Talking numbers: speaking their language?

The gift for interpreting numbers is an essential skill for any FD and
particularly for aspiring CEOs. Finance directors are rightly admired for their
technical skills and ability to decipher the mystery of the P&L, the erosion
of the gross and net margins and the effects of tax charges and currency
fluctuations on the bottom line. But the true value of all this is only unlocked
if softer skills are also mastered.

The finance team is often criticised for only speaking to itself and its
peers. The effort involved in explaining NPV, liquidity ratios and the need for
gearing to the sales and marketing team doesn’t always seem like a good use of
time. But while not everyone is fluent in the language of finance, communication
is a key skill that FDs need to master.

A survey by the ICAEW found that senior finance professionals value
commercial skills above leadership and communication skills, while those lower
down the career ladder place communication skills at the top of their list of
priorities. CEOs on the other hand place leadership and communication skills
firmly at the top of their list of key requirements.

So are communication skills really that important? Are financial skills alone
enough for the modern FD? The answer is most emphatically ‘no’ and certainly not
if the FD has aspirations to become CEO.

‘Touchy-feely skills’ ­ as one AIM listed company’s FD called them ­ are
paramount because FDs, like other directors, spend a lot of their time
communicating with and leading others.

Finance affects everyone touching a business ­ the suppliers, customers,
employees, investors, local communities etc. So whether FDs are delivering
punchy presentations to a highly discerning analyst and investor audience with
high expectations, or trying to cut costs, effective communication is vital. A
poor performance does not reflect well on either the FD or the company.

So what makes a good communicator? There are a number of relatively simple
steps you can take that will make a huge difference to your communication:

• Identify the key messages. Make them strong, clear, consistent and as
simple as possible

• Identify the stakeholders. An FD needs to think who they are trying to
communicate with and tailor the message accordingly. The messages should be
complementary but are likely to have different focuses. During the sale of a
company, investors want to know if they are getting a good return, while
employees want to know their jobs will be safe.

• Choose appropriate communication channels. Different audiences engage
through different channels. Investors are likely to read the press and analyst
reports, while customers may sign up to a newsletter and staff find information
through their managers, internal emails, the intranet and departmental meetings.

• Communication is a two way process. Your stakeholders are likely to have
questions about what you are saying or why you’re not saying anything. If you
don’t address these questions, then the resulting rumour, speculation and
uncertainty can lead to misinformation that it is very difficult to correct.
Communicate with your stakeholders regularly, think about the questions they are
likely to ask and make sure relevant information is readily available.

Arun Sarin, the 2007 winner of the PRCA Cision Business Communicator Award,
is a good example of a great communicator. Despite a very troubled period during
which he came under prolonged personal attack, the Vodafone chief’s clear
enunciation of the network’s twin strategy of chasing emerging market growth,
while simultaneously competing on content in mature markets, won him support. It
was the strength and consistency of Sarin’s communications that persuaded
shareholders to back him, enabling him to complete the landmark acquisition of
Hutchison Essar in India.

Involve the experts

The numbers on a balance sheet look the same whatever colour the PowerPoint
slide, but the words used to explain them will have a big effect on the reaction
of investors, the board, the media or staff.

In the same way as you decipher the P&L, PROs (public relations officers)
will understand what you need to communicate, with whom and how. Many companies
will have in-house communications expertise, however, where additional capacity,
a fresh perspective or specialist expertise is needed, there are numerous PR
consultancies who can advise you.

Media savvy

Good communication with various stakeholders needs to be complemented by the
development of productive relationships with those who influence them – the
media. This can be a sensitive issue: some CEOs are reluctant to give their FDs
‘equal billing’ when briefing journalists. However, in our experience, business
journalists are always keen to hear from FDs, particularly in the bi-annual
reporting season, and FDs should be confident in their ability to respond to
rigorous questioning.

In normal circumstances, media briefings with specialist financial or
business sector media are pretty straightforward. The journalist will be
immersed in the company’s business sector and will be familiar with the
company’s recent performance. In short, the journalist will have a number of
specific ‘technical’ questions which can be answered without ambiguity.

Problems tend to arise when the FD is briefing a journalist who has limited
understanding of the sector and/or ignorance of how companies work – and it
happens more than you think. Here the onus is on the FD to ensure, without
sounding patronising, that the journalist understands what they are being told
so that the resulting copy is factually accurate.

There are, of course, a number of dos and don’ts:

• Ensure that your responses are supported by written information.

• Always assume that everything you say, however peripheral to the main
discussion, is ‘on the record’.

• Avoid, whenever possible, the ‘no comment’ option. The journalist will
assume that you have something to hide.

• Make every effort to respond to media enquiries as quickly as possible.
Clearly the FD may have to consult with other parties to agree a suitable
response, but the journalist, who is usually fighting a deadline, must be

Diana Soltmann, chief executive of Flagship Consulting,
on behalf of the PRCA

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