Stratevolve Blog

A large part of the responsibility for riding out the recession, and avoiding a double dip recession, is falling to Finance Directors.

Through our consulting engagements, we’re aware that many FDs have taken on the core task to get the right information on cash flows in and out of the business. This may sound fundamental – but it’s surprising how much top teams are learning as they go through this process about sources of value, and waste!

Many FDs are reporting that they are assuming an operational officers’ type role, in addition to their usual duties. This expanded role, concerned with maximising operational efficiencies, requires an increase in close and regular contact with the CEO, and operating directors.

In short, the challenge to get rid of wasteful practices, find efficiencies, and become the organisation’s operations management guru, is falling to the FD. FDs are increasingly expected to be “impartial presenters” of the facts and the voice of reason among the Board with respect to difficult decisions in terms of resource allocation.

Three immediate implications are emerging. First, FDs need to get better versed in management reporting and analysis, i.e. how to gather, analyse, report and use data to effect positive business change. This task requires developing in-depth analytical skills in new areas, especially operations.

Second, FDs can benefit from learning about advanced performance management systems and best practices – such as Balanced Scorecards for example – as a means to embedded desired changes and practices throughout an organisation. This implies providing FDs with greater opportunities to learn about best management practices in general – practices that were previously considered outside the remit of FDs, but no more!

And a third implication is that FDs now need to think more strategically. In these difficult times, the role of the FD needs to be multifaceted; they have a key role to play in setting the strategic direction of the business and facilitating change. But this requires developing leadership skills, particularly in the area of strategy.

Consider three high profile FDs in the UK who are responding to the challenge of a broader remit: Morrison’s Richard Pennycook might well move into the CEO role in due course; McDonald’s UK FD, Brian Mullens, may be a worthy successor to the CEO role when it frees up; and BA’s FD, Keith Williams, is another FD who has expanded his role to be designated CEO of BA’s operating business. For FDs willing and able to build on their strategic leadership skills and assist their organisations to ride out the recession, opportunity knocks!