It is a commonly held belief when recruiting a finance director, that first-hand experience of the role is crucial. In our experience, however, promoting a talented financial controller or finance manager from within the business can be a more beneficial choice with the help of a mentor.
Estimated reading time: 4:00 minutes
- Firstly, you know what you’re getting; their work ethic, talent and potential have already shone through.
- The employee, with insider knowledge of the business and its dynamics, culture and people, understands what they are taking on.
- The onboarding process is streamlined because they already have a substantial base level of awareness and knowledge of the business. They will quickly become productive and valuable in the role.
- ‘Growing your own’ and promoting from within the business gives a loud message to other employees (and potential employees) that talent, loyalty and hard work will be recognised and professional development and career progression are possible.
- It is the most cost-effective route. The cost of hiring a new finance director is greater than just the salary; for example, recruitment costs alone add 20-30% to total costs. What if you incur all these costs and subsequently discover after six months that you’ve recruited the wrong person?
- Finally, a successful FD-CEO relationship is essential. It provides stability, direction, and clarity. Bring the wrong FD onto the board, and all sorts of things can go wrong. ‘Growing your own’ significantly reduces this risk.
A mentor will help the new finance director transition from a senior team member to a company leader
In their early career, the new finance director will have concentrated on developing their technical and analytical skills with little focus on the ‘soft skills’ required to manage behaviours and relationships.
The finance director role is critical to the success of the company, and they must be able to balance these skills effectively – while handling multiple priorities concurrently!
As finance director, they will now have a complex set of accountabilities, and will be expected to:
- Take a seat at the boardroom table with confidence and objectivity and be able to communicate and influence effectively.
- Transition from simply reporting the numbers to advising the board on all financial, commercial and strategy matters.
- Contribute strategically to the growth and value of the business.
- Be able to articulate risk to the business through a commercial, strategic and financial lens.
- Manage the relationship with stakeholders, shareholders, non-exec directors and partners (investors, lawyer, auditors and accountants) all of whom have their own priorities and requirements which need to be understood, managed and met.
- As a public ‘face’ of the company, they may also need to represent the company in the media, seek investment, manage an acquisition, or handle an approach from a potential buyer.
- Lead the finance function, ensuring the team is effective (including goals, targets and priorities), transactions are processed, routine tasks are performed, and reporting is timely, accurate and supports decision-making.
With full responsibility for the finance function and the board looking to them for guidance, the new finance director can transition from a senior team member to a company leader with a mentor to guide and support them.
What does a good mentor look like?
- A good mentor is someone who knows what ‘good looks like’ in terms of the role of finance director; they will have first-hand experience of working at board level.
- They also understand the difference between a financial controller, finance manager or head of finance and a finance director and what that ‘step up’ looks like.
- For this relationship to succeed trust is vital, as the new finance director will be sharing confidential information about themselves and the company.
- The mentor needs to be a good listener.
- They need to be able to challenge the new finance director by asking tough questions and delivering real feedback, both positive and negative.
- The new finance director needs to be comfortable with the mentor and value the relationship.
- The CEO must also trust and respect the mentor and believe that the mentor has the skills and the knowledge to develop the new finance director.
An iFD mentor will quickly identify with their mentee where their blind spots are and build a practical action plan.
In the first session, they will assess the gaps and find out more about the individual – experience, worries and where they think their gaps are in terms of knowledge and understanding.
They will then talk to the other stakeholders in the business and receive some open and honest feedback and direction.
Finally, they will build the transition plan– identify the areas that need development and define the steps they need to take together to transfer the skills to the new finance director.
We recommend a short period of intensive face-to-face sessions once a week (half-day is ample) followed up with monthly and then quarterly check-in sessions. This format enables the mentor to work through real situations practically, leaving the new finance director with the opportunity to put into practice their discussions during the following week.
Remember to be open-minded though, sometimes off-site mentoring works better – when the finance director needs to take a step back and get away from interruptions.
Mentoring can help an established finance director too
There are occasions when mentoring can help an established finance director because their existing knowledge base isn’t strong enough:
- When legacy or outdated systems, processes and controls need replacing to ensure ‘best practice’ is introduced into the finance function.
- When the ownership of the business changes from an owner/manager business to a private equity-backed business.
- In preparation for an exit, and during the transaction.
- When the business needs to raise investment