Richard Rose, the CFO of Premier Oil, is no stranger to adversity. When the oil explorer endured a two period he describes as “torturous” due to falling oil prices and a major failed project, he endured the challenge of returning the group to prosperity. It would be a test of his and colleagues’ mental strength.
Although the FTSE-250 constituent is still burdened with a £2bn debt pile, some wily deal-making has set the group back on course. Although this was partly due to the professional and technical skills of the management team, another key ingredient for ensuring the £1bn firm is back on track has been the resilient mindset of Rose and other senior managers at the group.
“You’ve got to have a thick skin and be resilient and be willing to bang on the table because it’s a difficult, stressful process,” says Rose reflecting on how he and his team conducted themselves when fielding tough questions from debt bankers. “You’ve got to stand up and believe this is what we’re going to do, and this is how we’re going to move forward,” he adds.
The situation faced by Premier Oil’s Richard Rose may have been a one-off scenario, but the level of stress is one that many finance leaders many will recognise. Rising levels of competition, as well as disruption from many sources and increasing geopolitical uncertainty are all combining to shake the confidence of finance leaders- who are being given ever greater levels of responsibility and wider remits.
Mark Freebairn, a partner and head of the financial management practice at global search firm Odgers Berndtson, says the volume of issues and challenges businesses have to deal with is increasing, rather than decreasing, making life challenging for finance leaders.
He adds that because the role of CFOs is no longer siloed in the finance function, but horizontally across every part of the business, their ability to deal with and cope with all of those issues is much more necessary. “I think they play much more of a leadership role within the organisation, and so therefore they are much more heavily involved in trying to help drive and develop an organisation’s culture. That’s never easy and is often seen as stressful,” he says.
“Because they’re much more of a leader to a broader function, with finance looking after a number of functions outside of finance, it is increasing the stress levels and the range of emotional intelligence needed in how they manage all those people. With more required of them, the level of mental robustness needed is increasing,” adds Freebairn.
He says that finance leaders that can learn from the experience of difficult periods in their career will be well placed to mentally cope with new challenges. “What doesn’t kill you makes you emotionally stronger,” he says. “I think most people who have been through troubling and traumatic times in a business context, assuming they’ve come out of it and it hasn’t harmed their reputation, will ultimately benefit. When you’re back in the daylight, it makes you more resilient,” he says.
Andrew Harding, chief executive – Chartered Institute of Management Accountants (CIMA), says what differentiates a good CFO from an average one is about the emotional intelligence they bring to the role. “It’s about the emotional intelligence, influencing skills, leadership skills that they bring, here we’re doing a lot of work, a whole series of short videos which we call the ‘Human intelligence’ series, to get an insight into things that help them to develop that skill,” he says.
Value of technology
Odgers’ Freebairn says that although the role of finance leaders is being made harder by the breadth of responsibility, this is balanced by an ever greater opportunity to capture insights from data that can aid effective decision-making.
“The CFO has the greatest command of data, in an environment where data drives decision-making. In vast swathes of business now the decisions are much more nuanced, and the requirements around a business understanding of the discussions they have, they’re going to use data to find the argument, find the decision,” he says, but with a warning: “You can just use numbers to back up your argument with the sales director, but this approach will also leave a lot of people cold,” he says.
What’s certain is that a blend of data-based insights to support decision-making and a highly developed level of emotional intelligence are all combining to help give finance leaders greater resilience. This is vital for withstanding the stresses and strains brought on by the current business climate.
But there’s also a much greater demand from organisations to test in advance whether potential leaders are mentally resilient, says Freebairn “The level of psychometrics we now bring to bear in the process to explore these types of things has increased from never happening to being pretty much a constant request in any recruitment process,” he says.
“Why is it that you want people with that level of mental robustness? It’s because you’re going to be putting them into situations where you’re going to test them, in moments of stress,” says Freebairn. “In many situations you can feel like it’s the future of the business on the line, if you don’t have mental robustness the fear is that the whole business could be imperilled,” he adds.