What a New Finance Director Should Do First

New Finance Directors face a host of challenges. We help you work out what makes the biggest impact on how well you perform in your new role and where to focus your efforts to get the best returns.
Date posted
14 July 2020
Reading time
5 minutes

New Finance Directors face a host of challenges. It can be tough to work out what to tackle first and how to work out what makes it into your plan for the first year.

We help you work out what makes the biggest impact on how well you perform in your new role and where to focus your efforts to get the best returns.

New Finance Director?

When starting a new role in any function, there is a mix of excitement and trepidation. With a new C level appointment, the business expectation is that things are going to change. That can spawn a sense of fear or hope depending on the existing frustrations and business culture.

First, you can try to better understand people's state of mind in the business. Still, most will start their new role with a broad understanding of the company and little else to inform them of what they are walking into.

Getting the tone right when walking into your new role is paramount, which means having conversations, asking questions, and listening. Getting to grips with the business, its culture, structure, and influencers will then be hugely valuable. This uncovers pain points and where processes and systems need to be improved, allowing you to build a plan. The final piece of the puzzle is executing your plan, and that requires access to quality data, good communication, collaboration, and a team that can add value through analysis and insight.

 

Where To Start? - Month 1

People

From the board to investors, functional managers to your team, there are many new characters to get to know when entering a new role as a CFO. Every role is important and its worthwhile taking the time to listen and hear their point of view.

Ideally, you will win the trust of those in positions of leadership as they will be more likely to support your ideas, whilst building respect within your team to understand where frustrations have formed and what is needed to fix them.

Identifying key influencer's means time can be spent with the right people to get support for making necessary changes. It might mean more time managing investor relations, auditors, or key functional heads. This is a group that many overlook, and yet they can help deliver plans. Furthermore, they are also internal customers of finance.

Your team are critical to you delivering a plan. Without support, you are going to sink. An early assessment of your team's skills will pay dividends as they will be critical to delivering and making the job easier. Be brave early on to ensure you have the right talent to make your ideas happen.

Listening to the woes around processes, access to information, systems, and communications are essential for understanding where change needs to be directed.

The Business

When embarking on a new role learning the nuances of the business is going to be important. Investor relations, which demand more forecasts and specific reports, could take a lot more of your time. Alternatively, there may also be issues around accessing information or addressing what auditors have flagged.

Value Audit

'The most critical activity during a CFO's first hundred days, according to more than 55 percent of our survey respondents, is understanding what drives their company's business.'

McKinsey & Co, Starting up as a CFO.

A strategic review that audits how value is created in the business helps build a picture of what makes the organisation tick, how the company makes money, its margins and return on invested capital (ROIC), alongside the usual performance metrics. However, it would help if you also considered potential ways to improve these drivers, such as growth sources, operational improvements, changes in the business model, and how much the company might gain.

To develop that understanding, the CFOs we interviewed conducted a strategy and value audit soon after assuming the position. They evaluated their companies from an investor's perspective to understand how the capital markets would value the relative impact of revenue versus higher margins or capital efficiency and assessed whether efforts to adjust prices cut costs.

When moving to a new sector and or business, be prepared for cultural differences, schedules, peaks, and troughs. Your role may be more high profile in a growth business with private equity investors or a well-known brand. PR and promotion may become part of your remit, which will impact your time.

There are businesses with powerful departments that demand more attention and 'shout louder' than others. Culturally, this may mean you have to give them more of your time or they impact the development and investment in other parties of the business.

Culture is tricky to navigate in a new role and certainly the hardest to influence.

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Month 2

Process Pain Points

Process improvement is one of the driving forces behind transformations. Yet with the advent of new technology and the promise of benefits in timesaving and costs, it is essential to weigh up if the benefits outweigh the investment and time needed to make it happen.

Some improvements deliver return on investment fast, whilst others take more time. So, remember to think about how a big project will impact you and your team. There is only so much time in the day and year to fit in projects, so make sure you don't sink your team and you too early on in your venture.

Building a Team

We touched on this under people, but your team is what will ensure your plan gets delivered. The search for talent can be a challenge in today’s competitive job market.

Old school approaches and outdated skills might need retraining, or you may need to recruit some new blood. The better your team are at discovering issues, adopting new systems, and speeding up the process of producing numbers, plans and budgets, the better they will be placed to support your ambitions for the organisation.

Month 3

Plan & Communicate

Planning is one thing; realising a plan is another. The first hurdle is to build a plan. Planning needs everybody involved to develop a complete picture of how growth, targets, and performance impact every part of the business.

In a survey by McKinsey, finance transformation projects were high on the list of improvements for CFOs and often initiated early on in their new role. A plan relies on sound data and modelling scenarios to analyse possible outcomes better and feed the financial plan.

For planning to stay current and collaborative, it needs the right tools and must be easy to produce and update. When a business is growing and changing, out of date plans become irrelevant, and people stop using or referring to them. Investors aren't interested in reports which aren't a true reflection of the current position, and the board quickly feel nervous if they don't know their FD is in control of the numbers.

Planning should drive better decisions, measure performance accurately and provide insight. Reports are a communication portal, so ensuring you can easily share information will make sure everybody understands the plan and why it is essential. This supports plans getting delivered successfully.

Don't underestimate the importance of communicating your plan. When people get relevant, well-structured information in a format they understand, they can contribute to the debate - without it, they tend to switch off.