FD rewind – a retrospective look at 25 years of Financial Director

Mary Bogan
Editor, 1987-1989
By the time I took over the editorship in 1987, the magazine ­ still called Financial Decisions ­ was really starting to find its feet. The interview piece became very much the cornerstone of the monthly title as, indeed, it is today.

But while the strategy was to address an audience of finance directors, the ‘Financial Decisions Interview’ more typically included chief executives and even company chairman. Having a career background as an FD might have helped, but it certainly wasn’t compulsory.

One advantage of this approach was that the magazine interviewed many of the big name business personalities of the day ­ and personalities didn’t come much bigger than Sir John Harvey-Jones who, shortly before his 63rd birthday, had retired as executive chairman of ICI, the chemicals giant whose shares used to be referred to as the bellwether of the London stock market.

Harvey-Jones was just a few months into his retirement when he told us why he was happy to have left ICI. Well known for his long hair, loud ties, plain speaking and for having taken his dog into the office, he steered the troubled chemical group to profits of more than £1bn ­ the first time such a figure had been achieved by any British company. But he had a remarkable modesty: “When I look back over my career, I think it’s ridiculous. I can never really believe that my accomplishments are anything to do with me. I was just your average slob with a bigger job than most.”

More significantly, we witnessed a ‘coming of age’ of the FD. One particularly significant article in June 1988 interviewed FDs Archie Norman (Woolworths), Gerald Corbett (Redland) and Alan Perelman (Dee Corporation): “All are under 40, hold powerful positions on their company boards and have a significant influence on the strategic direction of those companies, but none are accountants.” The latter point is critical: it reflected not an attitude th at the FD role was unimportant and could be done by any general manager as part of his career progression, but rather, that it was an absolutely vital role, far more important and essential to strategic development to leave it to a mere beancounter.
Mary Bogan

Peter Williams
Editor, 1990
Financial Director has always had certain characteristics which have run through the quarter century: strong, purposeful design with a signature front cover that made readers look and think twice, at least; an editorial which played to the strengths of the monthly frequency, no frenetic daily or even weekly schedule, but a thought-out approach to the stories that the editorial team judged FDs would want to read about, including columns which added the sum of knowledge rather than a knee-jerk reaction to events. The profile, in particular, has to be seen as a carefully researched tour de force which so often stands the test of time. It is journalism at its best.

Over the years, the magazine has found a confident voice supporting the work of the FD, but always prepared to offer a fair critique rather than simply slavishly admiring. In the early 1990s, the title changed from Financial Decisions to Financial Director.

Looking back at editions of Financial Director from the early 1990s, is it a question of plus ça change? Was business really so worried about the prospect of a Labour government? The cover story for April 1990 ­ the picture a red rose lying on a metal shard-strewn factory floor ­ was accompanied by the slightly hyperbolic question, “Life under Labour: will your company survive?” Well, we rather jumped the gun on that, as there was another seven years to go before we would find out, although in our defence in spring 1990 prime minister Margaret Thatcher and her government were stumbling badly in the polls thanks to high inflation and rising unemployment.

FDs with acute memories and who have grown up with the magazine will know that some themes have refused to go away: funding and structuring the balance sheet (yes, we were concerned with deleveraging back then), tax, financial reporting and pensions have always been part of the working life of FDs. In February 1990 we were writing about the rise of the convertible bond. Twenty years later, they are back in fashion.
But while we can find comforting similarities there are also stark differences. The early 1990s was an astonishing period of regulatory change. Until that time, corporate governance was a subject mostly discussed by academics and corporate governance codes of best practice were unknown.

The Financial Reporting Council (FRC) was established in 1990 to promote good financial reporting and, at one stroke, edged the auditor out of the limelight over accounting failures. It was clear that regulation was belatedly catching up with business. The Accounting Standards Board and the Financial Reporting Review Panel were also born in 1990 with much needed money, more full-time staff and more legal clout than their discredited and tired predecessor body, the Accounting Standards Committee.

The FRC and its acolytes have proved to be a sensible, even elegant structure designed with some panache by the then-Sir Ron Dearing, a good friend to FDs and the wider accountancy profession. But regulation inevitably begets regulation. The report on The financial aspect of corporate governance (Cadbury to us all after committee chairman Adrian) was published in December 1992. It was the beginning of the proliferation of codes, standards and guidelines and the expansion of the size and complexity of financial reports. In the early 1990s, I believe most FDs could have had a detailed grasp of both the accounting standards and the tax codes. A genius would struggle now to cope with the sheer volume in situ.

Cadbury had been set up by the FRC, the London Stock Exchange and the accountancy profession responding to a series of events, notably the collapse of Polly Peck and Coloroll. As the committee was conducting its work, higher profile failures blew up in the form of BCCI and Robert Maxwell. Maxwell had gone overboard in November 1991 followed shortly (metaphorically speaking) by his business empire, a victim of recession and fraud. In retrospect it seems like a medieval morality tale involving pensions, cash, accounting. If you want to know why FDs are grappling with international accounting standards then take a look at Maxwell’s accounts. The reconciliation between the figures published in the US and the UK should send a shiver down the spine of anyone looking to glean useful information from the accounts. Such different figures, how can they both be right?

Maxwell’s story recalls one personal memory and another stark ‘then/now’ difference. I remember making sure I didn’t let the one copy that the publishing house (home to two dozen titles) had of Maxwell’s reports and accounts out of my sight until I’d finished with them. Now, of course, they’d be on my laptop in PDF form (and soon presumably XML) and I could share them with any number of colleagues. But in the early 1990s no one had heard of the internet, email, broadband, Google (which was to start life as a research project in 1996) and blackberries were still only a type of fruit. Faxes were considered pretty sophisticated office equipment and celluar phones were absolutely state of the art.

FDs have always been in the van of the information revolution and technology. Finance departments, no doubt with varying degrees of success, can now impose control over large and geographically diverse global businesses in way that could not have been dreamt of in the early 1990s. It has also given FDs at least two new acronyms, ERP and SSC. ‘Enterprise resource planning’ was beginning to emerge in the 1990s out of ‘material resource planning’ and the first shared service centres (SSCs) were also stumbling into being ­ both have now been made commonplace by telecom and technology innovations.

FDs’ technology may change but their role within the company hasn’t fundamentally altered. It is a difficult job which requires a challenging skillset which makes you respected and valued more than liked. And that’s why it brings considerable reward. In March 1993 (after I had stepped down as editor), the profile was the FD of National Westminster Bank, Richard Goeltz. One quote in that interview stands out from the American Mr Goeltz. “When I began working, I thought the function of accounting was to reflect economic reality,” he says. “Fortunately I was disabused of that misconception early enough in my career that it did not do serious damage to my earnings power.” May Financial Director long continue to dig up gems like that from the world’s top FDs.
Peter Williams