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Herculean effort

CEOs want the modern finance director to be a demigod, top recruiters say

The debate over whether chief executives require their finance directors to
be beancounters or business partners is surprisingly persistent. Many FDs would
like to be seen in a partnership role ­ and have positioned themselves and
developed their functions accordingly. But is this what CEOs really want?

Our four recruitment experts suggest that CEOs want it all ­ they like their
FDs to fulfil both the compliance and the partnering role.

Mark Freebairn, head of the financial management practice, Odgers Ray
& Berndtson

‘If I ask chief executives what they want from their FD, the first phrase they
use is a “business partner”,’ Freebairn says. However, they also want ‘someone
who gives them complete confidence that the numbers are right and that they will
be on time’.
The specific requirements will reflect the nature of the company, whether
public, private or private equity-backed. A public company FD, for example,
needs to inspire City trust.

‘In a public company FD, the CEO wants the combination of business partner,
sound technical finance experience, external communications and the ability to
play a sober numbers-orientated head as the yin to the yang of the outgoing,
punchy, optimistic chief executive,’ Freebairn says.

This sounds like chief executives want it all. Do they? ‘Yes, absolutely,’
says Freebairn. Is that realistic? ‘Yes, as long as the FD is able to recruit a
complementary team that allows the FDs to do what they want to do.’

Though Freebairn accepts that the image of FD as beancounter will take a long
time to disappear, it still annoys him. He says: ‘The collective term for FDs
now should be “sounding board” rather than beancounter. Ask most chief
executives who their right-hand person is, who they would not cope without, and
the first role they come up with is the FD.’

Suzzane Wood, head of the financial officers practice, Heidrick
& Struggles

Wood suggests that what CEOs say they want and what they actually need isn’t
always the same thing. They may say they want a business partner, but they also
need someone with a grip on compliance and governance as well.

‘Chief execs definitely want to own the strategy,’ Wood says. ‘They can get a
bit concerned if the FD wants to have corporate strategy, planning and
development under their belt. Superhero FDs who have ended up with risk,
investor relations, corporate strategy and business development under their
remit are starting to encroach on the CEO’s territory.

‘There’s a potential conflict there. They are almost overstepping the mark.
Some CEOs, when replacing them, recognise they need to prune the business. They
prune the bush to make it stronger, but also as a signal.’

They may want a structure that recognises the board sets the strategy, with
finance supporting it and possibly a separate individual responsible for
corporate development.

The requirements of the FD have shifted more in the past year, Wood says.
Until recently the priority had been to find a safe pair of hands to drive the
growth agenda ­ adding value in recognition of the threat from private equity.
This moved the emphasis away from regulation and governance to growth. However,
there have been a reasonable number of boardroom changes, with new CEOs coming
in. ‘This creates the opportunity for CEOs to reshape how they lead the
business,’ says Wood.

Sarah Hunt, MD and founder of Equity FD and Equity FC
Hunt has particular expertise in recruiting FDs for private equity-backed
businesses. She has found that what CEOs want will often depend on their own
experience in a private equity-backed environment.

Those who are first-time CEOs, perhaps following the buy-out of a business
division, may ‘refer back to what they have seen before’, she says. ‘They may
have been in a larger business with finance providing technical support.’ They
may, therefore, be more focused on hiring a beancounter, rather than a strategic
partner. However, Hunt will seek candidates who can tick both boxes. ‘We want
someone who will be responsible for the figures, but they also have to be able
to show that the numbers mean something, and are able to be a partner with the
chief executive,’ she says.

CEOs who have been FDs themselves tend to have a clearer idea of what they
want in their own FD. ‘They will instinctively know whether someone is a good
finance person, so they tend to focus on that person’s ability to partner them,’
says Hunt. It shouldn’t be about whether the CEO feels they will enjoy going
down the pub with their FD, Hunt stresses. ‘It’s more, can we have a good row
and then be friends again in the morning?’ The CEO needs to be able to tell the
FD their ideas and expect an opinion based on business understanding, not just
on cost control.

Ben Jones, head of the CFO practice, Whitehead Mann
‘The overriding feeling now is that the FD is required not only to be strong in
the numbers, compliance and corporate governance, but to play a role in the
strategic direction of the business as well,’ says Jones. He has, however, seen
a subtle shift in the relative emphasis placed on those requirements.

Over the past four years, CEOs have been asking for FDs who can fill the role
of business partner, someone who will ‘drive the performance of the business’,
he says.
‘Now we are seeing a slight correction in terms of chief executives and chairmen
wanting the CFO to have a very strong handle on the numbers. We have come off
the back of a four-year bull market, but now we are going into a fairly
uncertain 2008, which is redressing the balance between the requirement for a
business partner and someone with really strong accounting skills and a genuine
handle on corporate governance.’

In essence, CEOs, chairmen and company investors are looking for CFOs who
are genuine all-rounders. Jones calls such an FD ‘the demigod’. ‘This is someone
who is not only strong technically, and who has a good handle on corporate
governance, but who can also help drive business performance.’

Has Jones any advice for FDs being asked to meet the requirements of a
demigod? ‘It starts with the CFO creating a relationship with the rest of the
business and creating a finance function that is seen as a peer rather than a
functional tool within the business,’ he says.

This is an abridged version of an article that originally appeared in

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