the cfo strategic expert and commercial co pilot - a workplace study

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Market overview

Some are still battling back from the recession, a time when it has been harder to get funding from banks, and customers have been focused on driving the keenest price bargains possible. But almost all the businesses we interviewed commented that their current focus was how best to invest in the business to ensure it was ready to meet the growth demands that the upswing will eventually bring.

“The biggest challenge is the need to invest in the business to get it ready for growth,” commented Robin Sharpe, CFO at Slipstream Ltd, a leading marketing services business supporting global technology vendors. “It’s still a very difficult market, and requires really careful consideration and fine tuning so that we can balance cashflow with investment.”

For sales-led businesses such as insurance, coming back from a period of heavy customer defection has been the challenge for the likes of RIAS FD, Nick Lemans. “We’ve gone through the period of cutting costs and paring spend back to the bone, but the focus of the business has now moved forward. We’re now working with the business to build an attractive brand strategy that will make RIAS stand out in a very competitive market, but is also cost effective and sustainable.”

Financial Services has clearly been an area that has suffered significantly in the downturn, but having steered through the choppiest waters, our CFOs are definitely looking forward. One midlands-based insurer is now focused full-time on preparing the business for floatation, while other CFOs have championed new business areas as a way of building future growth.

Rob Hudson, UK CFO of global information business Experian explained his current challenge: “The last two years has been about focusing on our financial services business while growing new vertical segments. Now, as we diversify into SMEs, the Public Sector, telecoms and insurance – as well as new geographic markets - it’s about identifying and adopting the right opportunities. There are plenty out there: the trick is to find the best ones that offer us the best chance for success. Then it’s all about aligning all the necessary resources to meet the opportunity

Other challenges on the radar:Compliance and regulation provided a recurring theme with an overwhelming feeling that the Board – led by Finance - has to deal with an ever-more intrusive regulatory environment. For industries such as financial services, rail, water and the airline industry, there was growing pressure not just to satisfy shareholders and all the organisation’s internal stakeholders, but external regulators too.

“We operate as part of a bullish transport operator in First Group, but have to balance their stretching revenue and profit targets with the service level agreements set by Transport Scotland,” commented Scot Rail’s Billy Connelly. “Sometimes it’s a particularly tricky tightrope to tread.”

The regulation picture potentially becomes exponentially more problematic when there’s an international dimension involved, as BUPA International’s Wayne Close observed: “Different regulations are in play in almost every market in which we operate. It’s my job to keep all the plates spinning: to ensure that a problem in one market can be overcome and doesn’t become a wider issue.”

We asked CFOs: ‘What are your key business challenges?

Asked about the challenges their organisations currently faced – and if they differed from the previous two years. Our Finance chiefs reflected the different stages their businesses have reached in the business recovery cycle.

“It’s about identifying and adopting the right

opportunities. There are plenty out there: the trick is to find

the best ones that offer us the best chance for success. Then it’s all about aligning all the necessary resources to meet

the opportunity.”

Full name / Organisation

They told us: ‘Preparing for growth; dealing with regulation and managing change.’The CFO

Strategic expert and commercial co-pilot

A Badenoch & Clark workplace studyMay 2011

http://www.badenochandclark.com



The CFO: Strategic expert and commercial co-pilot / A Badenoch & Clark workplace study / May 2011


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The CFO: Strategic expert and commercial co-pilot A Badenoch & Clark workplace study

The role of the CFO within business has never been more challenging or more important. With ever-growing demands from the board, the business and external stakeholders, it’s no longer enough for today’s CFO simply to be ‘good with numbers’. Today the challenge is much more around strategy, commerciality and leading a finance team that’s a real driver of business success. But what does that mean in practice?

We asked CFOs and FDs across the country for the inside track on the challenges they face; the expectations they have to live up to and their thoughts on their role, the function they lead and its place in their organisation’s drive for success. We asked them to define the kind of skills they’re looking to grow and recruit – and indeed what skills CFOs need to put them on track to a stellar future. What they all demonstrated was the rapidly-changing role of Britain’s top finance professionals.

We have reported for some time the increasing pressure on finance teams to be more commercial and to display stronger communication and influencing skills. This message was reiterated by the CFOs in our research. While technical expertise is often an entry card to a career in finance, it’s increasingly obvious that those who progress to senior management also need a wide range of softer skills. These skills are those of a broader, more strategic manager than the ‘number cruncher’ of old.

While many CFOs recognise the future skills needs of their teams and some acknowledge that technical expertise may take second place to communication and influencing skills in the future, it’s important to note that, as finance recruiters, we’re not necessarily seeing this translate into the typical job specification for an accountant.

It would appear that CFOs continue to struggle with the balance of skills needed in their teams and experience challenges in balancing the technical and behavioural capability of their teams; the mix it seems is all important. This may well reflect the demands on teams in the recent downturn to focus on managing the numbers tightly. But if CFOs genuinely believe they need a different skill base – and we’ve no reason to doubt this – they do need to begin the process of mapping out exactly what this should look like in their organisational charts.

Part of the issue lies, we believe, in not having a clear set of competencies for finance people and a structured way of identifying these in potential new recruits. If they are serious about the need to shift finance up a gear, CFOs need to bite the bullet and critically assess the current capability of their people and, where necessary, consider bringing in new blood with the required skill set.

So, take a look inside to get a rare insight into the challenges of today’s CFO.

Foreword

Lynne Hardman Managing director, Badenoch & Clark / May 2011






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Market overviewWe asked CFOs: What are your key business challenges?

They told us: Preparing for growth; dealing with regulation and managing change.

“We’ve gone through the period of cutting costs and paring spend back to the bone, but the focus of the business has now moved forward. We’re

now working with the business to build an attractive brand strategy that will make RIAS

stand out in a very competitive market, but is also cost

effective and sustainable.”

Nick Lemans / RIAS

Asked about the challenges their organisations currently faced – and if they differed from the previous two years, our finance chiefs reflected the different stages their businesses have reached in the business recovery cycle.

“The biggest challenge is the need to invest in the business to get it ready for growth,” commented Robin Sharpe, CFO at Slipstream Ltd, a leading marketing services business supporting global technology vendors.”

For sales-led businesses such as insurance, coming back from a period of heavy customer defection has been the challenge for the likes of RIAS FD, Nick Lemans. “We’ve gone through the period of cutting costs and paring spend back to the bone, but the focus of the business has now moved forward. We’re now working with the business to build an attractive brand strategy that will make RIAS stand out in a very competitive market, but is also cost effective and sustainable.”

Compliance and regulation provided a recurring theme with an overwhelming feeling that the board – led by finance – has to deal with an ever-more intrusive regulatory environment. For industries such as financial services, rail, water and the airline industry, there was growing pressure not just to satisfy shareholders and all the organisation’s internal stakeholders, but external regulators too.

“We operate as part of a bullish transport operator in First Group, but have to balance their stretching revenue and profit targets with the service level agreements set by Transport Scotland,” commented Scot Rail’s Billy Connelly. “Sometimes it’s a particularly tricky tightrope to tread.”

Coping with change remains a very ‘live’ issue for most of our CFOs who have seen their organisations go through significant transformation in the recent past – or are in the midst of transformation now. Richard Gray, finance GM at BMI summed up what can be a painful experience. “BMI was acquired by Lufthansa in July 2009. Since then, we’ve had to move from a cash and P&L driven non-corporate, relationship-led, owner-operated organisation to one that’s fit for purpose in a large process-driven corporate empire. It has been a massive cultural change at all levels.”

Finally, not all our CFOs have struggled with the effects of the recession. Equiniti group is a specialist outsourcer for pension administration, share regulation and related services. Its CFO, Alasdair Marnoch confided: “We rather like recessions as many organisations choose to outsource their non-core services. We’re seeing a number of opportunities come out of the public sector as we know we can deliver services much more efficiently.”






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Today’s CFO

The terms they continually referred to were ‘strategic’, ‘forward-facing’, ‘commercial’, ‘flexible’, ‘inspiring’ and ‘influential’.

So what makes a great CFO today? Each of our interviewees looked to their peers to build an amalgam of the skillset required in today’s business environment.

Network Rail’s John Schofield said: “The top finance roles are becoming much more strategic – the technical elements of the role are now simply intuitive. The real obsession is people and change. We’re not in a back office or ivory tower any more, and are far more strongly aligned with HR in delivering an enlightened, business driven approach. Finance is now a driver of the business.”

For Guy Adams, the finance director at NSL Ltd, the commercial arm of National Air Traffic Services, engagement and adaptability are core elements of the finance DNA. “We need to be able to engage with the business on the business’s terms in developing strategy. That means being credible and convincing communicators with a deep understanding

of the business. But we need to be adaptable too – able to manage cost reduction one year but then able to drive business growth the next.”

“My job’s taking me further and further from the nitty gritty of the numbers,” stated RIAS’ Nick Lemans. “I’d see myself now as an interchangeable player in the top team leading the business. That means being able to communicate with the board in the language of the business, painting a picture and telling a story in a way that’s going to push their buttons.”

Ozgur Kilic, CFO for Novartis Vaccines and Diagnostics concurs: “I hardly ever talk finance with my boss. My conversations reflect my role, which is to get involved in business decisions, strategy and influencing the direction of the business.”

We asked: What are the pre-requisites for today’s CFO?

“For today’s CFO, technical skills are just an entry point. It’s about shaping the business.” So said Allan Dowie, CFO at Clyde Union Pumps and his view was reflected by most of the CFOs we spoke to.

“We’re not in a back office or ivory tower any more, and are far more strongly aligned

with HR in delivering an enlightened, business driven approach. Finance is now a

driver of the business.”

John Schofield / Network Rail

Our survey told us: A key business player, with commercial acumen; a strategic view of the business; ability to manage people, risk and change – and to earn the respect of the board. Financial skills are a given.






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The CFO as functional head

One CFO painted a picture of a past incumbent who seemed intent on keeping the function in the dark ages. “He insisted that no-one but him talked to any other function in the business,” the CFO recalled. “He also gave everyone in the team very specific responsibilities and didn’t allow anyone to work on any piece of work that he didn’t consider was ‘theirs’. It was divide and rule. No-one could challenge him; the team operated in silos with massive gaps and unnecessary duplication and morale was through the floor. It has taken me the best part of two years to even begin to turn that round.”

Clyde Union Pumps’ Allan Dowie added: “It’s essential for the CFO to be a role model to the finance team of the behaviours we want from them. I know I have to get my team to engage and act with the business – not to be aloof or falling back into finance-speak. The business wants challenge and I want the finance team to get the business to recognise that they should spend money as if it was their own.”

There’s an art to being a great functional head, and our respondents were clear on just how vital it is to create the right culture for success in the finance function.

“The business wants challenge and I want the finance team to get the

business to recognise that they should spend money as

if it was their own.”

Allan Dowie / Clyde Union Pumps

We asked: What’s important in your managing style when it comes to leading the finance function?

Our survey told us:People management is key: build the right team and give them all the support they need to do a great job. Don’t get bogged down in the detail. Be confident in delegating to your people.






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The evolution of the finance team

“It’s imperative for finance to be in charge of events, not have events controlling us,” stated Slipstream’s Robin Sharpe. “At all levels, we must scrutinise spending, challenge plans and ideas and suggest solutions.”

Certainly finance now seems to be more willing to integrate with the business as supportive contributors to the decision making process rather than merely being reporters after the event. “My team’s key challenge is to support the needs of the commercial team and ensure that as a business we have sufficient resources available for the business to meet its strategic targets,” explained Julia Wilson from S&A Foods.

Providing that kind of support requires a different kind of finance person from the ‘norms’ of a few years ago. Network Rail’s John Schofield sums up the type of person more prevalent in today’s finance teams. “The key challenge for finance is to build the right chemistry between the appropriate finance person and their business peer,” he commented. “The business wants its finance people to understand the business and be able to speak and think in business terms. That translates into three key attributes: to deeply understand the business area they’re involved in and the overall business context; to be a skilled and active communicator, and to challenge ideas and norms.”

We asked: What role does the finance team play in the business today?

No longer can finance afford to be a back-office oasis intent only on reporting what’s already happened. The niche the function fits into today is forward-looking playing a key role in decisions and controlling the future of the company.

“My team’s key challenge is to support the needs of the

commercial team and ensure that as a business we have

sufficient resources available for the business to meet its

strategic targets.”

Julia Wilson / S&A Foods

Our survey told us: Much more commercial; a business partner challenging business thinking on business terms. Outgoing, communicative and understanding.






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Today’s finance skillset

At Novartis, Ozgur Kilic noted there was cultural change necessary both for the function and the business as a whole. “We need to make sure that finance isn’t at the back of the queue when it comes to the business making strategic decisions. But to change the perception of the business, we have to upgrade our team’s business partnering skills and general awareness of the business. Being able to speak the language of the people they’re interfacing with helps our team change the business perception that we’re the team that likes to say ‘no’, to being seen as a team that can come up with alternative solutions to business issues.”

“We need individuals who are both well rounded and grounded,” added Umbro’s CFO, Gary Brown. “What’s also important is the ability to multi-task in what can be a very fast paced working environment.”

So what skills do CFOs currently find lacking in their teams? Most were generally full of praise, but when pushed, a CFO from the supply chain industry stated: “It’s the soft skills; the interpersonal stuff. Finance people like to interact with finance people. They get a bit frayed when they have to go out into the business.”

Many businesses are looking for finance managers who have experience from other functions that they can bring to the mix, which steered our discussion into the kind of people our CFOs recruit to strengthen their team and prepare for future succession.

“I look for people with a ‘bit of spark’,” noted RIAS’ Nick Lemans. “Some are ACCA/CIMA/ACA qualified, but that’s not actually the requisite for many jobs in finance. What’s needed most is the ability to understand and actively support the needs of the business.

Meanwhile, Network Rail’s John Schofield was unequivocal: “We need to change the traditional finance mindset: to understand that we have to break the umbilical that states that anyone in a senior finance role has to be a qualified accountant.

What was very apparent from the responses we received though was the need to get the mix right to ensure the finance team can operate effectively.

At Bupa International, Wayne Close has worked to build a team that has the right personality in the business. “I’ve deliberately built a diverse team, recruiting people not just capable of doing the job they’ve been employed to do, but also able to step up and grow in the finance team. There is a mix of people from diverse finance backgrounds – and all the expected qualifications – who can expand commercially.

To some degree, skills were lacking in the teams of just about every CFO we interviewed. Many CFOs noted that they had inherited fairly traditional finance teams and were in the midst of cultural change.

We asked: What kind of skillset is required in finance today, especially for managers aspiring to be CFOs? Are any of these skills in short supply?

Our survey told us: Accounting skills are a given. The build is excellence in communication and influencing, adaptability, willingness to engage within the business and an equal willingness to influence and challenge for the good of the business.

“What’s also important is the ability to multi-task in

what can be a very fast paced working environment.”

Gary Brown / Umbro






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How will senior finance roles change?

Our respondents saw commerciality, strategic input and increased impact both at board level and across the business as the CFO drivers moving forward.

“We’re in a changing marketplace,” William Medlicott of ITV commented. “The CFO role is going to evolve further to focus on growth and delivering change to adapt to the market.” Umbro’s Gary Brown echoed this saying: “We have to become more strategic and execution-orientated. This job has to be at the level where we’re not concerned about the minute details, because we can delegate these to trusted managers.”

An insurance CFO told us: “The role will be ever more about change leading to business transformation. Control remains a challenge – but it’s our bread and butter. We have to manage risk, it can’t be avoided. But the challenge is to find and maintain the right balance of risk versus opportunity. And, ever more, the CFO will play a leading role in managing the external stakeholders we work with and for – and who will enable our transformation to happen.”

Experian’s Rob Hudson painted the picture of tomorrow’s CFO. “Business direction and finance direction will be interchangeable. The CFO will have strategic foresight bolstered with great relationship and influencing skills. The role will be to make change happen through the art of the possible.”

Clyde Union Pumps’ Allan Dowie saw the role going even further. “I see the CFO moving more into the COO box with more emphasis on further managing external relationships. In future, I think we’ll be thinking less about finance, and focusing more on taking business-critical decisions.”

In terms of facing the future, we asked a sub-group of respondents to answer: ‘How will the top finance roles change most moving forward?’

“The CFO role is going to evolve further to focus on

growth and delivering change to adapt to the market.”

William Medlicott / ITV

“This job has to be at the level where we’re not concerned about the minute details,

because we can delegate these to trusted managers.”

Gary Brown / Umbro






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The up-coming challenges for CFOs

For Allan Caven, a group FD from the East Midlands, it’s about cementing finance’s hard-earned respect in the business. “Businesses are now looking for real direction from finance. As a result, commercial and communication skills are key. We must now live up to our billing as an integral part of the business – we’re no longer just a necessary evil.” Adecco’s Neil Martin added: “CFOs must make the most of a very fortunate position of being able to look at the entire business lifecycle from concept to cash. The magic is in then being able to turn more of the organisation’s income to a positive on the bottom line.”

For a number of CFOs who have been through major change, the way forward is putting their new strategies into practice. That’s the case for Gary Brown at Umbro: “The last year has been about strategy development, now the focus is on execution, taking the brand into new markets and regaining brand control. Finance has to be an active and involved player in this demonstrating our position as ‘value champions’.”

For all, the demand is to take the ‘commercial co-pilot role’ more than a trusted adviser and integral to driving the business forward. Southern Water’s CFO Mike Jones summed up the complexities of the challenge. “The scale of the role is ever-widening. It’s about business development, security, stakeholder management and keeping on top of the regulations. There are two distinct sides of business and I often wonder how I can fight the alligators and drain the swamp at the same time!”

The challenge for all is to extend the capabilities of their financial systems beyond core activities into new areas integral to driving productivity gains higher.

“Finance has to be an active and involved player in this

demonstrating our position as ‘value champions’.”

Gary Brown / Umbro

“The scale of the role is ever-widening. It’s about

business development, security, stakeholder

management and keeping on top of the regulation.”

Mike Jones / Southern Water






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Details and methodologyThis report was researched and written for Badenoch & Clark by Mark Shanahan of Leapfrog Corporate Communications Ltd.

Over 40 Interviews were conducted between November 2010 and January 2011 by Mark Shanahan and Badenoch & Clark’s Dave Fleming, Ian Machell, Ben Searls,

Penny Penman, Michael Quinn, Richard Hatchett, Mark Norrish, Kay Senior, Danielle Coleman, Jenny Burton, Helen Goold, Maureen Ford and Tom Cliffe.

We are all immensely grateful for the time and candour of all the contributors to the report.

About Badenoch & Clark Whether you’re looking for a fresh career challenge or you’re an employer looking to recruit talented professionals, you’ll appreciate working with a recruitment consultancy that really understands your needs.

At Badenoch & Clark we focus on connecting the right organisations with the right people – whether for permanent, interim, contract or temporary accounting and finance positions. We understand that it’s much more than filling vacancies. It’s about making the right connections between skills, cultures and roles.

Our clients tell us that we’re particularly good at getting under the skin of their

organisations, understanding their precise needs and getting a good feel for their culture. And our focus on building industry knowledge means we can advise on broader recruitment trends in your industry.

Our UK-wide presence means we have the strength and depth to deliver a truly tailored service. It’s not a one-size-fits-all approach. We tailor our advice to your particular needs. We listen.

Which means that when it comes to building your team or finding your next career move, there can by only one choice of accounting and finance recruitment partner.

Related articlesCareer planning essentials for employersA Badenoch & Clark guide

Developing your career planA Badenoch & Clark guide

Employer branding essentialsA Badenoch & Clark guide

Your personal brand: making yourself attractive to employers A Badenoch & Clark guide

Copies can also be requested from Margaret Emmens at [email protected]

Other Badenoch & Clark resources

InsightRegular analysis of current trends in your market. Visit www.insight.badenochandclark.com

ConnectionsOur unique magazine for customers and contacts of Badenoch & Clark, published three times of year. Packed with comment, opinion, news and analysis on recruitment, talent management and broader business issues. See past issues at www.badenochandclark.com

Career guidesA series of ‘how-to’ guides for employers and employees focusing on topics including employer branding, career planning and work-life balance.

www.happinessatworkindex.co.uk A quarterly index tracking employee happiness across the UK office workforce. Results by profession and region.

Contact usFor more information on our workplace study please contact: Heidi Waddington, Operations Director Accounting & Finance on 01179 251 600 or at [email protected] Margaret Emmens, Marketing Manager on 020 7300 9235 or at [email protected]




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the cfo strategic expert and commercial co pilot - a workplace study

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