Does your face fit? The making of a successful FD

Speaking for themselves, though, many FDs have told us there is a real benefit in switching from one industry to another. Ten years ago, Richard Clapson told us how he went from the ‘rag trade’ ­ Pineapple Dance Studios and fashion retailer What Everyone Wants ­ to join a start-up airline, Debonair. “The jargon is, for an accountant, the only real barrier,” he said. “Once you can understand what the engineers are telling you then you have cracked most of the problems.” What Clapson told us next gels with sentiment expressed by many FDs we’ve met: being new to an industry, you get to ask some really stupid questions.

“I can question anything, and ask, ‘Why? Why are we doing this?’ Very often the answer is quite illuminating. They start asking themselves, ‘Why are we doing it this way?’” But while you’re on that learning curve, he added, “You have to be persistent and not allow yourself to be bullied. You’ve got to fight your own corner. That’s the way you keep the costs down. Don’t get hoodwinked!”

Career minded
Most FDs we’ve met over the years don’t ­ or at least, claim they don’t ­ plan their careers at all. For the most part, they go into accountancy because of an interest in business then eventually stumble into something interesting ­ or not ­ then another thing, before finally reaching the elevated heights to which they’ve aspired for so long. One FD is an exception: Tim Score at ARM Holdings told us in 2002 that he looks at each job offered to him with a view to how it will help him to get the job after that. It sounded clinical, though he was probably simply being more open than most. When we interviewed him, his CV was already long.

We asked about his next job, but he simply said, “It’s too early [into this job] for me to say what specifics one might have achieved, but in three years’ time if I’m looking back on another 12 quarters of beating expectations I’ll be happy.” That was almost seven years ago. He’s still there. In fact, we’re often surprised at the number of FDs we meet who wind up staying put for much longer than they originally expected. A fair wind helps but, if that’s not around, a series of excellent adventures serves as well at keeping FDs in situ.

Tony Conophy, as we noted in our September 2007 interview, has worked for a small entrepreneurial business, on a FTSE-250 IPO, a take-private of a much smaller company and a business that’s seen half its profits disappear. And they were all the same company: Computacenter.

Conophy had been FD there for 20 years, but with the ever-changing nature of the industry in which the business operates, he said it felt like working for lots of different employers. When we met him, his challenge was running a business with margins of 1-2% ­ terrifyingly thin for most FDs, but all in a day’s work for Conophy ­ though he admitted the years of 60% growth were more fun.

Heinz’s Price is another long-serving FD, having notched up 23 years with the company, the last two as FD of the UK and Ireland businesses. Running the finances for Heinz in both North America and Europe has helped keep things interesting for him, but, more importantly, he clearly loves being an operational FD rather than a buy-side corporate financier like some FTSE-100 FDs are. “We eat the soup,” says the finance man who, um, relishes being involved in all aspects of the business, from new product development to taking part in the company’s “adopt-a-store” scheme, in which top managers make regular fact-finding and awareness-raising visits to a supermarket.

Richard Pennycook had a job as FD of a successful business once ­ at breakdown rescue company RAC. He describes it as a “career break” in between proper jobs. Pennycook has made a name for himself as a turnaround expert, having tried to stop the rot and restore the fortunes at Laura Ashley and HP Bulmer. Now he’s at Morrison’s Supermarkets which went horribly wrong after biting off an acquisition that it couldn’t swallow: Safeway. One of the key tricks, he told us last June, is to stay emotionally detached from the company you’re turning around. “You didn’t create this mess, and it can be very negative if you somehow assume all the guilt for what’s gone wrong,” he says.

He reminded us of Eric Tracey, a Deloitte audit partner who had never been an FD when he was asked to go into PFI group Amey on barely a moment’s notice. The shares had crashed so badly, the value of the business fell from £1bn to barely £60m. As he told us five years ago, within 48 hours of his arrival Tracey was presenting the group’s finances to the banks who were reading the fine print on their covenants. “I started my presentation with the words, ‘These are not my figures and I take no responsibility for them,’” he told us. “‘They will be subject to an Eric Tracey audit and I will get back to you.’ That was the start of rebuilding our credibility.” Worse was to come: Tracey realised that the already-declared interim dividend would have to be cancelled.

Into the breach
What’s always striking in these sort of situations is the immediacy with which priorities are set and actions are taken. It’s all good exciting stuff. Just as interesting was the approach taken by Chris Woodhouse who had the good fortune to be installed as finance director of Homebase when it was acquired by a private equity group. “You have got to get people to work as if they are in a crisis,” he said.

We have often been told ­ by headhunters and by Michael Queen, former FD of 3i ­ that if you are the incumbent FD in a company that is the subject of a management buyout, there is a non-trivial chance that you will get booted out. Partly it’s a skill-set thing, as the resident FD of a business that used to be part of a larger corporation will typically lack the necessary experience of working with banks and negotiating deals; partly it’s a culture thing, and the whole cut-and-thrust of the private equity world where huge returns are demanded and expected. The sitting FD, Queen told us, is often “doing a good financial controller’s job, but not really adding value strategically to the business.” That’s when “upskilling the management team” becomes the euphemism du jour.