The Finance Director’s primary role in fast growth and mid-cap environments is to support the CEO in delivering the strategic vision by ensuring the business is suitably funded, with balanced controls and flexible process in place to safeguard its assets and underpin anticipated growth. The CEO and the Management Team have to embrace the value brought by the role. It is common for people to have challenges embracing the role.
Problems typically arise where a Management Team is run by a visionary individual with less regard for process and execution, or by an autocratic leader who won’t listen to an opinion, or the role is imposed upon an entrepreneurial team by an investor who insists on a trusted pair of ‘eyes and ears’ in the business.
If you polled managers and investors in fast growth companies that have gone through rapid change, few – if any – would argue against the importance of a quality Finance Director who’s been through it before. I’d take transition experience over sector experience any day too. Where opinion gets divided is around the timing of the hire (they don’t come cheap), and the personality match for the organisation.
With regard to timing I would try to hire ahead of the curve so the business doesn’t outgrow the FD in 12 months – it happens. Tensions can mount if they can’t effectively manage the trifecta relationship of CEO, Management Team and Investor/Institutional Owner. On the one hand, an overbearing personality and negative attitude to risk can sap the entrepreneurial spirit of an organisation. On the other, an inability to say no can cause an unexpected cash pinch. It’s a constant balance that changes with the ebb and flow that comes with growth and the inevitable setbacks along the way.
Without the right level of assertiveness, the Finance Director will be marginalised and end up fulfilling the role of Financial Controller, producing the numbers and keeping score – critical, but that’s what you pay the Financial Controller for. This can be the most damaging as it often takes much longer to surface, especially if the Management Team has no prior experience of working with an outstanding Finance Director.
A great FD is like your GP. They know enough about most issues facing the organisation to either address them themselves, provide leadership and delegation to the Finance Team, and know when outside expert advice is needed.
A great FD isn’t just there to keep score and publish the results. The value-add from proactive support to the visionary entrepreneur and professional Management Team provided from an experienced, grounded individual invariably results in 1 plus 1 adding up to way more than 2.