Number crunching to power lunching

Headhunters are looking for a broad range of management experience to make the grade. Even then, it is unlikely for an FD to make such a leap straight out of finance, unless it’s an internal promotion to succeed the CEO.

Accountancy Age’s sister magazine, Financial Director, produced a study on the performance of FDs-turned-CEOs in September 2003. It found that, by and large, CEOs who had previously been an FD helped their companies outperform the stock market average in terms of total shareholder returns.

The description of FDs as number-crunchers who lack leadership qualities, has long been viewed as old-fashioned. ‘A lot of finance directors see themselves as general business people with a portfolio of experience and skills,’ says Alison Hill, senior partner at executive recruitment agency Korn/Ferry.

Mina Gouran, Korn/Ferry’s head of board services, adds that FDs have to be able to think commercially and contribute to the overall strategy of the business. ‘I can’t tell you how many times we hear the phrase: “We don’t want to be accountants”,’ she says.

Despite the strategic responsibilities that FDs hold, experience within the finance function will not be enough to earn a ticket out of the role.

Financial Director’s survey revealed that nearly all of the CEOs who had been FD at a different company held broader roles before taking up the ‘top job’.

‘A company seldom chooses a finance director to become a CEO when it’s recruiting externally,’ says Gouran. ‘When an organisation looks externally for a chief executive, it usually looks for someone who is already in general management,’ agrees Hill.

Gouran adds that the risk falls dramatically when the candidate for the CEO’s job is an FD within the organisation, as the board is usually aware of their strengths and weaknesses.’Would an FD vote for someone to run their company who had served in finance and nothing else? As the voice of risk analysis, I think most would want to see a track record; something broader before saying yes,’ says Hill.

However, both Gouran and Hill make it clear that, whether an FD looks to make the move to CEO internally or externally, general management experience is a key requirement. ‘FDs must make themselves more visible and bring their skills to the fore. They must also develop communication skills and take on tasks above and beyond,’ says Gouran.

‘Look at Chris Woodhouse (former Homebase FD and serially recruited by private equity firms). He is seen as a general commercial animal – not so much an FD – who can see through the numbers and drill out where the value is in the business,’ says Gouran.

A chief executive appointment is by no means the only career move open to an FD. Korn/Ferry is increasingly asked to do international searches for FDs or CFOs to work in the US, mostly due to the value attached to UK accountancy qualifications. ‘UK finance directors, with that base, that grounding, are highly respected,’ says Gouran. ‘The US corporates are looking to fill audit committees and chairmanships with our finance directors.’

Hill says: ‘The impact of recent negative accounting publicity means it has never been more important to have a robust, well-run finance department in an organisation.’

‘I’m pleased not all FDs want to be CEOs. I recently asked one FD, “Why, when you had the chance, when you could have gone for a more senior role in your organisation, didn’t you?” He said: “I knew I was one of the best FDs, and felt I’d make a good CEO, but not one of the best.”‘

This is an edited extract of an article that first appeared in the February issue of Financial Director.