What happens when candidates for the FP&A role have less than the full skill set? “As a practitioner, I often had a hard time finding a person that could handle it all. I settled for someone who had half the skills and taught him the rest. Nevertheless, it’s valuable to have good finance experience and good merger and acquisition [M&A] experience,” says Anthony Hadorn, a former FP&A professional who now has his own recruitment consulting firm.
The biggest challenge is finding the kind of people who can be dynamic. According to Hadorn, FP&A professionals have to combine a certain mindset with flexibility. “A lot of people want their role to be clearly defined,” he says. “Companies that do not challenge their FP&A professionals with new projects have a hard time retaining top performers.”
“It is critical for FP&A leaders to quickly add value by leveraging deep company insights and industry knowledge, so hiring tends to be internal and assignments are relatively short as they are often seen as development opportunities.”
According to Phil Murphy, consultant with global executive search firm Spencer Stewart, FP&A leaders must quickly add value by leveraging deep company insights and industry knowledge. Assignments tend to be relatively short as they are often seen as development opportunities. Promoting FP&A leaders from within is frequently the preferred approach, as they have already established the key relationships within the organisation.
The FP&A function can act as a great means of grooming suitable individuals, says Murphy. “In terms of core competencies, FP&A leaders have to be builders who can create infrastructure often with minimal resources. FP&A functions tend to run leaner than other functions within finance.”
Crucial FP&A Skills
Brian Kalish, director of finance practice for the Association for Financial Professionals (AFP), parent of gtnews, breaks down the skill set of a successful FP&A professional as follows:
- Technical and financial acumen.
- Industry and company knowledge.
- Soft skills (communication and partnership abilities with other groups).
Of the three components, Kalish would put industry and company knowledge as least vital. It’s better to have the finance acumen and communication and partnership skills; company drivers and key performance indicators (KPIs) can be taught more easily.
“There’s a lot of debate around whether a new hire has to know the industry and the company in order to be successful,” he says. “There are people who feel very strongly that you really can’t thrive if you don’t have the background. The ‘catch-22’ is how to get that experience.”
Finance in general and FP&A specifically is a support function to the executive team and business management. “If you don’t understand relationship building and nurturing it’s not going to work,” adds Kalish. “Finance is important but that’s not why we exist. We need all the pieces to work in tandem to be successful.”
Depending on the organisation, FP&A can be a rotational opportunity or a full time career. That will affect the talent that’s being recruited. “For large groups I’ve seen several approaches,” says Kalish. Many businesses promote an internal candidate; typically someone from accounting or financial reporting, although there is much debate on this issue. “Accounting is often about looking backwards and being right while FP&A is about looking forward and being good.”
What are the Priorities?
For most financial professionals, a Master of Business Administration (MBA) is required, not so much because of the educational attainment but because it requires the ability to think and solve problems.
FP&A professionals can really stand out among their peers by earning the Corporate Certified FP&A Professional credential. Practitioners who possess this certification have clearly demonstrated that they have an impressive combination of knowledge and skills, as well as a high level of dedication to the profession.
Another important plus is operational experience. It’s important for FP&A professionals to understand processes for selling products. They must also be able to work in a consultative manner, to advise the operations and senior management.
“We look for technical skills in accounting as well as analytical skills,” says Matt Mitchell, plant finance controller at US power generation equipment group Cummins. Mitchell is also responsible for planning, forecasting and reporting; these being Cummins’ own version of FP&A. “We would like people that have solid analytical and technical skills, but can use the skills to be a good business partner and provide insight to our leaders.”
Cummins utilises the business improvement tool known as ‘Six Sigma’ for its primary process improvement method. “We encourage people to close three projects to achieve Six Sigma green belt status,” says Mitchell (project leaders are called Black Belts and Green Belts). Also important are communication and partnership-building skills. “A lot of my staff have a direct link to department heads so they have to be able to communicate financial results to people that have non-finance backgrounds.”
Mitchell adds that Cummins is always looking to recruit and retain top talent from across the globe, which includes actively working with and recruiting from top universities. The company also aims to develop from within. Cummins has a two-year finance development programme that includes four six-month rotations.
The Right Combination
The issue of the right combination currently preoccupies one FP&A leader at a major US energy company, who is hiring for an open position. She reports that the post involves multiple skills and very few candidates come with a combination of them all.
She is looking – almost always internally – for people who are strong in at least one area:
- Financial accounting and reporting: Her group does analysis and looks at key metrics. Its key mission is to project impact of a given plan on the financial statement.
- Corporate finance: It’s important that candidates understand M&A and corporate finance transactions, since FP&A at the corporate level models what would happen in various scenarios.
- Soft skills: The candidate needs to be someone who can work well with a wide variety of people across the organisation; someone who can initiate conversations and dig into the numbers to find out answers.
- Strong organisational skills: The group deals with multiple forecast cases and part of its mission is to keep track of it all so management has confidence in the various analyses being performed.
The biggest challenge she has faced so far is that publicising the vacancy has attracted a large and healthy internal response. “The hard part is choosing among a lot of great people,” she reports.
However, no one individual offers the perfect package of various skills, which poses dilemmas. Should she take someone with strong accounting skills, but who lacks the soft skills or the drive? Alternatively, is it better to choose someone with great drive and general analysis skills but not the financial reporting and accounting application experience and have to train them? “The key is to look at the candidate within the context of the entire team, and play to their strengths and weaknesses,” she says.
For Mitchell, the biggest challenge is giving people meaningful work. “Our former chief executive [CEO] was well known for saying if someone leaves within the first five years at the company, it’s either because they’ve had a bad boss or a boring job,” he says. “As a leader, one of your primary objectives is to develop people.”
It helps to have a diverse set of experiences. FP&A professionals who aspire to be business leaders need a broad perspective. Mitchell worked at four other companies before joining Cummins. “You should aim to get a set of experiences that keep you excited while developing yourself,” he suggests. For managers, that means matching up what people enjoy with the experience they require to grow.
“The expanding role of FP&A means you have to transfer the need from being a doer to a leader,” Mitchell added. Most FP&A professionals have the technical competencies, but how do they lead? Can they set aggressive, but achievable goals?
The reality is that “from FP&A, you can go anywhere,” says Mitchell. Some have left FP&A and became general managers. “It’s really up to the aspiration of the individual. The best career path is one that matches a person’s aspirations with work they enjoy and which meets the company’s objectives. In doing so, you’re able to gain a broad set of experiences while building up technical competency and deepening your understanding of the company.”
At Cummins, even if an individual has been in the finance function for five to 10 years, he/she can exit the discipline and join an entirely different one.
“We encourage people to start thinking of a new assignment after two to three years on the job,” says Mitchell. The next role is often in finance, but there is latitude to look either within the finance function or outside. “It is one of the many reasons that I enjoy working at Cummins. I have the opportunity to be constantly be challenged while developing my skills as a FP&A professional. I think it keeps the organisation more dynamic.”
More information on the Corporate Certfied FP&A Professional is available here.