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How FDs get the most from their chairmen

Forging a powerful relationship between a CFO and chair of the organisation can be of critical importance, say voices from both sides of the equation.

When online fashion retailer’s chairman Peter Williams was the CFO of department store group Selfridges he worked alongside CEO Vittorio Radice, regarded as one of the most creative and high-profile business leaders of his day.

But while Radice’s dynamic approach was highly successful and resulted in him taking on some of the biggest roles in retail, including the top job at Mark & Spencer, it was also important to check that dynamism at certain times.

“Radice did really great things for the business, but wasn’t right on all subjects,” says Williams, who in his first public company CFO role at Selfridges turned to chairman Alun Cathcart for advice on how to temper the CEO’s approach.

“Alun was a very wise and sensible guy who was very politically savvy. If I raised a concern about an issue with Radice’s approach he wouldn’t tear a strip off the CEO, but instead used the information to approach the situation carefully,” says Williams. “That approach often helped the company arrive at a better decision,” he adds.

Williams’ description of working closely with Cathcart, typifies the strong relationship that can develop between CFO and chairman, that can act as a break on hard driving chief executives.

A powerful axis

Now that he is a well-established chairman- Williams also chairs Domino’s Pizza Eurasia and property regeneration group U+I- he can see the relationship from the other side. “As a chair I always value a good relationship with a CFO because it’s a check and balance on the CEO.

“Sometimes the CFO will be wrong because they’ll be more financially orientated than the chief executive, but there are occasions when the CFO might say the CEO is being a bit aggressive. That might be because the CEO wants to present a positive picture to the board, they might leave out certain elements. It’s not because they’re trying to mislead, but because they’re trying to get their strategy through,” he adds.

Williams says the board and the chairman sometimes need to understand there are one or two other things around the fringes to be aware of, where the CFO can lobby the chairman to make sure it comes out in the board meeting and in discussion.

“The more serious event is where actually you’ve got a CEO who is not up to the job, or is doing something dishonest, and there the CFO has to put their head above the parapet and wave the red flag,” says Williams. “They should go straight to the chair, who has to be careful how they handle the information- but they are duty bound to do something about it,” he informs.

“You shouldn’t do it all the time, because the chairman will complain the CFO has got it in for the CEO or is mischief-making,” advises Williams. “I think you have to be careful to pick your issues, fight sensible battles rather than dealing with minutiae.

“Being a CFO can be a lonely experience. If you’re in a business where you don’t feel you’re being listened to, or the CEO is just running riot, being able to feel you can have an off the record conversation with the chairman, is really helpful,” says Williams, who is also the senior independent director of property website Rightmove.

Unlocking the wisdom

Mark Freebairn, partner and head of the CFO practice at search firm Odgers Berndtson, says there is a very good reason that CFOs are seeking out good advice from chairs more than ever- their roles have expanded.

“There is a huge expectation that the commercial voice of the CFO is being heard as much now as it ever has been- and you can see that in how broad a CFO role is now, and how many CFOs are becoming chairman and CEO. That commercial agenda, that ability to challenge and change and deliver, reflects more what CFOs are doing in organisations,” he adds.

“On the other hand, chairs will join an organisation, often from outside, and therefore need to very quickly build a level of rapport and understanding, and a CFO will often in that situation be a truly independent voice, not one necessarily politically loaded in a way you might find a CEO is. They tend to be a little bit more natural, a bit more balanced,” says Freebairn.

He says having a safety-orientated CFO and chairman in harness can be crucial in an organisation. “If you let a CEO do whatever they want, they may cost you the entire business, you can’t accept the latter for the opportunity of the former. That’s especially the case in a public company.

But it’s also important that the chairman and CEO don’t overdo that,” says Freebairn. “The danger is if you don’t let the CEO push as hard as they can do, you may not get as much out of that business as you’d want to,” he warns.

Unlocking the wisdom of those that have had a long and distinguished career, isn’t limited to those chairing the organisation you’re working in. Penny James, CFO of general insurer Direct Line, says she will seek out the advice of anyone who has been around the City, who has the appropriate experience.

“If that person isn’t sat in the board, then I’ll find that person. What I’ve learnt over the years is that a lot of chairmen are willing to act as mentors and advisers,” she adds.

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