Five card trick: what to look for in today's FD

Since the launch of Financial Director in 1984, we have interviewed hundreds of finance directors and met and spoken with perhaps thousands. But we, as do our readers, remain intrigued by one question: what does the perfect finance director look like?

To some extent the answer to that question has changed over time. The vastness of global enterprises, the onward march of technology, the growing complexity of business models and the multi-headed hydra of regulation have certainly made the role more challenging. But it’s a moot point whether, fundamentally, the role has really changed. This year marks Financial Director’s 25th anniversary, so it’s a good time to look back at our interviews and features on the role of the FD to try to put together a picture of the characteristics that make up the (mythical) perfect FD.

Our very first issue, in October 1984, carried an interview with Geoffrey Mulcahy, then the chief executive of Kingfisher. “The financial director is in an almost unique position, apart from the MD, of being involved in all aspects of the business,” he told us, giving us the one quote that we have used most often whenever asked what it is that FDs actually do. (It is a sad irony that we should be marking our anniversary just as Kingfisher’s main business, Woolworths, heads for oblivion.)

Mulcahy’s words were echoed by the Bank of England a year later when it said, “We believe… that there is an important role to be played by a finance director who, apart from the managing director and the chairman, will be best placed to take an overall view of the business.” The reason why the Bank of England was concerned about FDs was because, at that time only one major clearing bank, Midland (long since subsumed into HSBC), had an FD on the board of directors – and because a hitherto obscure operation called Johnson Matthey Bankers had recently gone bust, without the help of an FD.

The Bank drew attention to perhaps the most important key characteristic of a leading FD: “It is not an easy role, as the finance director must be prepared to question and challenge the decisions of his colleagues.”

Strong and dependable
A dozen years later, in our December 1997 issue, we interviewed Sir Lewis Robertson, a company doctor, then aged 75, who claimed to have hired and fired more FDs than anyone else. Undoubtedly, his view of the ideal FD was coloured by his career in rescuing businesses that had gone off the rails – hotels group Stakis was his most famous success – and by his pre-war training as an accountant in Dundee (“soul-destroying”, he said, though it gave him “marvellous training in numbers”). Sir Lewis’s preference was for “one of these granite-jawed Scottish chartered accountant types who rarely smile, but whose numbers are always absolutely dependable.”

You may lack the looks – or the accent – that he wants, but Sir Lewis made the point that that sort of characteristic gave the FD the necessary integrity and degree of independence: “The FD needs to be prepared, if push comes to shove, to stand up and say, ‘This is not actually right. We can’t fudge it. The numbers will not work.’”

Our first issue gave us another insight into what the FD should look like. At the time, British Telecom was on its way to privatisation and it was the job of Doug Perryman to prepare the finance function for the harsh commercial realities that awaited. What he found when he joined three years earlier was a finance department that “was stuck like a limpet mine on the side of the battleship, but having nothing at all to do with driving it,” he said. By the time of our interview, Perryman had dramatically transformed his team and, indeed his role, making himself what we described as “a fully participating strategist on the board”.

Where the role of the FD, therefore, truly has changed is in the once-public sector organisations that have been privatised. In the commercial world, the fundamental job an FD is paid to do has, perhaps, changed less. In September 2001 we interviewed John Coombe, FD of GlaxoSmithKline and at the time chairman of the influential but low-profile organisation, The Hundred Group of Finance Directors. He told us, “Since I became an accountant, people have been asking whether the accountant is going to have to be strategic and stop being a beancounter. For 30 years people have been asking that question. And 30 years ago it was a stupid question.”