Does your face fit? The making of a successful FD

In last month’s cover story,
Five card
trick: what to look for in today’s FD, we trawled through our
archive of FD interviews accumulated over the past 25 years to look at some of
the key attributes of a successful FD. We noted how FDs need to have a wide
range of talents, from strong communication skills to the technical accounting
knowledge companies have come to rely on in these complicated times. An ethical
backbone that helps the FD stand up to the chief executive is vital, but we
examined how it’s possible to be entrepreneurial in the role, too. How FDs
relate to their shareholders can be critical, but attitudes to this vary
enormously. And as the chief executive’s right-hand man, we looked at how well
equipped the FD is to be the chief executive.

This month we continue our walk down FD Interview memory lane, looking at how
some FDs switch jobs and even industries with great ease, while others carve out
their entire career with one company. FDs we’ve met often do both, finding a
string of new challenges where they are. Each one, however, has found success in
a company whose demands match their skills and aptitudes.

Chop and change
One issue that has cropped up often is the ability FDs possess to switch from
one industry to a completely different one, rather than having to spend the rest
of their lives in specialty chemicals, financial services, or whatever.

“The FD’s is a more portable skill,” we were told in 1994 by Des Gunewardena,
who at the time was the finance director of Sir Terence Conran’s retail,
restaurants and design businesses. “There is a lot less difference between the
financial monitoring of a car business and a food business than between the
skills needed to sell cars and sell food.”

True, perhaps, but unfortunately for many FDs, CEOs very often regard it
unthinkable that they should recruit an FD from outside their industry,
headhunters tell us. Sometimes FDs share that view. Garry Price, for example, is
the FD of Heinz UK and Ireland and has a preference when he recruits finance
staff to bring in people well versed in the fast-moving consumer goods business.

“They can speak the lingo, they understand the customers, they understand the
pressures with regard to promotions and deals and audiences,” he explains.
“Historically, I think a lot of accountants were viewed as reporters of the news
after the fact ­ – what I call rear view mirror. Really, what we’re trying to
become is business partners.” Hence, for preference, Price goes for those who
know the industry and can hit the ground running.

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.