CFO skills in the 21st century

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robert-outram By Robert Outram, Editor, The CA

3 August 2018

Robert Outram talks to finance heads about the skills they need to help their business succeed.

The CFO or FD can make the difference between success and failure - so what are the skills needed to take on this task?

Mark Freebairn, Head of the Financial Management Practice at global executive search firm Odgers Berndtson, asserted that companies are looking for finance leaders with a high capacity to manage change, to help them navigate political uncertainty.

He explained: “Agility has never been as important as it is now in leaders of finance, which is a consequence of the massive geopolitical uncertainties facing business at present.

“In the UK, CFOs are struggling with the prospects of a slowdown in the economy and need to find new sources of growth. In the current climate, automation looks like one of the best ways to deliver growth but it’s also controversial - so companies looking to go down this route need CFOs who not only understand the potential of innovation but also its societal impacts, to advise boards on the potential risks and rewards.”

The increasing move towards digitisation has also impacted the role of the CFO, with much greater demands from the business for better and quicker management.

But are the basic role and skill requirements also changing? FreeAgent’s Katherine Tenner commented: “The CFO role seems to have broadened in recent years to encompass a much wider remit than traditional finance activities, in particular the focus has changed to driving business change and influencing corporate strategy.

"The increasing move towards digitisation has also impacted the role of the CFO, with much greater demands from the business for better and quicker management information and self-serve reporting tools.”

Petrofac’s Diane Stephen agreed: “I know it is a bit of a buzzword just now, but digital is going to have a huge impact on the way we prepare and deliver information and I am sure every finance person would love to spend less time creating information and more time acting on it.

“The key, though, is ensuring it works in practice; implementation is key. And don’t forget that people are still at the centre of digitisation, so don’t forget the human factor.”

The CFO role has definitely got a far wider reach in terms of responsibilities now. They have to be involved in everything.

Technology is also set to change roles within the finance team. Parkland’s Simon Wrench argued: “In the £10m to £25m [turnover] sector I see continuing cost pressures and rapid change in pace of technology, leading to flatter senior management teams. This will likely mean that in a business this size there will not be a need for a financial controller if technology is used correctly.

"For example, a lot of the analysis that has traditionally been provided by the financial controller can now be acquired via technology in a format that is ready for the FD to review and base decision-making on.”

Keith Fleming of ED&F Man added: “The CFO role has definitely got a far wider reach in terms of responsibilities now: reporting, treasury, risk, compliance, legal, tax, IT, strategy, corporate finance, HR. The CFO has to be involved in everything.”

A foundation for success

A CA’s professional training provides an excellent foundation, but most of the FDs we spoke to also stressed how much of the skills they use day to day come as a result of learning on the job.

Alan Scott said: “I don’t like to admit it, but two and a half years of auditing was a very sound grounding for understanding the numbers. A clear understanding of the theory and mechanics of shareholder value and how to create it are also essential in the role.

"I was very fortunate to spend 10 years as an insolvency practitioner, running businesses in receivership or in administration in different industries for up to 14 months, managing the crisis, turning them round and selling them as a going concern. This was a fantastic experience - you had to learn the industry and the business and its cost and income drivers very quickly, how to assess viability and keep people on board.”

You learn a lot from being brought into situations where things have not gone to plan and you have to quickly understand why.

Anderson Strathern’s Susanne Godfrey added: “I came from professional practice and had spent many years dealing with stakeholders’ expectations, whether that be banks, private equity houses, pension trustees, regulators or shareholders. This gives you a valuable insight into how to manage expectations, get buy-in and ensure that you communicate effectively with all parties.

“I also think the breadth of experience I gained working in both the UK and international deals arena was invaluable. You learn a lot from being brought into situations where things have not gone to plan and you have to quickly understand why and be able to formulate a plan to rectify things as far as you can.

"Someone once said to me that the worst decision you can make is not to make one at all and I think this sums up the FD role for me - cutting through the detail of the data to make effective decisions is key.”

As FD you make a lot of judgement calls. Your CA training helps you ‘do the right thing’ and I do think you develop an ‘auditor’s nose’ or gut feeling.

For Diane Stephen, the transition from professional practice to industry was an important learning experience. “Managing teams of diverse people can be a challenge when you first move into industry," she admitted. "You come from the professional environment where people are career-driven and tend to think alike to an environment where you need to figure out what motivates each and every person.

“I think integrity and ethics are the most important qualities you get from your CA training. We live in a grey world where things are rarely black and white and as FD you make a lot of judgement calls. Your CA training helps you ‘do the right thing’ and I do think you develop an ‘auditor’s nose’ or gut feeling.

"I also think the insight you get across both good and bad clients increases your breadth of experience very quickly. You learn as much from what has gone wrong as you do from what has gone right.”

CA training “gets you in the door”, as Kate Gibb put it, but she also commented: “The CA gives you great discipline and instils things like fact checking, but much of what I’ve needed to know, I’ve learned on the job. Everything you do, you bring to your next role.

“A former CEO of mine once said: ‘The finance role is like engine oil; you have to seep through the whole organisation.’ It wasn’t exactly flattering, but I know what he meant!”

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