Companies are risking their future because they are leaving the development of future senior finance staff to chance, according to a study carried out by Ernst & Young.
E&Y revealed that companies reporting growth in excess of 5% had CFOs at the helm that had been ‘brought up through the ranks’. This did not apply to too many companies, indicating that, if they had internal finance talent development programmes in place, then their growth may well have been better.
A key growth strategy for international businesses is through acquisition and integration – this requires strong finance presence at the top of the organisation. Given the apparent strength of internally grown talent, then this may present problems down the line.
The study highlighted a number of areas that future CFOs need to develop, the main ones being:
• experience across different sectors and divisions;
• experience of shared service centre implementation; and
• international experience.
Les Clifford, chair of the Ernst & Young CFO programme in the UK and Ireland, said: “Since the 2008 financial crisis, the role of the finance function in guiding company growth and strategy has increased dramatically to meet challenges such as increasing volatility, regulatory change, globalisation and the rise of emerging markets. Organisations risk jeopardising their future growth prospects if the development of the CFO is left to chance”.
Too many large companies are leaving the acquisition of top finance people either to chance or to the expense and trouble of extensive recruitment or headhunting campaigns. Interestingly, the main single reason for this is that incumbents are too busy to coach and develop talent.
Consult.Autus can provide assistance either directly with training and coaching schemes, or indirectly through project work and/or ‘day job’ backfilling, to enable resource to be freed up.
The Sunday Times (10.10.10) reported that so many people now agree on what shapes top leaders that some people think no more research is necessary!
So, what are these magical experiences?
- Early work experience. It may have been good enough to lead to a lifelong obsession, or bad enough to force someone to seek better. My two months at a big six accounting firm while I was at University encouraged me to choose to qualify within industry.
- The influence of others. Someone (usually the boss) who may have been good enough to seek to emulate, or bad enough to seek to avoid emulating. My first manager (Stephen Burr, Delta plc) taught me everything I needed to know about balance sheet management – simple but effective.
- Short-term assignments. Anything from projects, covering a job, interim management – the key is to see what’s out there and get out of your comfort zone. The reason I ended up leaving my first job was that I was excited about the prospect of standing in for my boss while he went on a foreign assignment; he was stood down and so was I, but I had tasted the next level.
- A big break. May be a first promotion, a big bonus, a new job – something where, suddenly, things were bigger, more complex, more important or a big responsibility. When you’re an interim executive, everything is complex and important!
- Hardship. It may be personal or professional, but the lessons learned were crucial to understand how to manage in a crisis, and what’s important when the chips are down. When my second employer was in the process of being taken over, things were tough, and then made worse by a personal misfortune.
- Management development. It is, perhaps surprisingly, not a major factor – which is bad news for business schools and the like.
What’s interesting is that most of the main issues revolve squarely around experiential learning and having ‘been there’ rather than bookwork and technical knowledge. So, it would appear that if you wish to be a leader of tomorrow, then you might need to get out a bit more…
The Sunday Times (10.10.10) contained an interesting article summarising the results of a Directorbank report. There were few surprises, but it’s always useful to remind ourselves of the key issues; these were collected from fellow directors and CEOs so I think it gives a valuable view from the inside.
The perfect FD evidentially displays the following characteristics:
- Delivers accurate and timely improvement-led results, as opposed to just working long hours for little real effect.
- An eagerness to drive out poor performance across the organisation, and is willing to ask the questions no-one else is brave enough to face.
- Loyalty to the CEO, but with enough bottle to challenge.
- Good communications skills, not just within but also outside the organisation.
- Has at least most of the answers to hand to answer questions asked.
- A clear sense of what drives revenues and profits within a business; commercial and strategic awareness.
- Technical competence is a given; advisers may be used but without over-reliance.
- The experience to have dealt with problems, and come out successfully of the other side.
- Takes appropriate, but managed, risks.
My personal experiences would echo many of these factors, but I won’t mention any specifics!
Does your own organisation have the luxury of ‘the perfect FD’?
The downside, for those who don’t fit the bill, is that in most cases the ‘problem’ is resolved by the FD leaving…as one of my previous CEOs would say: “If you’re ever worried about taking a difficult action, consider the consequences of not doing so!”
It seems to be never out of the news nowadays that we should recycle everything feasible and dispose of as little as possible.
Why? Because waste is evil! For those who know me, the thought that I may have run around a conference room screaming (yes, literally) such a declaration may be surprising. But that I did!
The elimination of waste in a manufacturing environment (my background) is an obvious route to better financial (and environmental) results. But why should waste reduction be the unique preserve of manufacturing industry? How can the principles be applied within an organisation that doesn’t make anything?
The key is to view waste in its broadest sense i.e. anything that is not useful.
- Wasted time – how many reports does an organisation produce that are not used, or only certain parts are used?
- Waiting time – how much time is lost waiting for other people to get things done before you can continue?
- Rework – how many things are reworked either because the first product was of poor quality, or the original requirement was not made clear?
- Added value – basically, anything that does not contribute directly to the vision of an organisation, or directly support others doing so, can be regarded as probable waste.
The identification and elimination of waste is one of the key deliverables of process mapping, often referred to as process re-engineering or process optimisation – one of my pet subjects.
If organisations in the current climate are to continue to firstly survive, then enable themselves to grow and respond quickly when the recovery is in full swing, then the efficient and effective utilisation of expensive resources (of which time is only one) is critical.
Perhaps now, when things are a little quieter, is the optimum time to consider business process optimisation.
I was invited to what appeared to be an infinite series of meetings recently, the first one of which was to determine why they had been scheduled!
Don’t you just love meetings? Regardless, there are times when they are unavoidable. No doubt the recent air travel problems caused by Mount Eyjafjallajökull caused a large number of business meetings to be cancelled, but we can only guess how much value was lost (or gained!).
Continue reading ‘Meetings are a necessary evil’
Everyone wants more for less. Consumers do, and so employers and clients do. That’s the definition of improved efficiency – more output for less input (see Adam Smith for details!), and for professional workers that means delivering more value in less time.
Continue reading ‘Add Value through Time Management’
One of my pet sayings, as both my colleagues and family would testify to, is ‘presentation is everything’.
Is this right where financial and management reporting is concerned, or is it just an irrelevant saying with no basis in the business world?
Continue reading ‘Is Presentation Everything?’
There is often organisational concern as to whether, and how quickly, hiring interim staff can add value. It is difficult to justify, especially when cash or profit is tight, expenditure on something that cannot evidently pay dividends quickly.
I have myself been guilty, in a previous life, of considering ‘temps’ for only a certain type of work that can be picked up quickly, controlled easily, and where not much can go wrong. This is OK where you are just short of a head or two, and need to make up the numbers to keep on top of volume tasks.
Continue reading ‘Do Interim Executives actually add value?’