BusinessCompany NewsGetting back in the saddle

Getting back in the saddle

Financial scandal may seem like the end of the line for an FD but there is a way back.

When Judy Boynton’s departure from Royal Dutch/Shell was announced last week, much was made of her lucrative severance package – but very little was mentioned about her future.

The former Shell CFO walked away with £1.5m worth of cash, shares and pension entitlements – more than enough to keep her bank balance in rude health for some time. But while Boynton’s personal finances may be in tip-top condition, pinning-down her career potential is less certain.

Will employers be prepared to give an ex-financial director associated with the Shell reserves reporting scandal a second chance? Or is making that one bad call the knockout blow that will end career prospects for Boynton – and other FDs in a similar situation – for good?

Mark Freebairn, partner and head of CFO recruitment at Odgers Ray & Berndtson, says that, for a FD, the repercussions of making an error are more severe now than ever before.

‘Corporate governance, Sarbanes-Oxley and the implementation of rigorous international accounting standards has given added weight to negative publicity,’ he says.

‘Increased scrutiny has made directors risk-averse and hesitant to hire candidates with tainted reputations.’

However, even though the stakes have been raised, a nasty departure does not mean that a FD will never work in a high-profile position again.

For John Collier, a director at Executive Recruitment Company Clive & Stokes International and a former ICAEW secretary general, there will be life after Shell for Boynton – as there will be for any FD leaving a company controversially.

‘Irrespective of the circumstances surrounding her departure, Boynton had worked her way up to the top of a major corporation. She must have had significant ability to do that, and her skills could be put to good use elsewhere,’ says Collier.

‘An FD’s ability to do the job is the most important thing – not a pristine, unblemished reputation.’

Former Stakis hotel group FD Neil Chisman believes it would be short sighted to exclude experienced FDs for no other reason than being associated with a contentious incident.

‘Employers should be broadminded enough to realise that one mistake does not impact on talent. They can’t deny that a candidate who has already held a high-profile position must be capable,’ he says.

Chisman even goes so far as to suggest that making a major blunder could even appeal to companies: ‘One thing an employer can be sure of is that if a candidate has made a big error in the past, he or she is unlikely to do it again.’

So, how should a CFO linked with a hullabaloo go about picking up the pieces and landing another high-profile position? According to Freebairn, managing publicity, watching the job market and staying patient are the key to rebuilding a career.

‘An FD who has been sacked from a FTSE100 firm is not going to land a position at another FTSE100 company the next day. FDs need to manage the media response to their dismissal, time future job applications intelligently and give themselves time to re-establish their careers,’ says Freebairn.

Enlisting a public relations consultant has become essential for managing the aftermath of a sacking. Ignoring public criticism and forging ahead professionally and stoically is no longer an option. FDs, who are often dismissed for factors beyond their control, need to publicly fight back and defend their integrity.

After a dismissal, an FD should consider a stint with a private company or move into a non-executive board position or private equity. By running a private business profitably, or making money for a private equity firm, an FD can get out of the public domain and resurface after 18 months with a restored reputation.

‘Once you are making businesses money again, past discretions seem to be forgotten. Time out of the spotlight allows controversy to blow over and provides an opportunity to rebuild,’ says Freebairn.

When an FD decides to re-emerge from work with a private firm and chase a position with a FTSE250 company, timing becomes crucial. FDs should wait for an opportunity when the number of potential candidates hits a lull.

An FD publicly fired for a business’s poor performance is going to have more difficulty finding a job when there are scores of other applicants around, than when the candidate market is quieter.

Through managing a damaging dismissal correctly, FDs have every chance of bouncing back. ‘A controversial departure does do short-term damage to an executive’s career,’ says Collier, ‘but in the long-term it becomes nothing more than a small blip in an otherwise very successful career.’

If there is anybody who knows how damaging a bit of scandal can be it is Ric Piper. Piper was fired from his job at Trinity Mirror before he even started, after a new billing and payroll system at his former employers WS Atkins flopped, causing shock profit warnings. Piper contested his dismissal and received an apology and compensation from WS Atkins. He now serves as a non-executive on a number of boards and is a regular on the lucrative public speaking circuit where one of his favourite topics is managing the publicity after a topical dismissal.

In 2002 Chris Martin, the then CEO of Mothercare, abandoned ship after the shambolic integration of a new warehouse in Northants and the announcement of a third profit warning within a year. It may have looked as if Martin’s career was over, but that was far from the case. Martin stepped out of the public eye, taking up the financial directorship of EUR3.3bn (£2.3bn) Irish wholesaler Musgraves. Martin was so successful that he has since moved upwards into Musgraves’ MD office.

When Martin Gatto resigned as Somerfield’s FD in 2002, he must have thought that Somerfield’s 35% drop in sales and the consequent 47% fall in its share price would hang over his head forever.

It wasn’t too long though before Gatto was working as the MD Midlands Electricity. Soon after that Gatto went one better when he landed a job as the CFO of British Energy – clear evidence that it is always possible to re-energise a career as a financial executive.

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