The Route to CFO - What Are Companies Looking for when Recruiting a CFO?
[We're going to use the terms CFO and Finance Director interchangeably in this article although they are not always exactly the same]
As experienced recruiters of CFOs and Finance Directors, we are often asked:
“What makes a good Finance Director?”
The answer, perhaps unsurprisingly, is “It depends….”
There is no standard blueprint that makes a good Finance Director. However there are certain skill sets that are required as a pre-requisite.
The skills required to be a Finance Director fall broadly into 4 categories (see below) and the mix of those skills varies significantly according to the type of business for which an FD is being recruited. For example Large Corporate Listed PLC differs from Private Equity-backed SME differs from owner-managed business. There is also a significant difference in the mix of skills required to be a Group FD/CFO as opposed to a subsidiary or divisional FD.
In addition to the type of business, the blend of expereince and skills is also dependent on the company’s circumstances. It could be that the business is in a turnaround or cost-cutting situation, or it could be pursuing growth organically or through mergers and acquisitions.
However, while there is no "one size fits all" answer to our initial question, our experience of working on numerous assignments indicates that all good Finance Directors in whatever type of business will require skills which fall broadly into the following four categories:-
- Communication and relationship-building – with stakeholders such as the banks, investors, the CEO and the Board. Being a trusted adviser and challenger; being supportive as well as challenging; managing expectations; being able to influence across all functions. In particular, external financial backers of businesses, such as Private Equity, professional investors or the banks, require the FD to have the utmost professional integrity and maintain a degree of detachment from the chief executive.
- Commercial and operational acumen – ability to quickly identify and measure the key drivers of the business, with a particular focus on cash; ability to swiftly translate information into action, drive the business through the numbers; contribute to strategic development; awareness of the competitive landscape in which the business operates, including a strong grasp of key risks and their mitigation.
- Leadership and change management – leadership of the business as a whole, not just the finance function; ability to delegate key tasks in financial management; identify areas requiring change and ability to implement these effectively; a provider of solutions.
- Technical – a solid bedrock of day-to-day financial management skills is assumed; ensure a robust control environment is in place with appropriate processes and systems to deliver prompt and accurate information.
And now the bad news….If you are travelling the route towards becoming a Finance Director, while you will first need to gain the experience and skill sets described above, possession of them does not in itself guarantee you a Finance Director role.
How you actually get appointed to your first Finance Director role involves yet another - completely different - set of skills…and a bit of luck!
In our next article, we will look at how, having gained the relevant skills, you can give yourself the best chance of actually being appointed to a Finance Director role. We'll publish the next article in a couple of weeks.Finance Director CFO Private Equity PE PLC Financial Recruitment