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ACCOUNTING – Interested in a top FD’s job? Then take a sight test

Earlier this summer J Sainsbury announced that finance director Rosemary Thorne had agreed to delay her departure from the company, as the hunt for her successor had not yet produced a suitable name. After seven years in the top finance slot her departure had been announced at the end of March. She was leaving, said the supermarket, “to pursue other opportunities” and would be in line for a compensation package of up to £400,000. Announcing the delay, Sainsbury added, “She will be staying on as we search for a replacement. We have nothing else to say.” While the headhunters were still trying to find a new FD for Sainsbury, they were equally busy on behalf of Barclays. Thorne’s counterpart at Barclays, Oliver Stocken, had originally hoped to leave the bank on St George’s day, but he too hung around to help the bank through a crisis – this one brought on by chief exec Michael O’Neill, who resigned due to ill-health before he had done a day’s work. While the difference in skill, temperament and talent between a Premiership footballer and one who boots his way around a council pitch on a Sunday morning may be obvious, it is not as easy to spot the difference between a FTSE-100 FD and the rest. There are many FDs who are excellent at managing staff, who get their work completed to tight deadlines and deal efficiently with the bureaucracy and administration that any large organisation creates. They generally also have a sound understanding of technical arguments, and can argue with auditors or explain accounting and treasury intricacies to the rest of the board. But this is not enough when it comes to the top corporates. One FD who worked for a number of years for a couple of smaller quoted companies said: “The really excellent FTSE-100 financial directors that I have met, all have the vision thing.” By this he meant that top FDs have the imagination to rise above day-to-day detail and provide their company with strategic leadership. They envisage a direction for the business and help make it happen. So the big question for most of us is: can we teach ourselves the vision thing? Some commentators would suggest that, as a general rule, financial professionals possess less imagination than, say, lawyers or teachers. As proof of their argument they point to the fact that so few accountants make it in politics. Yet FDs do need some of the Machiavellian arts to win the hearts and minds of analysts and institutions in the City. The ability to sweet-talk brokers and shareholders has risen dramatically up the must-have list of FD attributes. One City headhunter pointed out that in any photo-call on results day for a top company, the line-up is almost certainly chairman, chief executive and financial director. As this is figures-day, you could argue that is pretty obvious. But the faded pictures showing just chief execs and chairmen beaming broadly in The Times and the FT, from just a few years ago, prove that the FD wasn’t always the fixture that he or she is today. Financial directors aren’t always the most publicity hungry of characters but increasingly – boosted no doubt by the emphasis on corporate governance – they are having to shed their reticence in order to act as the acceptable faces of their companies. Of the FDs who have left companies in 1999, lacklustre City reaction has been one of the prime factors behind the departure. In an age where large companies are under intense scrutiny and are minutely compared and contrasted with the competition, the FD has to inspire confidence – otherwise the share price will suffer. So FDs can’t be stuck behind a desk preparing accounts, they have to be out making themselves known to major – and potential – shareholders. In the ICAEW’s new report, Boardroom Governance – Practical Insights, Hugh Collum, a former vice president and chief financial officer at SmithKline Beecham, wrote that, at SKB, it was policy to meet regularly with major shareholders. In particular, the company targeted institutions that were underweight in its stock. As Collum put it: “We needed to understand why they had not invested in our company and whether explaining the business to them would encourage them to invest. Similarly, if an institution divested in a significant way, we wanted to know why.” As the UK catches up with the US habit of being more demonstrative, it will only become more difficult and more essential to deal with the City properly. Chief executives already admit that finding a good FD is no easy task. And while there may be plenty of finance professionals out there, it seems that the top organisations are becoming increasingly choosy. The time and trouble that Sainsbury and Barclays spent trying to find suitable successors suggest that they both think it is worth waiting for the right combination of talents. Peter Williams is a chartered accountant and freelance journalist.

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