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Flurry of FD signings during transfer window

AN UNUSUALLY large number of prominent organisations have recently announced a change of FD, each with a positive story. The transfer window is wide open.

Those FDs who I know, or have met on occasion, include: Mike Speakman at Cape; Trevor Strain at Morrisons; Simon Nicholls at Cobham; Paula Bell at Menzies; Stephen Young, now CEO at Meggitt; Andy Jones at Safestore; Steve Dryden, going to private equity; Andrew Crean at the Football Association, replacing Mark Donnelly whose new position on the field is COO at QPR.

As a result of the appointment of their new FDs, these organisations, and countless others, face significant changes. The FD’s role should, legitimately, make a profound and lasting impact on the organisation, and it is a constantly evolving and increasingly influential one.

I am delighted to see these FDs flying high and I acknowledge this is an encouraging sign for all of us, including those in the pilot seats of headhunting firms who have obviously resumed lucrative business levels.

However, and in stark contrast, the troubled Boeing 787 Dreamliner project has been temporarily grounded with inevitable implications for businesses in its supply chain. We have also seen the recent high-profile demise of HMV, Comet, Jessops, Manganese Bronze, Blockbuster and Clinton Cards, to name only a few from too many other sad cases to mention.

Some businesses have failed because of technology shocks; others due to the shifting tides of customer trends as unsound business models give way to newer market entrants. Low interest rates mask the underlying problems in some situations. Private equity firms are reluctant to move their aggressive returns models (and time horizons) away from those based upon the abuse of debt capital as a substitute for real equity, so they are not coming to anyone’s rescue.

I could discuss the FD’s responsibility to predict the forces that cause business failure, but my focus is on the FD’s quest to guide the economy towards recovery through business growth after enduring years of relentless cost-cutting. Every FD has an understated but influential role to play in this mission, and each new FD brings a fresh perspective.

Unfortunately, some FDs and CFOs display inappropriate characteristics, one of which is egotistical behaviour, and therefore they detract from the mission. You know who you are … or do you? As James Gorman, CEO of Morgan Stanley, said, “We must change the perception that the individual is the hero,” and, “We can have larger-than-life personalities, but individuals do not make an institution.”

A powerful FD is an obvious asset, but it is vital to strike a balance between such things as control and delegation, cooperation and competition, autocracy and benevolence, respect and egotism. I agree with professor Cary Cooper of Lancaster University in suggesting that, crucially, ego is an ‘enemy within’, and in an FD, ego is a psychological virus, severe or mild in its host’s symptoms, and able to hide so the host is unaware of its existence until it is too late.

The best FDs and CFOs demonstrate their skills in negotiation, strategy, innovation, communication and leadership. Beyond our skills and experience, it is essential for FDs to have integrity, gravitas and strong personalities, but we must all adopt a balanced approach to everything we do. We never know who is watching and we should be comfortable in setting aside our egos. There is always someone else, hungry for progression, who is capable of doing our job.

So I wish every success to all FDs starting new leadership roles. I am watching with interest as you each make the best of your opportunities to influence your new organisations and, importantly, the mission. ?

 

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