Career development: stepping out of audit

Congratulations to Jon Stanton, who was recently appointed the new FD of Weir
Group plc. He replaces current chief executive Keith Cochrane and at the same
time enters into a very exclusive group – those that have achieved the move from
audit partner to plc FD in a single bound.

This is no easy move to make and begs the question of why it is so hard to
achieve. Well, there are a number of different issues at play here. In its
simplest form this boils down to two factors – experience and competition.
First, let’s talk about experience. If you were to look at the job specification
for a number of plc FD roles, you would see some common themes:

* Guarantor of financial integrity;

* Leader of a finance function that provides partnership at every level to
operational management;

* Strategic partner to the CEO;

* Manager of external relationships – banks, analysts, investors, etc.

The experience of an audit partner ticks one of those boxes extremely well –
that of financial integrity. At its most basic level, the role of audit partner
is one of ensuring that the person who guarantees financial integrity has done
so. It is therefore fair to say that the audit partner ought to be able to
guarantee it themselves.

However, in other areas, their experience is less strong. An audit partner
may have spent some time with banks and analysts, but it is unlikely that this
exposure will have been along similar lines to a plc FD. This is the same for
CEO relationships.

A CEO looks for a commercial partner, someone who has helped run businesses
before and can add value to the thought process from a strategic perspective.
Audit partners may have been asked to participate in these sorts of debate
previously, but it’s not a core element of their role.

And that leaves us with the leadership of a finance function. Well, the point
here is the same point made about every consultant living today. Those who
advise, advise and those who do, do. Switching from doing to advising is n
ormally easier than switching from advising to doing, and that’s where the
problems come in. An audit partner will have looked at the top of a business and
a finance function for a while – for many years, normally – and, while they will
appreciate the role that a management accountant, or a purchase ledger clerk
does, that doesn’t mean they can lead and direct them as well as they need to

The second issue is competition. You see, if the above issues were looked at
in a vacuum, and all the competitors for a role had the same experience, then
the best of them would win. But that’s not the case at all. In every instance,
the shortlist will comprise several well-qualified candidates. They may be plc
FDs, group FCs or divisional FDs, and they may come from a variety of different
sectors. Any which way, they are going to be well qualified for the role and
they will have a lot of relevant experience.

Against this community, audit partners are going to look less relevant. Any
divisional FDs are likely to have broader operational experience. They will have
worked in more commercial situations and will be able to evidence that
experience more clearly. Any group FC is likely to have stronger external
exposure. They will have under-studied the group FD and, as such, will have
dealt with investors and bankers. And any group FD is going to tick all four

So, if you imagine a typical shortlist, with one of each of these people on
it – well, it’s hard to see how the audit partner is going to be the one person
that wins. And you have to remember that a process will go through an exercise
where over a hundred people will be considered and filtered down to get to the
final four.

Now, all of this is sounds horribly negative for audit partners, but people
like Jon, as well as Chris Lucas (Barclays) and Graham Roberts (British Land),
have proved that you can make the move from audit partner to group FD. But, in
doing so, they have also shown that there are a number of things you have to try
to do as you build your CV to enable you to make the move.

First, get as much experience outside audit as you can. Secondments to
clients are fantastic, experience in M&A and management consultancy is
extremely useful. Essentially, more experience of non-audit work is good.
Second, wherever possible, build a network and reputation in the City. If the
analysts have met you and rate you, then their views on you will add to your
candidature. Also, build as strong a network among your clients as you can.
There is no better pointer than hearing from a chairman or an audit chair that
the audit partner they work with has the potential to be a FTSE 100 FD one day.

The simple fact is that this happens to the few, not the many. If you want to
be a plc FD, audit is a great starting point. But experience outside of practice
will beat experience built inside – unless you are Jon, or the few other
outstanding candidates like him.

Mark Freebairn is a partner at Odgers Berndtson.

names E&Y’s Stanton as group FD

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