LOOKING at the 2014 FD Salary Survey, I am intrigued about the various career paths that FDs have followed leading up to and after their first FD appointments and what we all have to do in order to stay ahead. In today’s competitive environment, it is no wonder that the quality of FDs is exceedingly high, but I have also found myself wondering how certain people ever managed to rise to their FD positions in the first place, and how they survive.
As the role of the FD has evolved strategically, it calls for a completely different skillset than it did in the past. A surprising number of recently promoted FDs are not qualified accountants, but are educated in a variety of disciplines, and can demonstrate a rich collection of experiences. The career paths of new and aspiring FDs will bear little resemblance to those of their predecessors. I know a number of FDs who have experience of working internationally, and proficiency in at least one second language is commonplace. It is normal for FDs to have gathered some experience in both corporate and operational roles, with some time spent in a general management position.
Although specialist technical knowledge is useful, the emphasis is now on M&A, relationship management, leadership skills and operational management – so divisional FDs are well placed for promotion to the CFO roles. Mark Freebairn of Odgers identified four mandatory attributes for the role of CFO: guarantor of financial integrity, leader of the finance function that partners at every level of operational management, strategic partner to the CEO, and manager of external relationships.
The marketplace calls for the aspiring CFO to demonstrate capability in all four, and more besides. This tends to rule out FD candidates from audit partner positions although we have seen some high-profile successful exceptions, such as Jon Stanton at Weir Group.
A recent Russell Reynolds report noted CFOs are CEOs in waiting – a trend that takes its lead from the US – so organisations tend to rotate finance rising stars in operational roles. And 50% of CFOs appointed in the last three years include strategy and corporate development experience in their CVs (double the level three years ago). Some 50% had general management experience, and 45% had held an international role. The report also argued that many of the junior roles which were part of the traditional career paths have disappeared through technology advances.
A Spencer Stuart report suggested that some FDs had taken a smaller role in a better organisation to get a foot in the door, and success is determined more by having the right attitude and developing a good leadership style than by following any prescribed career path. Certain well-established FDs and CFOs have broadened their experience by taking part-time roles as non-executive directors, typically as members or chairs of audit committees. This initiative tends to lead to a variety of opportunities that are refreshing and interesting in equal measure, and brings new impetus and enthusiasm to the day job.
It is one thing to gain the first appointment as an FD, but quite another to stay there, to get ahead or to move on to another FD position. In my case, I was never too shy to seek new moves – there will always be others in the race who are fired up with ambition. Longevity in an FD role can be a virtue in terms of organisational knowledge, but it can also cause typecasting, therefore restricting future cross-sector moves. Obviously, we are all being judged constantly on our performance, and we are only as good as our last mistake, so we need to develop the skills to stay out of trouble when that inevitability arises.
The challenge for all FDs is to do everything possible throughout our entire careers in order to stay ahead, but the reality is there is no one-size-fits-all career path. Despite the fashion for coaching and mentoring, no one can tell us how to achieve career success and the most important but underestimated factor is luck itself. ?
Last month the SFD dined at Lancaster House at one of its frequent ministerial events, and contributed anonymously to a roundtable event with ACCA