Qualifications still top of the class for FDs

As many as one-fifth of FTSE 100 companies do not have an accountancy qualified finance director, a study by Accountancy Age’s sister publication Financial Director has shown.

Of the top 100 companies in the country, two did not have a finance director, with 18 not holding an accountancy qualification – including companies such as BP, Prudential, Royal Bank of Scotland and AstraZeneca.

Of the 18 FD’s without an accountancy certification, 10 have an MBA. The spectrum of companies is varied, from brand giant Unilever, to travel operator Thomas Cook, and tobacco company British American Tobacco.

Other statistics in the latest study revealed that the CIMA is losing ground among the upper echelons of the FTSE 100. The first study looking at qualifications was compiled in 1998 when 15 of FDs among the UK’s biggest 100 companies were CIMA qualified. The latest figures show that just eight now hold CIMA membership.

The ICAEW showed an increase in FTSE 100 FDs from 51 to 55 with the CIPFA not appearing at all this time round compared with two finance chiefs holding the qualification in 1998.

The biggest drop in institute numbers comes from the Association of Corporate Treasures who saw their numbers fall from 13 to just seven.

The plunge is due to a change in the admittance criteria for membership to the Association of Corporate Treasurers. Membership could once have been won by gaining enough professional experience. However, the ACT now requires prospective members to pass an examination before they are admitted.

The South African Institute of Chartered Accountants saw five of the FTSE 100 finance directors hold their qualification, level with the ACCA and one less than ICAS.

Unilever and BP were the only two companies to continue their track record of non-accountancy qualified FDs. Hans Eggerstedt held the top spot in 1998 at Unilver, with Jim Lawrence, an MBA, now in charge of finance at the brands company. John Buchanan was FD in 1998 at BP, with Dr Byron Grote PhD now heading up the petrol giant.

Broader skills

However experts believe that some industries do not need an accountancy qualified FD to head up the finance function, even in FTSE 100 companies.

‘Certain businesses can recruit FDs with various skill-sets, with finance not such a dominant skill – such as mining and financial services,’ says Mark Freebairn, a senior finance recruiter at Odgers Ray & Berndtson.

‘The skill set for FDs in those sectors is broader and focuses more on the need for social, political and economic skills,’ he adds.

The report supports Freebairn’s comments as mining and financial services feature most strongly for non-accountancy qualified FDs; including Aviva and Petrofac.

Suzzane Wood, managing partner at head-hunter Heidrick & Struggles, says: ‘Companies also want the finance director to create value for shareholders.

‘You could be the best technical person, but if you can’t drive the business forward, you are restricted in your value.’

She believes qualifications can be cyclical. ‘Post-Enron, we saw a pendulum swing away from [FDs with a] lack of accountancy qualification. There was more scrutiny on the FD and whether they could keep control of the business. Now it’s as if the pendulum is swinging back again.’