The role of a CFO

Richard Francis talks to SRM Recruitment about the role of the CFO
Richard Francis talks to SRM Recruitment about the role of the CFO
Richard Francis, CFO at Netcentric

While some leaders have a clear career path mapped out from the outset, for others the journey evolves. We speak to Richard Francis, CFO at global digital service provider Netcentric, to hear what lessons the twists and turns in his career path have offered him, the changing role of a CFO and the future of the finance team.

Did you always know you’d work in finance, Richard?

Not at all. At university, I didn’t know what I wanted to do. I went to a career fair, got chatting to someone from Deloitte and they persuaded me to consider audit. After I graduated, I joined their audit team in Crawley. It was a good experience, getting to work with lots of big clients, like GM, but I realised quite quickly that I wasn’t interested in staying in practice. The main issue I had was that the decisions I made were for other people  – I wanted to be in on the action. 

What was your first role in industry?

I joined Duracell in their finance and tax team. The real breakthrough for me was when Gillette acquired Duracell. I got to see the systems integrate and my eyes were opened to a whole new area of finance. Instead of just looking backwards at tax returns, I was involved in forward-looking trends, standing up in front of the Managing Director to say why the business was going left or right.

How did you find working for a large corporation?

I realised quite quickly that it wasn’t for me. It seemed as though there were meetings about meetings, you had to ask your boss to ask their boss a question. It wasn’t what I wanted to do. At the time there was a lot of buzz about technology, the internet was just starting off, so I decided on a complete change of industry and moved into a software company. It wasn’t great timing – I arrived just before the dot com explosion. The share price went down about 75% the week after I joined. It wasn’t my fault, I hasten to add! But it was a big wake-up call  – you have to make quick changes to survive. I also learned that you shouldn’t make lots of little restructures, otherwise people are constantly looking over their shoulder. You have to make big changes, quickly.

What are the advantages of working for a smaller firm?

I’d say there are three main upsides of working for a smaller organisation:

  1. You can make things happen. You’ll be given accountability to get on and do something, such as setting up an office, which in a larger company would be reserved for more senior colleagues.
  2. You’ll see a quicker impact from your actions. Once you make things happen, for better or worse you’ll see the results more quickly than in a bigger organisation where risk aversion is rife and decision making is slower or doesn’t happen at all.
  3. There’s a lot more variety. Only in a smaller company can you be talking to a customer in the morning then reviewing a lease in the afternoon. The role of a CFO in a smaller organisation spreads across wider functions, including sales, HR, IT as well as the wider aspects of finance.  In a big corporate you’ll be more limited to the finance department, and you’ll have to specialise, such as forecasting, or tax.

What has been the biggest project you’ve worked on?

When I joined Day Software (a web content management company) in 2008, the company had only just listed, but the share price was going down, like everyone else’s, thanks to the financial crisis. It was a good chance to refinance the company, and after we restructured the business, it grew by 50% a year. In 2009, it became the best performing stock on the Swiss stock exchange. 

A few months later, Adobe wanted to buy us. At that point between March and July 2010, I lost my life! I was that dad doing conference calls on swings and arguing with lawyers in Sainsbury’s. Marrying a listed Silicon Valley company with a listed Swiss company was very rare and very difficult – it was a big deal at the time. Lining the financial reporting up forced us to have a strict deadline, which helped. The deal went through for US$240m and, after a long process, Adobe got control in October. I stayed on in the role of CFO for a year, to help with the transition.

Where are you working now? 

In 2015 I moved to Netcentric, which at the time was a Swiss private company. We maintain global websites for the likes of UBS, Lufthansa and Daimler Chrysler. The company was growing extremely fast. It started in 2012 and when I came on board, I was employee #299. In 2017 we accepted an offer from Cognizant and I worked on the transition, alongside our CEO. Since then I’ve taken responsibility for both the finance and operations at the firm. We now have 550 people at Netcentric – it’s a very ambitious company. The company has a very different culture, particularly as it uses the holacracy model.

What is it like to work in a holacracy?

The holacracy model is based on running a business in a non-hierarchical way. No one is working for anybody else, and the best ideas come forward. There’s no monopoly where only the senior people have good ideas. Projects are run in ‘circles’, and there are leaders of those circles. We never have to discuss or learn organisation charts, as the company reorganises itself on a daily basis. It’s an Agile method, which has allowed us to grow massively.

What is your biggest regret?

My biggest regret is not doing my due diligence properly when I joined a start-up some years ago. I didn’t ask the right questions about the business’ viability, which I regretted at the time. However,  you learn from those experiences and mistakes.

Most of my regrets are around bad hiring decisions. I’ve made a few, and the common trait is that I recruited too quickly. One thing I’ve learned is to hire slow and fire fast – the chaos from a bad hire is not worth the time saved at the recruitment stage. 

Hiring managers should try to avoid a ‘shopping list’ approach where people look for candidates with an exact match of skills. People generally want a change of role, and they won’t be satisfied if they’re moving like for like. Also, take the plunge and put your shortlisted candidates in front of your colleagues so they have the opportunities to point out any potential problems – it will pay off in the long run. 

You mentioned that you believe giving employees a better understanding of company financials is important. How are you doing that, and why?

I’m a great believer in openness and often find that people can handle the truth better than you expect. It’s far better to tell people how things are, as well as what you are and aren’t able to share. For example, at Myriad, we were facing a difficult financial situation and I told the staff I wasn’t sure if we’d have jobs in three months’ time, but I could promise an amazing experience that would be great for their CV. They loved this approach and everyone stayed.

At the moment I’m working on a project that involves next year’s budget. I have to be open and explain that I can’t share everything. As long as people trust you to have the right judgement, the role of a CFO be a buffer – you can’t share all the pain (you don’t want to unnecessarily panic people), but you can give insight.

How is the role of a CFO changing?

The role of a CFO is to be a true business partner to the CEO – long gone are the days of being locked in a room with Board reports. You have to challenge the CEO and be their sounding board (privately, of course). The CFO can’t sit in a bubble, they have to collaborate with other departments, such as sales and marketing, to get a feel of what’s going on in the business. That requires you to be approachable. If people are scared of you, you’ll miss out on ideas.

Regulations are changing the landscape too. Financial stewardship and technological advances mean you need to be on top of the latest developments.

What are your top three predictions for how finance teams of the future will look?

  1. Artificial Intelligence (AI) will take over an increasing number of tasks, like sales invoicing
  2. Teams will need more analytical skills to better understand the business and will need to connect more effectively with the business managers to gain insights.
  3. The pace of change will increase and it will be our job to observe trends and adapt. We’ll need to think outside the box to keep up.

And finally, what advice would you give now to that 18-year-old Richard, heading to the university career fair?

Keep educating yourself, it’s never enough. The world is changing and adapting to it is key. As jobs disappear, new ones will come, so be ready…

If you want to learn from Richard’s experience in finance, take a look at this article on ‘how to grow and sell a business’, or check out our other insights. If you’re looking for your next career move within finance, or you have an opportunity at your company that you’d like to discuss, get in touch on + 44 (0) 020 3637 7808.

 

 

How To Grow And Sell A Business

How to sell a business SRM recruitment
How to sell a business SRM recruitment

In the latest article for our ‘Lessons from Leaders’ series, Richard Francis, CFO at Netcentric, shares his expertise on how to sell a business, from initial growth through to post-sale integration.

Going for growth

Rapid growth might be a common business goal, but each company will require a unique approach to achieve it successfully.

Service businesses like my current organisation, Netcentric, must anticipate hiring needs early as it can take around six months to train a consultant and more like nine before revenue comes in. You need to make sure the company is properly financed well in advance so you’re able to take the plunge swiftly.

Quick expansion also relies on a delicate balance of process versus action. You want processes to work efficiently so teams can spend their time doing what they do best, not wading through bureaucracy. The company was not created for the finance team, it was created to help customers and make sales. Remember that your role is to support the company in doing that.

Being prepared to act quickly is absolutely vital if you want to grow a business. Don’t get too bogged down spending months on business plans in spreadsheets that will soon be out of date. Instead, do something more quickly at a higher level that you can change as you need to.

A CFO needs nerves of steel to support a company through ambitious growth. When I took on this role, the CEO explained that my predecessor didn’t sleep for a year! It’s your job to reassure people but also to ensure the senior leaders understand the risks. There’s no room for politics and blame, people need to be allowed to make mistakes if you want to grow.

Preparing for sale

This is the time to focus on doing what you do and doing it well. Don’t waste time thinking about who might buy.

It’s critical that you protect intellectual property. You might find yourself under pressure to transfer intellectual property ownership, but resist this at all costs and be very careful with the contracts you sign. Don’t take legal shortcuts. If you have to give liability, make sure you have an endpoint.

Wherever possible, it’s better to be bought up than putting the company up for sale, and that means a different approach.

How to sell a business successfully

To lead a business through a successful sale, you don’t need to have everyone working on it. It’s important to keep ‘business as usual’, so you want as few people as possible caught up in the sale.

Another risk to manage is time. Open-ended timeframes will wear everyone down. Create some time pressure on the process to drive it forward, and don’t allow yourself to be dictated to on the deadlines.

Harmonious Integration

A business which has recently been acquired faces many challenges during integration with the buyer. To manage the process and see the business succeed, it’s important to understand the reason for the acquisition, whether you are the acquired or the acquirer.

When Day was acquired by Adobe, it was clearly a software purchase, so the integration needed to be quick so that the customer only saw one ‘face’. It’s difficult to do, particularly with big cultural hurdles of a Swiss and US firm coming together.
Netcentric was very different, as Cognizant couldn’t do what Netcentric did, they were buying the way we work. Cognizant has a mantra – ‘do no harm when you acquire a company’. We actually agreed to preserve our approach in pre-acquisition talks and the integration was very light. It’s been business as usual, we’re still Netcentric, only it’s better now because we have the financial security of being a big group with a larger cash flow. We’ve merged where it made sense to do so, such as the legal and finance teams, and we’ve taken advantage of Cognizant functions where possible, such as the new delivery centre in India. When you’re thinking about how to sell a business, the aim is not to disturb staff or customers. It comes back to remembering why you bought the company and ensuring you protect that.

To learn more about Richard and his career in finance, take a look at this article on his career path.

If you are looking for your next career move in finance, or you have a role to fill at your organisation, please get in touch on: + 44 (0) 20 3637 7808.