Strategy & Operations » Business Partnering » These are the skills CEOs want in FDs

Raj Gandhi, IoD course leader for ‘The Role of the Finance Director’ explains what CEOs expect from their finance directors and the skills FDs need to succeed.

As challenges continue to amass for businesses on multiple fronts, including digitisation, market disruption and global economic uncertainty, the role played by the finance director is changing at a rapid pace.

FDs are no longer able to rely purely on their professional qualifications and experience of the latest accounting standards; these are a given. Any financial director that relies on such baseline criteria is going to disappoint the CEO, the board and many other stakeholders, internally and externally.

Today’s finance director is expected to contribute more strategically, become commercial, and move beyond the traditional reporting and compliance role. Being an FD requires tackling multiple priorities concurrently, alerting the board of any issues, and highlighting calls to actions.

To succeed in such a dynamic environment, it is incumbent upon FDs to empower themselves with the relevant tools and training. Doing this requires careful introspection to identify any knowledge and skill gaps.

As a leader for the Institute of Director’s (IoD) Role of the Finance Director course I regularly meet FDs who are keen to ensure they possess the required depth of training and qualifications needed to succeed.

There is a recognised need to focus on initiatives that enhance the chances of delivering success on the ground because, ultimately, the finance director will be judged on his or her ability to work alongside the CEO.

They must exude a confidence that is matched with delivering results, while demonstrating a ‘can-do’ attitude.

Strategy

It is clear that many CEOs now require their finance directors to immerse themselves in the entire strategic process, as well as track progress.

A key point, therefore, which needs to be highlighted from the outset, is a need for the finance director to invest a considerable amount of time and energy in gaining a solid understanding of the business model.

Soft skills

CEOs are also demanding more engagement with fellow directors and an increasing degree of diplomacy and tact. This can be a hard ask for any finance director who has little experience of strategic management and who thus far has not invested effort in developing soft skills.

They must develop interpersonal skills that allow them to connect, listen and communicate more succinctly with non-financial colleagues, avoiding jargon. These attributes take time to develop and typically require structured training and sometimes mentoring.

Leadership

Stakeholders demand more by way of financial leadership, business intelligence, performance trends and incisive reporting. They expect finance directors to propose choices that align with strategy and demonstrate much deeper understanding of the business and shock events.

One key development area for finance directors is financial leadership at a practical level. It means finding out what is expected of them (again, by their CEOs and other stakeholders) and then contributing much more purposefully.

FDs have to learn about proven practices to implement and monitor strategic initiatives, and how to develop their financial strategies along the way.

It requires an understanding of critical success factors, alongside an appreciation of the need to broaden their skills base. They need familiarity with treasury and liquidity management as well as techniques to mitigate risks arising from volatile markets (interest, commodity and currency risks) – all so crucial to ensuring business survival.

Finance directors are therefore beginning to embrace leadership and accountability much more and are starting to ask the ‘right questions’, although this continues to be a challenge for those who are struggling with the transition in mind-set from a traditional management role.

Governance, risk and regulation

Linked to this is the requirement to embed sound corporate governance and risk frameworks that tackle opportunities and threats to strategy, and to deal with the ever-changing regulatory and compliance landscape.

Finance directors are now sharpening their focus to avert potential damage to businesses, as well as personal reputations, that arises from mismanagement and are increasingly working with the chief risk officer and chief information officer.

Recruitment

Talent management in finance is receiving renewed focus, with attention turning to the hiring strategy in order to build effective teams that meet this expanding remit.

Finance directors are now acknowledging the challenge to find such a diverse skillset in one individual and are taking action to nurture teams that collectively possess the desired technical as well as soft skills.

This enlightened approach is opening up the prospect of rotating talented individuals across different disciplines, thus facilitating succession planning.

Finance directors are also delegating more, by hiring people who they can trust. The hiring strategy concentrates on those individuals who demonstrate the desired attitude, agility and team-working spirit. Formal qualifications are a given at this stage.

Reporting

Reporting is moving to a new level, with more decision-friendly business intelligence providing valuable insights on what the competition is doing and what performance trends are developing.

The process for compiling budgets and rolling forecasts are undergoing a critical review, with questions levelled on their merit and whether they help drive the business forward.

Incremental processes are giving way to outcome-and-event driven philosophies, linked to tracking progress with corporate strategy.

Final thoughts

Today’s finance director needs to possess and demonstrate a wide range of attributes and skills to deliver against CEO and stakeholder expectations.

FDs are required to chart and steer the organisation in a transparent manner, partner with IT and risk functions to pool expertise and tackle a variety of new risks to the business (cyber, social media), while also confronting the avalanche of information available through big data and analytics.

FDs cannot rely solely on academics or the traditional experience of a finance function to steer them through this new evolution of the role. Soft skills, strong leadership, strategic vision and technical ability are what is expected of the modern FD and CEOs will be on the lookout for finance leaders who can deliver this.

 

By Raj Gandhi is an IoD course leader and founder and chief executive of GGV London. Prior to GGV, Raj was chief financial officer of London Capital Group and worked at Royal Dutch shell as global treasury audit manager & business analyst.