Of course he was right. No amount of skillful presentation can spin bad figures into good ones. However lessons can be learnt from the events surrounding beleaguered companies in America.
FDs, if they are not already doing so, would be crazy not to benchmark their skills as a matter of urgency to ensure they are communicating effectively. People with poor presentation skills are usually lacking in confidence. Without confidence how can you stand up and tell it like it really is?
Of course many FDs feel they are already adequate communicators. Some profess excellence in this black art. Experience shows that the reality is not always the case.
Self-delusion is a phenomenon many senior executives suffer from, but FDs in particular are often the worst offenders. Quite simply they can be dismal at getting their message across. In the end it all comes down to being able to communicate a true and fair assessment of what really is going on within a business.
Take Enron, we are told that senior finance people within the company had shown that a particular type of transaction was perfectly legitimate and complied with the US rules-based accountancy standards. The issues however hung on just how many and the totality in dollars subsequent transactions turned out to be. In short, an insignificant transaction was multiplied several fold and became disastrous for the company. Had the senior finance people communicated effectively with their colleagues then the Enron debacle might have been avoided.
So why don’t finance people communicate early and accurately enough to those who need to know ? Is it a lack of will or skill? Probably both. The average FD never went into accountancy on the basis they would have to speak to anyone.
And of course modern corporates militate against the FD being perceived as ever being truly successful. After all, when things are going well the CEO takes the credit, when things go badly it’s often the FD that gets the kicking. And yet FDs are increasingly relied upon.
More than just bean counters
Recently I led a think tank at the Richmond Events Finance Directors’ Forum on board Arcadia. Here we were discussing the future role of the FD. It became apparent that although FDs are sometimes still treated as mere bean counters they tend to be relied upon more and more. This can lead to them being a dumping ground for everything difficult the company has to deal with. Depending on size an FD can find himself handling everything from company secretary roles through to IT and even HR.
So how should an FD communicate effectively? Is he by dint of his nature doomed to be a poor communicator? Take heart. There is a worse group – actuaries! FDs need to recognise how they are perceived by those they seek to influence. I recently talked to a number of their audiences. Their fellow executive directors and in particular chief executives said one of the key issues was, ‘no surprises’. Interestingly, this was echoed by many FD clients. They thought an FD’s ability to flag up issues before they turned into a crisis was a highly valued attribute.
Non-executive directors felt the same, but it has to be remembered that although some NEDs do have finance backgrounds many often don’t. An FD should try to cultivate these individuals and, it has to be said, educate them too. A golden rule we offer clients seeking to become effective communicators is, ‘never underestimate the intelligence of your audience and never overestimate their knowledge’.
All too often FDs use jargon and mandarin-like phrases that soar over the heads of their board colleagues, who are often too embarrassed to ask for explanations.
Insight into the numbers
This brings me to a highly critical issue to do with content. The facts, as Oscar Wilde said, ‘are seldom pure and never simple’. A good FD will offer interpretation. One in my think tank suggested that an FD’s role was to offer an insight into the implications of the various choices put before them. I don’t think you can put it any better than that.And what about internal audiences? Here again we have worked extensively with FDs who have to explain, for example, the ramifications of a new share option scheme or (here’s another hot potato!) new pension arrangements.
FDs often find themselves overly focused on one point of view – their own. It is critical, particularly when dealing with and trying to influence internal audiences, that you turn the telescope round and look at it from the audience’s point of view. In short they will want to know what’s in it for them. Pensions is a classic example of where the same message delivered to two completely different audiences (the workforce and the board) can have a completely different interpretation and effect. With several major trade unions warming up to use pensions as their new battleground, FD’s would be wise to sit up and take notice.
Which brings us finally back to the City. Could presentation skills have saved Enron? Well yes and no. As Shakespeare said: ‘There is nothing either good or bad nor right or wrong but thinking makes it so.’ What an FD has to ensure is the corporate message tells the truth and truth can often not just rest on facts or the suggestion that rules have been complied with. Remember true and fair? In the final analysis great presentation is about truthfulness and fairness – concepts that can be forgotten when greed and corporate imperatives drive communication.
- Khalid Aziz is chairman of spoken communication consultants The Aziz Corporation.
Mark McMullen joins the private client services team from Smith & Williamson
Merger between Clear & Lane Chartered Accountants and Magma Chartered Accountants was finalised on 3 February
BDO has taken its new partner intake to 23 during the first half of its financial year, including the appointment of five partners in five weeks
The firm reports 7.6% global fee income growth for the year ending 31 December 2016