By Michael Dickson and James Colhoun, Carlyle
Recently, Carlyle hosted a CFO event, focused on ‘The Journey to Non-Executive’. Inspired by the increasing requirement for organisations to have non-executives from finance backgrounds, Carlyle invited a group of experienced CFOs and non-executives to debate the current and future opportunities and challenges faced by senior finance professionals in non-executive roles.
The guest speaker, Graeme Bissett, shared his journey from Practice to plural non-executive. Key themes Graeme discussed included: what executives should be considering when undertaking their maiden non-executive position; how a non-executive director can bring demonstrable value to the business and the wider Board; and how best to manage the transition from executive to non-executive. In Graeme’s experience, the two crucial questions a potential non-executive should be asking themselves before considering a new engagement are:
- What value can I bring to this role and business?
- Will I enjoy the role? (Do I have an interest in this space or have an intuitive empathy with the company’s products or services from the perspective of their customers and end-users?)
These points were echoed by the experiences of the group. What became clear during the discussion was that whilst technical experience is imperative, passion for the business, industry and people is of equal importance.
Deloitte’s Mike McGregor added an invaluable perspective from an advisor’s lens, leading a discussion around how to successfully navigate the crucial relationship between advisors, executives and non-executives in regards to regulatory scrutiny, governance, general business advice and increasingly the public interest perspective.
“Today’s CFO is increasingly required to deliver on four key roles within a business; steward, operator, strategist and catalyst, respectively bringing challenge on control, efficiency, performance and execution. This experience is invaluable when considering non-executive positions and roles. “ said Mike.
There were a number of key topics covered regarding the role of the non-executive and building a successful portfolio during the course of the evening:
Firstly, the responsibilities of the role of the CFO are rarely solely aligned to the finance function. The CFO will frequently inherit or have strategic oversight for commercial functions as far reaching as IT, marketing, supply chain and health and safety. Out-with their obvious responsibilities, such as corporate finance, governance & audit, this broader experience allows a CFO to add real value as a non-executive through:
- Constructive challenge and influencing with a multiplicity of stakeholders
- Utilising problem solving and analytical skills to get to the heart of an issue quickly
- Providing wider commercial and strategic business insight
Secondly, what was apparent throughout the discussion was the importance of understanding your personal capacity as a non-executive against the business’ expectations. Expanding on this point, it was agreed that it is essential to keep a sensible distance from the day-to-day running of the business in order to offer a subjective view and council. A common challenge raised was a potential blurring of responsibilities; for example, non-executives expected to perform, in part, the role of a finance director within the business. Conducting appropriate due diligence into a potential non-executive opportunity in this regard was therefore considered crucial.
On a broader scale, several themes emerged; specifically around digital, social media, IT security and cyber threats. It was felt that there are significant challenges posed by the lack of expertise and understanding at executive (and especially non-executive) level on the opportunities and risks that these developments can pose. Many companies are facing a knowledge gap around current technology trends at Board level, with a concern that individuals who have expertise in these areas may currently lack the experience and leadership skills to take up executive or non-executive positions. This is reflected by an upsurge in demand and dialogue around how businesses attract and secure Digital and Risk specialists. Increasingly, this is being achieved through securing the services of senior interim consultants and Board advisors within these disciplines, who bring invaluable knowledge from their own ecosystems.