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Who would want to be an FD?

The complexity and gruelling demands of the finance director's role and increasing regulatory pressures are putting off many potential candidates from pursuing a career in finance

Is the supply of finance directors drying up? Scores of FDs in the UK, the
rest of Europe and the US were interviewed for a report by consultancy Mercer
and executive search firm Russell Reynolds Associates. There are hints in it
that the pressures now being placed on the shoulders of FDs are so great that
young candidates are being put off pursuing finance as a career.

“Young guns used to say, ‘I want your job’”, says one FD in the survey. “Now
they say, ‘I don’t want to do that. You travel too much. You have to sign all
these documents. There’s too much stress. Life is too short.’”

The experience of Russell Reynolds Associates suggests that there may,
indeed, be an adverse effect on the supply of interested, capable candidates.
“More potential candidates are expressing concern about the attractiveness and
pressures of the role, or are averse to moving to companies in unknown business
areas with unclear risks and liabilities,” says the report.

UK participants in the survey made clear that, despite the broadening role of
finance, accounting and financial control skills were critical and that business
partnership skills could be “picked up” along the way.

Even at the highest levels there are signs of disenchantment with the job.
Those who have already made it as FDs are divided between those who find the
current range of challenges invigorating and those who find the demands
“gruelling” and the emphasis on controls “unfulfilling”. “As a result, in some
markets it may be difficult to find appropriately skilled and motivated
candidates for CFO positions,” the report says. “I would not take another
FTSE-100 CFO role,” says one respondent. “If I were a younger finance director
coming up through the ranks, the thought of managing a business’ 4 finances in
the current governance environment would not be appealing,” says another.

Another FD said that “everything is fine”, but then said that he works
14-hour days, another four hours at the weekend, with the BlackBerry device as
an always-on holiday companion. The pressures were most succinctly summed up by
one respondent who said, “Hair, golf, tennis ­ all gone. Time management is a
Regulation, regulation

There is no surprise as regards the causes of such pressures on FDs. The
regulatory environment, the increasingly rapid pace of change and business
complexity are all placing huge demands on FDs. In fact, some FDs are now
questioning whether their control responsibilities and their involvement in
setting strategy are compatible. While some see synergies, as business processes
draw strength from compliance efforts, others believe that these priorities are
conflicting, not complementary.

Against this background, there has been a subtle shift in the type of person
that CEOs want to recruit as their FD. Russell Reynolds Associates says that
many CEOs in the UK won’t take on an FD who doesn’t have an accountancy
qualification. In the US, the picture is very different, though it is at least
facing in the same sort of direction: five years ago, more than a third (37%) of
Fortune 100 CFOs had neither an accountancy qualification (CPA), nor an MBA
degree. A little under half had just an MBA and only 18% had an accountancy

Now, the number of CFOs without either a degree or a qualification has fallen
to 27%, while the number who have an MBA degree, a CPA qualification, or both,
has risen. But CPAs still make up just 23% of the Fortune 100 (with or without
an add-on MBA).

The 30-page report has a number of suggestions from FDs as to how to best
forge ahead. These range from recruiting more staff to relationship management.
The best way for FDs to make an impact on the organisation is through a close
collaboration with the CEO. “I couldn’t do this job if the CEO and I couldn’t
finish each other’s sentences,” said one FD.

But whatever the compatibility between the FD and CEO, other board members
may wish for the FD to be more inquisitive and to ask provocative questions.
There should be “a healthy give and take” to preserve the independence of the
FD, said one, while others added that the CEO has to understand that the FD has
a fiduciary duty to the board. But even then, sometimes the FD can afford to be
pushier than the CEO. One respondent said his CEO sometimes has problems making
tough decisions: “I push him because I think there may be greater risk in
deferring or avoiding it.”

How CFOs are managing changes in roles and expectations is available
by emailing Mercer at [email protected] or Russell Reynolds Associates at
[email protected]

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