From treasurer to finance director

There have been numerous recent high-profile examples of individuals making the shift from treasurer to FD, among them: Paul Richardson, who moved from group treasurer to group FD at WPP; Paul Spencer, who moved from group treasurer at Hanson to group FD at Royal Sun Alliance; Andrew Shilston, group treasurer and group FD of Enterprise who became group FD at Rolls-Royce; Angus Russell, group treasurer at Zeneca and now group FD at Shire Pharmaceuticals; and Howard Dodd, group treasurer at Zeneca and now group FD at Boots. These examples prove conclusively that individuals in senior treasury roles are seen by the recruitment market – and, more importantly, by employers and advisers – as having the necessary skills to make the shift.

The traditional routes to group FD are well documented. In the current nervous climate, however, many plcs are trying to recruit group FDs who have held main board positions in quoted businesses or, alternatively, individuals below the main board who have had experience of dealing with external parties. Treasurers with their dealings with the banking community are more likely than any other finance executive to have had this external contact.

There is, however, a perception that treasurers who have not worked in other roles lack the management credentials and strategic experience to be considered credible candidates. In some instances, this is true but it is a very narrow reading of the role of a modern treasurer.

Treasury moved out of the spotlight in the late 1980s. More recently, with the launch of many new complex and diverse products, the profession has begun to get the recognition it deserved. During the stock market boom, treasurers assumed a more prominent role as they became involved in increasingly complex financings. Since the boom, their role has shifted again, specifically with regards to their interaction with bond markets, cash management, renegotiation of covenants and risk management. The advent of technology has also been critical as treasury functions strive to be more cost effective and efficient.

What skills are needed to make the move to finance director?

In a quoted company, FDs must be able to deal effectively with external audiences, particularly analysts, and persistent investment bankers, as well as the the demands of shareholders. They should be accustomed to managing large teams that are often based in remote offices, and they should be able to contribute to the strategic direction of the business. Most chief executives would say that their most important relationship, after that of the chairman, is the one with the group finance director.

How can a treasurer position himself/herself to make the move?

It is easier to make the shift to FD within one’s current company than to move businesses and positions at the same time. Any treasurer seeking such a move would be well advised to seek work outside treasury, either in a line finance role or group controller’s role.

Increasingly, group treasurers are being asked to attend board meetings as cash management and risk management become more critical issues.

Treasurers in specialised industries where risk management is high on the agenda are, generally, more successful at making the move to FD. Ambitious treasurers should therefore give serious consideration to the type of businesses they join when developing their careers. They should also be keen to ensure that their management skills are honed in a treasury role. Treasury functions are becoming leaner as technology develops and if the management role diminishes as a result of this, treasurers may begin to miss out on valuable management experience.

If there has been a general criticism of treasurers, it is that they tend to live in ivory towers. This is perhaps more of a corollary of other functions, not understanding or not wanting to understand what treasury does but increasingly in treasury briefs, the ability to influence and network across the whole business is of paramount importance in any new hire and treasurers should look to develop these skills which would fall broadly under management skills.

What can you, as a treasurer, do to ensure you have a strong chance of being considered for a CFO role?

• Push for interaction with the chief executive and the board.
• Increase your network within the business.
• Expand your City relationships.
• Consider what shareholders’ reactions would be to your appointment.
• Ensure that you have the PR skills to handle the role.
• Increase your exposure to cross-functional groups within the business.
• Press for involvement in strategy formulation that would enhance your understanding of the drivers that underpin the company’s demand.
• Push yourself forward to assist the finance director on roadshows.
• Talk to headhunters. Clients often start off with a very tight specification but much of good recruitment boils down to chemistry. You may not have the perfect CV for the job, but if you are known well to a headhunter who can advocate on your behalf, more doors will open to you.
• Develop a coherent job-seeking strategy, market yourself effectively and chose your target businesses
• Don’t give up if you fail at the first hurdle.

Conclusion

Treasury is a highly specialised and valued role. Risk management is a critical issue and few have the chance to perceive risk in both its technical details and wider application than the group treasurer. The above is not meant to be a blue print for making the move, but, hopefully, it will give some pointers to those who are considering this sort of progression. You will need luck, persistence, stubbornness and, whether you like it or not, contacts with headhunters.

James Colhoun is a consultant in the UK’s CFO practice. He also heads the UK treasury practice.