Any firm needs to have a proper control of its finances. In recent years the role of the finance people has become more sophisticated and the accounts department is no longer the domain of the bean counter. Increasingly, finance controllers are being replaced with finance directrors.
What makes a good finance director? This question, always important, is critical when the economic situation is uncertain. For a finance director is not the same as a finance controller and an FD is expected to make key positive contributions to a firm - not to just count the beans.
Dominic Dalli of venture capital investor Sovereign Capital, identifies several skills and qualities in a good Finance Director. "We typically back a lean management team," he says, "so the FD has to be operationally and commercially minded." This means that candidates with good people skills will be sought, not mere number crunchers. And, from a commercial viewpoint, the chief executive will rely on his or her FD for strategic input.
Almost buy definition, when venture capitalists are involved, change is going on. So Dalli looks to FDs to manage change - whether it is implementing new systems, or a head office relocations.
Such skills can be critical in service firms where retention of key staff is vital. If, for example, a group of people have been used to doing things in a certain way, an FD will need to get them to buy in to any new reporting systems. Related to this, many smaller companies do not have a full time human resources operations so recruitment often falls to the finance director.
For much the same reason, Dalli wants FDs with sector knowledge. "We're looking to hit the ground running," he says. Dalli adds that he is happy to buy a company with a finance director in place, or to bring one in.
Perhaps surprisingly, good deal making skills are not especially high on the wish list. "That's what we do," says Dalli, "It comes back to the need for a lean team. The key bits are supporting the chief executive and motivating employees."
If he needs to recruit a finance director, Dalli says he has a preference for Chartered Accountants, which he views as a highly regarded qualification.
He says the good candidates are often peole who are senior financial controllers in a large organisation or a finance director in a medium sized organisation looking to be their own boss. He also likes finance directors to be willing to invest as entrepreneurs. "Huner is important," says Dalli," We want a commitment for five to seven years.
Finally Dalli looks for those comfortable with both a team approach and direct reporting - there is no room for bureaucrats.
© Ian Cundell, 2004