4. Know the business. Cost, profit and efficiency all start on the ‘factory floor’. Don’t rely on the ops director – walk the floor.
  5. Be curious, not judgmental. An FD can be treated as a technician, not a strategist – just judging performance. Show engagement using smart non-financial questions.
  6. Know your politics (but don’t play it). Finance is a way of keeping score – it’s (sort of) an objective view. Others will spin – know the politics to spot their BS.
  7. Don’t get boxed in. The FD-to-CEO was still a story in the 1990s. Now, not so much. But a little general management experience on your way up doesn’t hurt.
  8. Muck in (and even muck out). One of the nicest startup-to-IPO FDs I’ve interviewed (now also a very rich one) cleaned the toilets before an investor visit; plenty of others have told me of pretty menial jobs on their to-do. BUT: know when that has to stop. In a start-up, everyone mucks in. In a scale-up, your focus is elsewhere.
  9. Don’t get caught in the middle. “As a PE-backed FD, I have ‘kick me’ written on my front facing my management team, and on my back facing the investors.” Ouch.
  10. Guard your mental state. So many FDs I’ve interviewed have exuded calm – and that’s served them well come rain or shine. Take deep breaths (especially when that PE non-exec is demanding crazy detail in your data…)
  11. Don’t get bored. Lots of my favourite FDs are one-company execs. But plenty get itchy feet and need fresh challenges all the time. Don’t be afraid to move around.
  12. Call out lapses in governance. It’s hard to squish the positivity of your fellow directors. But if a board is weak or reckless, the FD must be the voice of discipline.
  13. Steer away from egomaniacs. Business leaders need an ego. Corollary: boardrooms have more than their share of maniacs, and they’re often nasty. Life is too short.
  14. Find an outstanding FC. A FTSE 100 CFO once asked us for 20 reprints of a feature on what makes a great financial controller. He wanted every subsid FD to find one.
  15. Diversity is not a luxury. Your board and team will work better without groupthink. (And, y’know, if your hiring and promotion isn’t inclusive of people who are different from the ‘norm’, you might have bad culture problems elsewhere…)
  16. Beware financial trickery. I’ve seen a rise in exotic ways to manage cash and costs. Fight a race to the bottom, on debt especially.
  17. Network network network. Look at the list so far. Talking to other finance execs about how they cope with it, how they create, all is a huge plus. (That’s why the EquityFD Contemporary FD event has been so popular: no selling, just ideas and chat.)
  18. Apply your skills outside work. Lots of charities and small institutions can benefit from your skills. It can keep your grounded. And it’s never to early to think about a possible non-exec career path (and you can start small…)
  19. Don’t neglect succession. Every board member should know not just who might replace them, but why they will take the business to a new level. Groom them.
  20. Have fun. Honestly: life is too short. When you stop looking forward to going in to work, it’s time to look for a fresh role. Thoughtful, energetic, skilled finance execs are always in demand. And you know who to call…
And the Women Finance Leaders series has been – for me – a chance to get back to my roots at Financial Director 23 years ago: interviewing interesting FDs, exploring the myriad routes to finance leadership, and finding out what attributes smart, resilient execs have developed over their careers.

Apart from launching and editing Real Finance, writing for the team here at EquityFD (and FC, and Chair, and Interim…) has been a real career highlight. Working with people who care about what they do, show energy and passion, and have a zero-bullshit approach is priceless, especially in this era of ‘content marketing’. (Priceless… but I’m still going to invoice for this resignation letter.)

Contemporary FD, which Sarah dreamed up after becoming frustrated with the content and tone of so many other FD conferences, was a reminder that to be a modern finance leader, you have to have broad horizons, energy and guts. Skills, training and hard work can get you close to the top. But the FDs we’ve had on stage prove that an open mind, the ability to influence, and the desire to build – these are crucial attributes for the genuine finance leader.

And the Women Finance Leaders series has been – for me – a chance to get back to my roots at Financial Director 23 years ago: interviewing interesting FDs, exploring the myriad routes to finance leadership, and finding out what attributes smart, resilient execs have developed over their careers.

But this journey, for me, is ending. In September I’m leaving all of it behind to train as a teacher. Hopefully, I’ll be as good as former FT columnist Lucy Kellaway – whose own re-education five years ago was at least in part inspiration for my move – and be able to get a job at the end of the training (otherwise I might be back…). Read her new book, by the way. It's great.

I'm going to help young people learn about history. But like a great FD and their accounts, that’s just the surface. For me, it’s also about helping impressionable minds develop analytical skills that will help them better interpret their world. I want to show them that being able to pick apart received wisdom – with discipline and objectivity, not just because you disagree with a viewpoint or an outcome – is a crucial life skill.

It might not be quite the same as a finance leader helping the board make smarter decisions, or reining in a CEO with ‘old-fashioned’ views spending money unaccountably. But the best FDs I’ve met don’t just measure and report on their business. They help their people understand why their actions work or don’t; how to frame their decisions in ways that will drive growth; and they share their finance wisdom to open doors across their organisation. Sounds like a great formula to emulate in my new career.

And the content continues here at EquityFD/FC/Interim/Chair. I’m delighted to say that your new content guru in this parish is none other than Tim Hames. Tim’s CV includes running the British Private Equity and Venture Capital Association and being a columnist and chief leader writer at The Times – which means I’m handing over to someone better qualified than me both in terms of subject expertise and scribbling. (He even has a Wikipedia entry!) Which is to say, watch this space from September, it's about to get a fresh lick of paint.