The Evolution of the CFO

Chief Financial Officers (CFOs) have a big job on their hands. Increased regulation, competition and access to real-time data mean they are expected to be proactive strategic partners. Criticaleye spoke to a number of CFOs about how they are using financial insight to drive the business forward.

“The role of the CFO has changed significantly and they have become much more influential when it comes to business strategy and planning,” says Andrew Minton, Managing Director at Criticaleye. “Digital technology is enabling the CFO to transform their function from being expense and accounting focused, to one centred on predictive analytics and collaboration with other functions.”

In Criticaleye’s Eye to Eye video series, in association with Accenture, we asked a number of CFOs from large corporates how digital technology is transforming the finance function and how they see their role evolving. Here’s what they had to say:

Stephen Daintith
Group Finance Director
DMGT

Our technology development spend was around £15 million over the five years to 2010, in contrast over the next five years we will have capitalised and spent in excess of £300 million. There has been an enormous acceleration to keep up with competition, develop our products and to innovate stronger and harder than ever before.

That puts challenges and responsibilities on the CFO to ensure we’re always spending the money wisely, getting involved in the debate, understanding what it is we’re building and what the payback looks like, as with any sort of investment appraisal.

There’s another topic that’s come up – which is brand new for me and will be for many CFOs – and that’s the notion of measuring your technology debt. This is the understanding of your IT systems across an organisation and the cost of replacing or upgrading them. It isn’t recorded on your balance sheet, but is a contingent liability.

What’s also interesting is how we’re evaluating acquisitions. The technology assets they bring to DMGT is high up there on the list of reasons why we would acquire; it’s not just about the products or revenue streams. Technology is affecting us and it’s a case of CFOs having to learn fast.

One CTO gave me some good advice and said: ‘Ask more simple questions: ask why, how and what? And don’t accept our answers.’

Technology is a space where jargon can be used, so ask the common sense questions and flesh out real issues.

Patrick Lewis
Group Finance Director
John Lewis Partnership

I would pick three different lenses where I get the most value from technological improvement. The first [is about] our customers and making sure that we’re investing in the right place based on our digital understanding… That helps me with capital allocation and getting the best returns, so that we can provide the greatest service.

From an employee perspective, over the last five years we’ve managed to drive interaction with our partners… in a way that reduces the amount of time they have to spend on administration. This, in turn, increases the amount of time they provide adding value to the business [thus] enabling them to earn more. That’s very important, as a co-owned business my goals are slightly different from the CFO of a standard Plc.

Last but not least, the digital understanding right across our P&L helps us drive productivity. So, [to take an] example… the process by which we interact with our suppliers to pay them… used to be a very manual process, with different [procedures] right across the business. We have [now] put in [place] a number of systems that have standardised that, [allowing] us to manage the process all the way through our [supply] chain.

Simon Dingemans
CFO
GlaxoSmithKline

Enhanced digital capabilities across the company are transforming the way in which finance can engage with the business. In a traditional model of finance systems and finance IT, it would have been about controls and governance; it clearly still needs to be about those things, but you now include a much more comprehensive, capable analytics platform.

This allows you to engage with the business in a much more real-time environment. I think that is really the challenge: how do you think about the speed at which you need to make those decisions? You can invest exponential amounts in trying to accelerate that speed and, at some point, the trade-off and the value in that is questionable.

How you use data is also increasingly important. Many CFOs have invested in new systems and more standardisation, and GSK would be no exception. What you want to do is allow the whole business – not just the finance people – to see that data, understand it, interpret it quickly and in a practical way.

Stephen Jones
Former CFO
Santander UK

There’s a huge opportunity for the CFO to be able to drive their immediate business requirements in a manner that is better integrated across the firm.

Many of the requirements for a CFO… relates to ensuring that data is available in a manner that addresses accounting, capital, liquidity and other regulatory reporting requirements. [However], if you think beyond those narrow requirements it’s the same data that is driving credit risk, market risk, operational risk and could be driving customer relationship management.

I think the role of the CFO in relation to data overlaps very strongly, particularly with the roles of the Chief Risk Officer (CRO), Chief Technology Officer (CTO) and, to an extent, the Chief Marketing Officer.

Being digitally savvy and able to think about data in a manner [that] is based around golden, bullet-proof sources, [as well as] creating digital architecture which is being updated all the time with the latest requirements, are incredibly important skills.

CFOs need to become better at commissioning and executing data-related projects. The standoff I often see between the CFO and the CTO is [when] the CTO says: ‘You asked me to do this so I did it.’ Probably what the CFO asked [was] the wrong thing because they didn’t understand [the wider outcome]; they weren’t thinking beyond their own narrow scope. [CFOs need to be] lateral [and] understand the potential of technology.

Julie Brown
CFO
Smith & Nephew

There has been a big change in the role of the CFO. Previously, say ten years ago, the CFO would be a traditional accountant; they would know reporting, accounting standards and what you may call the finance specialisms, [such as] tax and treasury, extremely well.

The CFO of today is much more focused on business strategy and performance… The profile of [those] being sought after for CFO positions are now business orientated and commercial. When you think about the future… with macro-economic issues and [the fact that it’s harder to grow] in established markets, there’s an increased focus on cost, efficiency and resource allocation.

The CFO is ideally suited [to partner with the CEO in order to grow the company] because of their lens on the business and the numbers.[They can help an organisation to look] at the levers by which performance can be improved; I think that’s going to continue to become more important.

Getting top-line growth… requires someone that understands the business, looks at the granularity of the numbers and the return on investment in different parts of the business. [They need to] help the CEO channel investment towards the areas that are [ultimately] going to generate the greatest return.

By Dawn Murden, Editor, Advisory

Do you think the role of the CFO is changing? Please do send your thoughts to: dawn@criticaleye.com

Watch the latest Eye to Eye: The CFO as Architect of Business Value video series

Or why not read more from Accenture on how digital is killing the finance function as we know it.

Also, don’t miss next week’s Community Update on productivity.

Follow Criticaleye on LinkedIn 

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How to Achieve a High-Flying IPO

Comm update_13 OctoberChief executives looking to conduct an IPO have a gruelling checklist. Create a compelling growth story. Build a robust board. Prepare the business for a new reporting regime. Assess whether the rest of the management team are match fit. Such are the demands of the process that business performance can dip, resulting in that fatal mistake of missing your first set of numbers once you’ve gone public.

None of this seems to have dampened the enthusiasm of management teams considering a float. According to Big Four firm EY’s latest research, in the first nine months of the year there were 851 IPOs, raising $186.6 billion (£115 billion), a 49 per cent increase in volume and a 94 per cent increase in capital raised for the equivalent period in 2013.

The US leads the race for most capital raised, buoyed by Alibaba’s record $25 billion (£15.7 billion) listing last month. In Mainland China, a rush of IPOs at the beginning of the year propelled the region to the top of the deal rankings in the first quarter. Indeed, Asia Pacific saw more IPOs (217) in the first half of 2014 than any other region.

Martin Steinbach, IPO and Listing Services Leader at EY, comments: “Many European brands, like Prada for instance, have been looking to Asia Pacific, specifically the Hong Kong Stock Exchange, because of the wealthy and growing consumer base in China. By contrast, if you are an Asian-based technology company, you’d be looking to Wall Street.”

In the UK, there were 109 new floats registered on the London Stock Exchange from January to the end of September, an increase of 73 per cent on the same period last year, with £15.5 billion funds raised (up 163 per cent on 2013). John Millar, Head of Primary Markets at London Stock Exchange, says: “Improved valuation of the market has been key, with many world indices now trading at or close to record highs.

“Investor flows, too, have been important as, following many years of investors suffering net outflows from their funds, there has been a turnaround which has given fund managers new capital to invest in the markets.”

Criticaleye examines the six key areas for management teams to master if they’re to take full advantage of the wealth of funds now available to back businesses:

1) Get the Company in Shape

Every part of the business will need reviewing thoroughly before announcing the intention to IPO. “You need to be running the business as if you were a public company, governance and accounting especially, for at least two quarters and probably a year,” says David Harding, Chairman of Radius Equity Partners and former CEO of betting concern William Hill.

Others recommend a longer run-up. Caroline Brown, CFO and COO of engineering consultancy Penspen, and Non-executive Director of Intelligent Energy, which floated on the Main Market in July this year, comments: “I think about 18 months prior to IPO is a sensible timeframe to start planning because the company, if it is a traditional private company, will not have the skills internally to face the market.

“They will not have the systems and processes in place and it is likely to fall, at the very first hurdle, in terms of delivering its financial forecasts. It is a very difficult process and, once launched, it is quite hard to stop. So, build in resilience, build your systems and your people well in advance.”

Peter Williams, Chairman of online fashion retailer Boohoo, which listed on AIM in March, says: “Before you even start the process, the company has to do a sense check as to whether it’s got all its legal documentation in place and whether its systems are robust enough to be able to deal with all the information you have to share as a public company.”

2) Create an Effective Board

A common mistake made by CEOs is to only start thinking about appointing non-executive directors at the eleventh hour. Roger McDowell, Chairman of AIM-listed engineering company Avingtrans, comments: “All the governance requirements need to be met and the composition of the board needs to be appropriate for the business; investors need to be sure the NEDs will be engaged and working on their behalf.”

Choosing the right chairman is absolutely vital. Stephen Davis, Criticaleye Thought Leader and Associate Director and Senior Fellow of Harvard Law School Programs on Corporate Governance and Institutional Investors, says: “They’ll be able to guide the management team through that transition and make sure that the culture of the company is sensitive to the new types of accountability that exist within the context of a public market.”

Aside from knowing how to deal with investors and advisors and, of course, running a board, Peter notes that the chairman “needs to act as a mentor to the CEO and the CFO, and indeed the other people in the business, to explain what’s going on in the run up to IPO”.

3) Seek Wise Counsel

Those who have successfully conducted an IPO will talk about how crucial it is to appoint good advisors. David comments: “The key thing with all advisors – bankers, PR, lawyers, accountants – is to make sure that whoever they choose as the lead has done it before.”

Costs will have to be watched closely. “You need to put a cap on the legal and accounting [fees],” says Rod Webster, CEO of AIM-listed mining concern Weatherly International. “At the same time put someone in charge of co-ordinating the process; bringing [it] to a close quickly is the best way to control the cost.”

4) Tell a Good Story

Investor roadshows will be where the strengths and weakness of your ambitions for an IPO come to the surface. The CEO and CFO must be able to explain the finances and create a story for growth which sets the business apart.

“People are making investment decisions based on their analysis of the numbers and so on, but it’s also about their one-to-one interactions with the CEO and CFO and how they rate those two people in particular,” says Peter.

“The business will be a more attractive proposition for investors if the CEO and CFO come across well… Remember, investors have loads of choice as to where they put their money and the easiest decision they can make is not to invest.”

Rod comments: “It’s important to understand the person you’re presenting to [during investor roadshows]; the broker, if he’s switched on, should know what the investors are looking for. If it’s a generalist fund, the presentation needs to be at that level: simple, succinct and without technical jargon.

“If it’s a specialist fund then you need to go into more detail… It’s always useful having someone else with you, a chairman, CFO or company secretary, who can take over some of the talking and give you a bit of a break or to help reinforce a point.”

5) Be Sensible on Pricing

It’s inevitable that some IPOs will be pulled due to disagreements over pricing. David says: “Unconnected analysts and commentators will look to make money shorting and can always find a credible story as to why the issue was overpriced and that will always spook some into selling…

“It’s another reason why not getting suckered into bullish forecasts is so important, that way your first set of results will steady the ship.”

Martin comments: “If you are an entrepreneur looking to IPO, you should have your own idea of a valuation… [with] a price-to-earnings multiple that enables you to have a feeling about the fair price range for the business.

“Armed with this knowledge as background, you then need to convince the bank and the analysts that you have the right peer group and a proper forecasting system, which is reliable and that will continue to meet their expectations. You also need an equity story that is timed well for the market.”

Think carefully about the blend of investors too. Jamie Pike, Chairman of FTSE 250-listed plastics manufacturer RPC Group, says: “One of the critical success factors in any IPO is that you have genuine liquidity after a float. You must be able to create a market for people to buy and sell your shares… [because] if there’s a lack of liquidity people have no idea whether they’ve been given an accurate price.”

6) Hit Those Numbers

The performance of the business cannot be allowed to drop-off in the run-up to flotation, yet it can easily happen.

“A significant challenge for companies is to continue the day-to-day running of the business, while at the same time conducting an intensive IPO process,” says John. “Banks and independent advisers can help lighten the execution load, but it is still a demanding time for a company’s executive team.”

David says: “[It’s] a real issue as the IPO takes the CEO and CFO out of day-to-day management for three months. It helps if there’s a COO but, if not, it’s obviously important that no big operational events are planned during that period. [During the William Hill float] I made sure each of my direct reports sent me a short daily ‘exceptions’ report and were exhorted that ‘no surprises’ was the order of the day.”
***
For CEOs thinking about the move, it’s a case of taking the time to put every piece in place so the business is performing to the highest level. After all, while a successful flotation is to be commended, there’s no bedding-in period once a company goes public.

“Time and again I think management teams regard a successful IPO as the end of the journey, but it’s actually just the start,” says Caroline.

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk

Leading Global Expansion

Comm update_10 SeptemberEvery stage of international expansion requires careful analysis. From evaluating market opportunities to deciding on whether to make an acquisition, form a joint venture (JV) or grow organically, a leadership team must do its homework and be prepared to adapt to the commercial realities of each country. Get it right and the rewards are such that business models can be transformed.

The first step is to give serious thought as to whether a country is a good fit. Paul Walsh, Chairman of FTSE 100 catering and support service Compass Group and former CEO of global drinks giant Diageo, says: “[It’s] about looking at the GDP projections, the populous and the ladder of aspirations. You look at the social acceptability of what you’re selling, the political environment [and question whether] this is a market whereby a non-local company can do well… All of these things have to be analysed, then [you] make your priorities accordingly.”

Bill Caplan, Chairman of crane hire company Weldex International and former Regional Director for Europe, the Middle East and Emerging Europe at temporary power firm Aggreko, says: “You generally look at the macro-economic activity in the country, fine tune it to what’s happening in the sectors that you’re strong in and then, within those sectors, decide on your addressable market.”

Boards should be wary of being taken in by a market’s size and fast-growing GDP. Bart Cornelissen, Head of Emerging Markets within the Global Joint Venture Practice at KPMG, comments: “There is another dimension to this and that’s the whole question of what the ease of entry is like and what the competitive landscape is really about? It’s easy to focus entirely on the potential but you can forget to ask: ‘How are we going to make this work? What’s the right business model, e.g. a joint venture or local partnership, and how do we ensure we have the necessary capabilities?’”

Best-laid plans

Once a market has been chosen, the next challenge is the small matter of deciding on an entry strategy. While some leaders have a formula which they claim can be rolled out, the consensus is that the decision will be based on the speed at which you plan to expand, the experience of your senior leadership team and the risks and regulatory structure of any given market.

“So much depends on the sector, the geography and the business model,” says Charlie Johnstone, Origination Partner at private equity firm ECI. “A good example is [our portfolio company] Fourth, whose software is excellent at helping the hospitality sector understand and control their costs… When we invested they were doing some work in North America but were definitely underweight there.

“As we didn’t need [to introduce] a new product to sell into the US, a sales-led office opening strategy seemed sensible. However… given the small, monthly payment nature of the contracts, it would have taken a long time to scale. So, we helped Fourth identify and buy a software business in Connecticut which was in the same sector… [and] this gave the company immediate scale in the US, a sales force and signature clients.”

Tea Colaianni, Group HR Director at Merlin Entertainments, explains how an acquisition in Istanbul has given the theme and leisure group a platform from which to grow: “We’ve always wanted to be in Turkey… [so] the location was very attractive and it gave us an opportunity to establish a relationship with a number of people: landlords, city officials and so forth. We’re [now] in discussion to open possibly another two attractions in the same location.”

Alternatively, JV may be the best option as this allows organisations to share not only the risks and capital investment, but capabilities as well. David Moore, Chief Portfolio Officer at private equity firm NorthEdge, comments: “JVs allow you to leverage a locally-based business’s infrastructure, whether that’s people, manufacturing capability, logistics, know-how of operating in the territory, customers, routes to market or an established supply chain.”

Andy Dunkley, CEO of clothing company Lee Cooper Brands, which was acquired by global fashion group Iconix in 2013, comments: “We’ve got a JV partner in Southeast Asia, Li & Fung… We add to the portfolio of products that they can sell and [the hope is] they’ll grow our business and provide a supply chain, which we as a company will never do. So they help us on that missing jigsaw piece, as it were.”

Not every country presents a series of choices when it comes to selecting your entry strategy. Paul says: “In Vietnam, for example, a lot of the entities that you’re looking at are actually state owned and the government will only allow you to take a partial stake.”

Starting from scratch

The other tactic to use when entering a new market is to opt for organic growth. It is generally a far slower route to take, but it does have its advantages. Giles Daubeney, COO at international recruitment consultancy Robert Walters, comments: “In our industry [the issue with] acquisitions is if I buy a company… and all the consultants decide to leave, which can happen if they’re unhappy with the new compensation package, you’re left with nothing.”

Giles goes on to explain that expansion has to be client led. “I was having a meeting with [a major client] and he said: ‘Listen, what are you guys doing in Japan? We’ve just entered that market and we think it’s a huge opportunity.’ We then went and did a bit of research and decided to open an office in Tokyo… We’ve been in Japan 15 years now and we’ve got just short of 200 people, two offices and it’s purely organically grown.”

For Mark Silver, CEO of European property management specialists VPS, if you’re going to grow organically, the management team needs to really understand the market. “If I was going into, say, Scandinavia, I’d look for an acquisition because… it’s a really new area for us. But if I was going to go into Portugal, where we’re not currently located, I might choose to do that via organic growth because we have a business in Spain, so it’s just down the road.”

Whatever route you choose it will require genuine focus from your senior leadership team. “If you are going to invest or build you are committing yourself and you can’t get cold feet part way through, so you must have done your homework,” comments Paul. “I think the leadership, wherever they may be based in the parent company, has to invest time in visiting the market, understanding the people and creating strong relationships.”

Without that first-hand attention to detail, you may not appreciate the need to make changes to strategy. Bill says: “[Don’t] be afraid to revisit your… business plan and change it as you go along… [because] no matter how much due diligence you do… once you’re in, more is revealed and, as a result of that, you end up having to be responsive to things that you didn’t necessarily anticipate.”

It’s universally agreed that it’s wise to hire people that know the market from the inside. Paul explains: “You have to get people with local knowledge. Where businesses fail, in my opinion, is where they think they can just have either ex-pats or people visiting from London; you’ve got to have people who are senior and know the market, and you have to establish a very firm bond of trust.”

International expansion is difficult to get right but, as long as the markets are carefully selected and the entry strategy is aligned with an organisation’s capability, the rewards will be very much worth the effort.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk 

A Meeting of Minds

Comm update_3 SeptemberLeaders that spend some of their valuable time on networking never look back. They’re willing to meet a mix of people, are keen to share their own experiences while also taking advice that could inform their own thinking on how to tackle business dilemmas. Fundamentally, they understand that a diverse network, where there is mutual respect, can only be a good thing.

Sir Ian Gibson, Chairman of supermarket chain Morrisons, says: “Networking is useful because it opens people’s minds and stops them becoming too internalised. It’s also good for appreciating what you’ve got, because every company [and]… management team will have challenges and issues to overcome and, seeing the way it works for others, provides an external reference which can be useful to validate ideas and ways of working.”

It forms an important part of leadership development for directors who are curious, always on the lookout for fresh insights. “The real purpose of networking has become clearer in recent years,” says Dominic Emery, Vice President of Long-Term Planning for BP. “Certainly my experience of it, in terms of understanding how other companies do strategy, which is primarily what I’m involved in, I’ve found extremely useful… [and] I’ve learnt an enormous amount from real practitioners about what works and what doesn’t.”

Paul Withers, Senior Independent Director at engineering concern Keller Group, comments: “What it does is give you other people’s perspectives. So, like I did, if you spend a lot of time in one company, there’s a danger that you get a particular perspective on how things are, how things might be and how things should be.

“But if you see different companies run in different ways, in different styles and you meet a mix of people who have their own particular approaches, you’re more flexible in terms of how you see possible solutions or ways through situations and that is good to have.”

Code of Conduct

If you’re to extract the full benefits from networking, there’s some basic etiquette to follow. Jeremy Williams, Chairman of design agency Assembly Studios, says: “For me, people selling their services at a networking event, particularly at the outset or in an insistent way, is a big mistake. My approach to networking is to look for opportunities to help others, be that by making connections, further introductions or recommendations.

“If you focus on the needs of other people rather than yourself, then you will add great value for them at networking events. I feel this approach is much more likely to develop into mutually beneficial, two-way relationships in the future.”

Neil Wilson, CEO of recruitment concern Stanton House, agrees: “When you’re networking, you have to go into it with a feeling of trying to help people, whichever way that might be, because then it could be reciprocal. But if you just go in and think: ‘What can I get from this personally?’ and don’t give anything back, that’s when I think it can go wrong. It’s a case of striking the right balance.”

A transactional attitude will be damaging, both for the person trying to sell and the organisation they represent. Liz Bingham, UK&I Managing Partner for Talent at professional services firm EY, says: “You can’t expect an immediate outcome, like another meeting, a piece of work, a job opportunity, whatever it may be. The problem with that approach is that the whole thing becomes more tactical than relational.”

According to Liz, it’s a misunderstood skill. “One of the challenges is that people view networking as standing around with a glass of something fizzy in your hand chatting, whereas the true value really does need to be better understood,” she says.

Quality, rather than quantity, is frequently cited as vital when building a network. Mike Greene, Chairman of online education company Bolt Learning, says: “I would rather meet one person a year who was hugely beneficial than a thousand of no value.”

In its purest form, knowledge, learning and diversity of thinking are what high-value networking can provide. “It works in a rather diffuse way,” explains Dominic. “You’re never quite sure what you can potentially offer until you get into the conversation. So you may have a superficial view that you’ll be able to exchange ideas about how strategy gets created in your company, but until you get to the conversation it’s not obvious where the giving and taking will be.

“So, I think if you go in there with some sense of what the purpose of the conversation is and then allow it to evolve, often it will result in a lot of common ground emerging very quickly.”

Not everyone is a networking natural but that shouldn’t be an excuse to shy away from it. With a little planning and effort, the benefits, both personal and professional, will soon become apparent.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

What’s on the Mind of a CFO?

Comm update_20 August1

Collaboration is essential if chief financial officers are going to perform to the highest level. They have to be highly analytical, commercial in approach, capable of shaping strategy and possess a keen eye for detail and process at the operational level. It’s why technical expertise and good interpersonal skills are so important as the CFO will be pulled into a variety projects right across an organisation.

“The demand on the CFO is to be a bit of a silver bullet guy,” says René Matthies, Chief Financial Officer for energy company E.ON UK. “They need to be strong on different capabilities, particularly stakeholder management. It’s a balance, on the one hand supporting customers and the business and, at the same time, managing the delivery of the strategy and financial targets while safeguarding compliance and managing risk.”

It relies on possessing a diverse set of skills. “The role of the CFO is a lot broader so it’s no longer about accounting and [bookkeeping],” says Shatish Dasani, Group Finance Director at electrical systems manufacturer TT Electronics. “It’s about getting to know the business, being a commercial player and getting involved in strategy.”

The CFO will be called upon for their insights on a variety of issues, from IT, legal and HR, to the more traditional areas of financial modelling, compliance, acquisitions and speaking to analysts and investors. Steve Allen, Managing Director for Finance at TfL (Transport for London), says: “You have to be able to work collaboratively with colleagues, draw out information, challenge constructively and yet still be able to present results in a robust manner.”

David Santoro, Executive Partner for IBM Global Business Services, says: “The role of the CFO has… gone from one that’s been custodial in nature, statutory and regulatory [in its focus], to one that’s now more forward-looking and oriented towards providing strategic input into the business…

“Data and reliable information are probably the most important assets in the armament of the CFO today and that’s definitely something that has changed dramatically over the last ten to 15 years.”

The emphasis on risk management has grown significantly. Bob Emmins, Finance Director of sugar supplier Silver Spoon, comments: “Gone are the days when risk management was just what the financiers asked and the auditor thought about. It has to be embedded into the business, so that people are considering the risks whilst making their decisions.”

Deirdre Mahlan, Chief Financial Officer of alcoholic beverages company Diageo, says: “Globalisation, or the increasing tendency of businesses to act and think globally as opposed to just being present globally, has shifted the balance in terms of thinking about risk and reward.

“Certainly, when your business has less presence or less at stake in multiple cultures, multiple economies, different sets of socio-political environments, you can manage that risk-reward and resource allocation differently.”

As a business becomes more global, the dynamics around risk and resources becomes far more complex. “I think many organisations and individual professionals are still working their way through getting to reasonable levels of comfort in doing that,” adds Deirdre.

Using Intelligence

Technology’s impact on the role of the CFO is only going to increase. “It is driving both the strategic and detailed aspects of the work,” comments Barbara Moorhouse, Non-executive Director of the Lending Standards Board. “More of an organisation’s strategy may be technology led; support systems are becoming more complex and risks are increasingly technology related – and hard for non-specialists to understand.”

The speed at which information can be sliced and diced is proving to be both a blessing and a curse. Jim Wilkinson, Chief Financial Officer at African investment concern Lonrho, says: “Technology is changing the role because everything is becoming more immediate and the amount of information is increasing significantly.

“This means that time management skills and being able to identify the valuable information is extremely important. It is also making the role far more 24/7 than ever [before].”

It’s one of the reasons why finance functions are rapidly evolving, so they can provide productive insights by integrating operational and financial data to inform the decision-making process. “The operating model is changing from being transactionally focused – so producing reports, closing the books [and reconciling accounts] – to one that’s much more focused on… insight creation and driving real value back into the business,” says David.

In fact, many organisations are keen to outsource the day-to-day aspects of management accounting in order to bring in people that can enhance performance. “It’s a massive challenge facing finance [teams] globally and one that is causing a fundamental shift in how they look at… investing in the future of finance,” he adds.

What hasn’t changed is the need to talk regularly with the CEO and, in effect, act as co-pilot. Paul McKoen, Chief Financial Officer of bed and mattress manufacturer Silentnight Group, comments: “A CEO needs the support and complete loyalty of a good CFO, but they also need somebody who is prepared to stand up and criticise and tell them when they’re wrong. It can’t be an uncritical relationship.”

Jim makes a similar point. “The CEO and CFO should work extremely closely together as partners. However, they should also be challenging each other and not be afraid to speak their minds and have differing opinions. Respect for each other’s style and achievements should still overcome any fundamental disagreements,” he says.

The CFO has the widest ranging role on the board, with the emphasis firmly on forming alliances to make sure strategy and execution are aligned. As Deirdre puts it: “The biggest change in the role of the CFO, over the last decade or so, is a shift from almost a policing or reporting function, as the primary role, to one of business partnership.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

The True Value of Risk

Comm update_2 July1A healthy approach to risk is one where a board has a robust framework in place which allows it to focus on the most important threats. Success will mean an organisation is not only resilient and well-drilled in how to avert or respond to a crisis, but strategically directors will be able to make informed decisions that can outsmart the competition.

Alison Carnwath, Chairman of commercial property and investment company Land Securities Group, says: “In 2010, we took a gamble to start our big development programme in London. There were commentators at the time who said we were taking a very risky view on life… but we calculated financially, and in the context of the property cycle, that we were doing the right things… and we’re seeing the payoffs now.”

What risk cannot be is purely a box-ticking exercise. Barbara Moorhouse, Non-executive Director of the Lending Standards Board, comments: “As directors we have very well developed models for good governance, internal controls, and risk management. Professional services firms in the UK – accounting and legal – would rightly see themselves as setting high standards by international comparisons. While this may help the balance of the UK’s ‘invisible trade’, it may increase the focus on governance issues disproportionately.”

Board directors must have the time to think strategically. Allan Cook, Chairman of engineering consultancy Atkins, says: “The balance between risk and strategy, and taking full advantage of opportunities that exist, is down to the quality of the leadership in the company. It’s in the balance that you have between the executive and non-executive directors.”

A system should be in place whereby directors aren’t overloaded with information. “Boards need to focus on the big risks and make sure that they are properly considered, debated and addressed,” says Andrew Allner, Non-executive Chairman of public transport concern Go-Ahead Group. “You can end up with an incredibly long list which is not particularly helpful, and there’s a lot of stuff that, really, shouldn’t take up the time of directors.”

Peter Shore, Chairman of telecoms concern Arqiva, comments: “We have developed a risk matrix… [whereby] only the top ten risk items come up through the business to the main board… If they aren’t realistic or actionable, or it isn’t a material performance risk, they don’t actually make it onto our risk register.”

For chief risk officers (CROs), internal auditors and chief finance officers, this is posing some interesting questions about how to manage data, the general flow of information and what should be communicated to risk committees. Sue Kean, CRO at financial conglomerate Old Mutual, explains that while wide-ranging monitoring reports and trend analysis are conducted and examined, only identified trends or exceptions are passed up to the board.

Across an organisation, there has to be an embedded sense of accountability and openness. Judith Nicol, Director at executive and non-executive recruitment specialist Warren Partners, comments: “You have to make sure there are internal processes to measure and monitor known areas of risk. But perhaps the more difficult thing for boards is to ensure they have a culture and a system in place to allow issues of concern to be surfaced that may not even be on their radar.”

Getting this right is easier said than done, especially for global entities. Peter says, “If you’re across a whole range of countries I think [the question of risk management]… is increased, because the probability of something going wrong in those countries is increased…

“Rather than tight central controls, you’ve got to find a way to distribute some of the decision-making authority and risk assessment. That then has to take account of different cultural and business practices and markets, regulatory risk and the whole swathe of things that you have to deal with. It’s just bigger and more complex.”

At board level, a mix of individuals will be needed, including experienced non-executive directors who are bold enough to provide a different perspective, while not acting like blockers. Allan says: “Having a balanced board means that you’re able to take a longer-term view, in terms of what you should be looking at with regard to risk, and actually what [you] should be looking at in terms of strategic options.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

The Value of Investor Relations

Comm update_17 June1The management teams of public companies must work hard at investor relations (IR) if they want to be heard by the right audiences. It’s something that needs to be carefully judged, as it’s easy to fall off the radar with so much news and information available across a wealth of channels, but equally executives mustn’t make the mistake of telling a story that is more fiction than fact.

“A good investor relations strategy starts with the business and whether you can tell a clear and compelling story around it,” says Vanda Murray, Criticaleye Board Mentor and Senior Independent Director at engineering company Fenner. “You must be able to translate what happens in the business into an understandable story that is evidence-based. What are the external factors and what are the elements in the business that are going to take it forward?”

It’s a case of using advisors wisely, such as hiring a good public relations firm, taking the time to talk to analysts and having a well-rehearsed narrative to relay about the company.Jamie Pike, Chairman of plastics manufacturer RPC Group, comments: “You need to take investors seriously, even if they’re asking you questions about strategy and management which you might think reveals a lack of detailed experience or understanding.

“That’s perfectly reasonably because these people don’t run businesses, but if you don’t take them seriously and if management teams lose what one might loosely call the confidence and trust of investors, then that really is bad news.”

Competence, communication and clarity are what investors want from management teams. Martin Bloom, Criticaleye Board Mentor and Non-executive Chairman of Chinese solar wafer manufacturer ReneSola, says: “Boards need to provide timely and accurate information to the market and, above all, they mustn’t hide problems. Investors will forgive a lack of achievement once or maybe twice, but they certainly won’t forgive deliberate misinformation, nor will regulators.”

A common mistake, especially among companies seeking backing for an IPO, is to get into the nasty habit of promising too much. “I’ve seen companies where board directors don’t really see past the funding itself and therefore, in their relationships with the investors, potential investors, brokers and research analysts, they oversell their capabilities,” continues Martin.

Alan Bannatyne, CFO at recruitment company Robert Walters, comments: “[My advice is] to be as straight as you can. Companies definitely get themselves into trouble if they start to overhype things and I think it’s important that, in terms of where the consensus numbers are, there’s a high degree of confidence.”

Running commentary

Whether it’s the media, analysts, institutions or private investors, each audience will have different needs and management teams shouldn’t be under any illusions about the time it takes to nurture strong relationships with them.

Tom Attenborough, Head of UK Large Caps for Primary Markets at the London Stock Exchange, says: “One of the most important prerequisites to a successful IR function is management commitment. [It] should be embedded within the senior management team and the CEO, CFO and Chairman must commit the requisite time and resources to support the IR effort.

“A good IR function will know the business inside out, know its target audience and ensure that the messaging to both investors and sell-side analysts and brokers is consistent, clear and timely – both in good times and bad.”

Mike Tye, CEO of Spirit Pub Company, comments: “You need trust from the analysts. If you don’t talk to them they always think something is wrong or there is something they ought to know about, and they don’t like surprises… If the relationship is good and you’ve had the right conversations to help them shape their modelling, then they can make their own decisions about the impact of management actions on their model.”

More often than not an experienced PR firm will prove to be invaluable. Martin says: “If you’re involved with new technology, you probably need a separate PR firm to place stories with opinion formers in the tech community. These can see the benefit of the technology, how innovative and how different it is from what else is out there. So that is important and that may need a certain specialisation, depending on the nature of your technology.”

There is, however, another side to this which should be taken into consideration. Leslie Van de Walle, Chairman of construction company SIG, comments: “You need to have a strategy which reflects the size of your company – you don’t want to be over exposed. What you want is to have one or two [financial journalists] that you know and can rely on… [and] a PR agency that is well experienced, who will introduce and advise you [on the level of profile you need].”

Jim Wilkinson, Chief Financial Officer at African investment concern Lonrho and former Group FD at online gambling company Sportingbet, says: “Financial PR is one of those things that you want because it helps [the market] understand what you’re doing, when you’re doing it and why you’re doing it. In the good times, that doesn’t add a huge amount of value apart from a sense check… but in the bad times [PR] adds a huge amount of value because it makes sure that your communication is done properly and that you’re getting the right message across to the right people.”

It boils down to building trust through open, honest dialogue – after all, there’s no currency like goodwill on the public markets. Mike says: “When you’re running a Plc you’ve got to have enough in the tank to deal with a decent amount of bad news, because there are always ups and downs. You simply have to build a trusting relationship to create long-term holders.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

A Flatter, Faster and Fitter Business

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Strategic, board-level decisions often fail because they are ground down in the corporate machine. While senior executives must be smarter at overcoming this by engaging middle managers and explaining why certain decisions have been taken, there is also a bigger, systemic question that needs to be addressed around organisational design and culture so that the best ideas are driving a business forward.

Martin Hess, VP of Enterprise Services at IT concern Hewlett Packard, says: “We have taken out tiers of management to flatten the organisation’s structure, because one of the biggest frustrations is that decisions taken at the top basically don’t hit the bottom. Too many tiers of management dilute the message that comes from the top, so you’ve got to find ways in which you can communicate decisions that avoid that dilution.”

It does appear that a point has been reached whereby traditional structures, be they hierarchical or matrix, are proving increasingly inadequate for global businesses. If that is the case, anything that can simplify and bring transparency to the decision-making process should be welcomed.

Julian Birkinshaw, Criticaleye Thought Leader and Professor of Strategy and Entrepreneurship at London Business School, comments: “All organisations use, to some extent, business models and management models that they don’t question and have inherited. These are based on order and control, but this ends up constricting an organisation’s ability to function…

“There are alternative models emerging which are bottom-up, relying more on the ability of people to make decisions for themselves and working out a mode of operating that is successful.”

Informed decisions

Much has been written about how data and analytics can inform choices. While there has undoubtedly been a step-change in this field, it shouldn’t be seen as some kind of panacea for making tough calls. Martin says: “You’ve got to avoid the process whereby you filter only the information that supports that decision.

“It’s not a weakness to change. You make decisions based on the data… then you’ve got to create a model that is permeable, allowing other data sources to come in that might influence that decision going forward.”

The focus must be on flushing out any false assumptions you may have.

Simon Dawson, Associate at leadership and organisational change consultancy Transcend, says: “Be aware and open about your biases, both personal and organisational, that might come into play in decision making, whether it’s in interpreting data or having a gut feel about what to do.

“That might include being tainted by negative previous experience; the different perceptions of risk; whether levels of optimism are realistic or how people perceive themselves and each other.”

Caroline Brown, CFO of consulting and software service concern KBC Advanced Technologies, emphasises the need to balance data with personal judgement.  “I’m afraid I tend to go with the gut feel and really interrogate the data that doesn’t agree with that,” she says.

“I’m very sceptical about data most of the time. I wouldn’t go as far as to say [I pick the data that I agree with]… but data that is in contradiction of the gut feel gets interrogated thus, because it starts with the wrong assumptions and probably the wrong inputs as well.”

The volume of information now available means that executives can become lost in an endless maze of data analytics as they attempt to make the ‘right’ decision. “Companies which look at data and are obsessed by it can find themselves in a state of ‘analysis paralysis’,” warns Julian. “They get stuck in inaction, whereas the next era is one of action and conviction.”

For Geraint Anderson, CEO of electrical systems manufacturer TT electronics, it’s a matter of course to be working to clear data points but, he says, “it’s ultimately about whether I feel it’s the right thing to do… then making sure that I can back that up with data where possible”.

The right results

The crux for effective decision-making in any organisation comes down to leadership. “When decisions fail to take hold within an organisation it’s mostly down to culture and lack of communication around the context for the decision,” says Caroline.

Geraint says: “I keep HR directly informed and share and develop decisions and the direction with the rest of my team, bringing them together on a regular basis to assess whether we are still on the right track. It’s vital that you’re coherent and bring decisions together as a team and are not just being dictatorial.”

The common mistake is to announce a change, not communicate it clearly and then fail to revisit it on a regular basis. Clodagh Murphy, MD of Eclipse Internet, a division of KCOM that provides communications services to small and medium-sized businesses, comments: “Decisions often get taken in boardrooms and are cascaded out as ‘just do it’, without taking the time to explain the context of why the decisions have been taken…

“We’ve had bottlenecks where, to some extent, the capability of some of the middle managers just isn’t there to articulate the messages effectively… [and] we’re doing quite a bit around people development to try and overcome some of that.”

If decisions do appear to keep getting ‘stuck’ in a business, ultimately a CEO will need to see this as indicative of a more ingrained weakness around the leadership team, the culture and organisational model. At present, many companies are at a stage of reassessment, wondering how to reduce complexity so that everything is moving faster, but in a way that is based on clearly established values.

According to Julian, “we have now reached a point where an emphasis on collective knowledge has led to sterile decision making, devoid of emotion… Organisations now need to marry knowledge and emotion”.

It may prove to be an unbeatable combination.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk 

The Changing Role of the CFO

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By necessity, chief financial officers have to be able to see the bigger picture. With rising commodity prices, fluctuating currencies, greater oversight and regulation, cost cutting and the emergence of new economic powerhouses, it’s essential that a CFO has a firm grip on risk and controls but is also able to have a strategic overview of where an organisation needs to be heading.

Inevitably, those who are successful in the role must be able to communicate clearly with investors and stakeholders, while also demonstrating strong leadership qualities in the finance function and across the business. As part of Criticaleye’s latest filmed series, The Changing Role of the CFO, in association with Accenture, we spoke to a variety of CFOs to find out how this key position in the executive team is evolving.

Alan Stewart, CFO at retailer Marks & Spencer, says that “the emphasis has really shifted from getting the numbers right to forward planning, to understanding what forces are impacting on the business itself – whether that’s customers, competitors, technology or different aspects of marketing.”

A similar point is made by Chris Wright, Managing Director at Accenture, who observes that “the CFO is now a co-partner to the CEO and is getting much more involved in the strategy of the business”, while simultaneously being close to the operations of an organisation. He adds that this is possible because both the training and experience of CFOs is much broader than it used to be.

Ben Stevens, Finance Director and Chief Information Officer at British American Tobacco, says that a variety of skills is absolutely essential. “As IT becomes more central to the way a company operates, it’s very important for CFOs to have, at least, an overall understanding of things like ERP [enterprise resource planning] systems, where value can be added to a company… You’re also looking for people who have a vision… and who have the influencing skills to take the company with them.

“Now, neither of those skills is particularly finance related but I think they’re important in a CFO because you have an overall view of the company that hardly anybody else [has]. You see the strategy and the performance of the company, you also deal with governance issues, resource allocation and financing.”

Patrick Butcher, CFO at Network Rail, says: “CFOs are expected to engage with the business and across it in much broader ways than they were in the past. This has become [customary] as accounting standards have become more complex and, to some extent, the accounting profession has lost its way.
Therefore, the financial accounts are of no use to anybody trying to make decisions about a business and the role of the CFO is to interpret the numbers and use them to tell a story about business performance.

“So it’s about business partnering and storytelling, rather than about simply producing a high quality set of accounts, which is not to say that we don’t still have to produce really high quality accounts which are consistent with whatever accounting standards the organisation happens to be using.”

Nic Nicandrou, Chief Financial Officer at insurance and financial services provider Prudential, argues that the range of responsibilities is constantly developing: “In time, the role of the chief financial officer will be less of a technician and more of a strategist, less of an operator and more of a catalyst, less of a people manager and more of a leader, and less of a minister in charge of a portfolio and more of an ambassador on behalf of the organisation, both internally and externally.”

Whole numbers

There was general agreement among those interviewed that if a CFO had any hope of performing to the required level, aside from a basic grounding in operational finance, management accounting, budgeting, treasury and so on, there had to be experience outside of the finance and accounting department.

Evelyn Bourke, CFO of healthcare specialist BUPA, says: “People who can integrate different perspectives are crucial. Individuals who just crunch numbers all day and say, ‘X moved to Y,’ without any added insight or actual ability to expand on what the consequences of that might be,  have limited futures in their organisation. You need someone who is able to think holistically.”

Leadership qualities will undoubtedly be tested. Deirdre Mahlan, CFO of drinks business Diageo, says: “You need to be able to influence without authority. There are many occasions in the life of the CFO when you really need to be able to encourage or influence your business partners, whatever function they happen to be in, to rethink a particular strategy or to consider one that they hadn’t thought of and you are rarely doing that with direct influence.”

At a time when change is the norm, the CFO, working closely with the CEO, is perfectly placed to keep business goals aligned. For Patrick, that ability to articulate where the business is at in its journey is incredibly important. “The numbers we use are not just the financial or reported accounting numbers but the business metrics,” he says.

“They’re quantitative numbers and I think another key skill is to be able to translate a raw set of data and metrics into a story that comes alive, whether it’s for employees, customers, suppliers or investors.”

For Chris, although awareness is improving, many organisations continue to sit “on mountains of data around their customers and products and they are just not harvesting the value that can be gained from proper analytics”.

There are plenty of elements to the CFO’s role that remain the same as they ever were, such as a healthy approach to risk, corporate governance, clear processes and controls and timely reporting. But the complexity is increasing, particularly for global organisations.

Nic says: “The more options you have, the more stakeholders, the more things you have to worry about… In very practical terms, it makes a lot of our jobs 24-7 and, in a way, that probably reduces the tenure of a CFO as a result, because there is only so long you can do a 24-7 job. But, in my role, it also makes it much more enjoyable.”

This is why CFOs must have a strong team around them who can take responsibility and be trusted to provide quality information. According to Nic, to be a success means being “able to scan the horizon, read and analyse at a macro level the signs, trends and the data points, then translate them into a vision for the organisation”.

It’s number crunching, but not as we know it.

I hope to see you soon.

Matthew

https://twitter.com/criticaleyeuk

 

Boards and the Pension Crisis

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As investments and strategic deals get blocked because of pension deficits, directors, trustee boards and regulators need to work together to find ways to see through some of the madness created by actuarial assumptions. With an ageing population, volatile equity markets, low gilt yields and eye-watering levels of debt, compromises do have to be made in order to arrive at real-world solutions.

First and foremost, if a corporate does have a problem, there’s no excuse for senior leaders burying their heads in the sand. Those executives at the top have to own the issues – not delegate them. Lady Barbara Judge CBE, Chairman of the Pension Protection Fund, says: “It’s absolutely fundamental that executives understand the risks surrounding their pension fund; directors need to understand that the pension fund liability is essentially a debt of the company.

“Companies have a responsibility to their employees and the pension fund, as well as other stakeholders. Accordingly, any pension fund liability is clearly an issue on which company directors should be educated and company finance directors need to manage their pension fund exposure as part of their broader balance sheet management.”

Alastair Lyons, Chairman of outsourcing company Serco and car insurance provider Admiral, comments: “I would expect the CFO to have an in-depth understanding of the… accounting deficits [and] to changes in market and non-economic assumptions. I would also expect the CFO to have examined different mitigation strategies – for example, investment de-risking – in order to reduce the potential impact of pension scheme volatility.”

That said, it’s unrealistic to suddenly expect directors to become pension experts. Richard Farr, Partner in BDO’s pension advisory team, says: “How many of those in the C-suite actually understand pension risk? They’re struggling with corporate risk, let alone pension risk and it is a completely different universe of understanding.”

David Harding, Deputy Chairman at private-equity backed Malaysian lottery operator Magnum Berhad and former CEO of bookmakers William Hill, comments: “It is reasonable to expect senior execs and non-execs to focus resources on major risks. However, this is a specialist area and not one many execs or non-execs will have dealt with, so it is not reasonable to expect them to come up with solutions without specialist help; and it is unlikely to climb the risk ladder and grab their attention unless it is flagged by specialists.”

The danger is for executives to fail to see how a pension deficit is intrinsically linked to the sustainable performance of a business. Jeremy Stone, Chairman of Trustees of the WH Smith Pension Fund, says: “It’s almost a fiduciary requirement but often plc boards lack patience with the subject. They don’t have much appetite for understanding why the numbers have moved against them.”

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A question of trust

Undoubtedly, the pension crisis is a man-made disaster of epic proportions. Recent figures released by The Pension Protection Fund in the UK show that the aggregate deficit of 6,316 defined benefit (DB) schemes – representing about 12 million members – increased from £201.5 billion in February to £236.6 billion in March. Total liabilities in the UK now exceed £1.3 trillion.

This dire state of affairs makes the interaction between the trustee board and the executive team increasingly important. Anthony Arter, London Senior Partner and Head of Pensions at law firm Eversheds, says: “Given the liabilities at stake it is vital that pension schemes are run by an effective and properly constituted trustee board with clear leadership. The Pensions Regulator has made clear that ensuring good pension scheme governance is one of its top priorities.

“This means that trustee boards need to be well run; be on top of the issues affecting their scheme, and be able to make good decisions that are not tainted by conflicts of interest in a timely manner.”

Alastair says: “Particularly important is the quality of the Chairman of trustees as those on the board will typically follow his or her lead. The Chairman needs to be highly knowledgeable of the intricacies of pension scheme funding and preferably have confronted difficult situations before – if they have they will, therefore, have confidence in their own judgement as to what shape and structure of solution is appropriate for the scheme concerned.”

Inevitably, there will be some that need to raise their game. “All schemes will have properly constituted boards but whether they actually have the right distribution of competencies on that board is another question,” says Jeremy Stone. “The way it’s set up, some are nominated by the company, often people from the finance or HR function, so they know something about the subject, then you might also have some independent representatives.”

According to Richard, a real problem in arriving at perfectly achievable solutions is the lack of knowledge among some trustee and corporate boards about what is possible. “The trustee boards are not aware of the potential solutions because they’re not being told,” he says. “There are very competent and committed trustee boards out there, but the lawyers, accountants and actuaries need to give them more options – however, that also involves the advisors understanding the economics of the employer as well.”

The future lies in finding ways to share risk. “You have to change the framework, the guidelines and encourage partnerships – if there isn’t an answer through that, then there is no answer at all,” says Richard, who predicts greater activity among investors, especially hedge funds, in taking on pension risk as schemes are restructured and sold on at a discount.

While there may need to be more regulatory flexibility around how corporate and trustee boards can de-risk their schemes, the less involvement from Government on the issue is uniformly seen as a good thing. Ian Harley, Criticaleye Board Mentor and Senior Independent Director at media distribution company John Menzies, argues that “regulation and politicians have been a large part of the reason for why we are where we are”.

Alastair says: “It is important to determine early-on the position of the Pension Regulator so that where there are material deficits that require imaginative funding solutions, a lot of time is not spent seeking a detailed solution with a pension fund that the regulator itself will not support. Ultimately the pension fund trustees will be constrained by the need to satisfy the regulator that any solution to which they are a part is, in the regulator’s view, in the best interests of their pensioner body.”

Communication and education is what is needed. Jeremy Small, Group Company Secretary at insurance company AXA UK, says: “Companies should treat deficits as one of the largest risks that the company faces and deploy resources accordingly. All the senior executives on the board need to understand what the issues are and to have a shared commitment to resolving them in an effective way.

“They have to recognise that there are clearly trust arrangements in place designed to protect the assets and to ensure the assets are used to pay the beneficiaries, the so-called ‘pension promise’, but it’s important not to underestimate the magnitude of the severity of risk being faced… It is a big challenge to decide how best to fund the scheme in a way that allows them to fulfil the promise made to members but links back to the company in a way that doesn’t ultimately destroy it.”

What’s painfully clear is that solutions do need to be found as it’s difficult to see how the current situation can carry on for much longer.