Part-time FD's

Traditionally misunderstood as bean counters and bad cops who actually cost a lot themselves, financial directors (FDs) are increasingly in vogue.

Instead of putting off their recruitment for as long as possible, small growing businesses like yours are now proactively tuning in to the many strategic advantages of having a highly qualified board-level finance person on-side as early as possible. But their popularity owes more to the acceptance of outsourcing than fashion. The idea of bringing in talent and skills as and when you need them has permeated business activity and, as a result, FDs have now become a viable option for businesses that previously couldn’t afford them. Welcome to the emerging world of the part-time FD.

Nick Schwefel, managing director and founder of children’s shoe shop chain One Small Step, One Giant Leap, knew from the outset that his management team was lacking financial time. “My experience was all in retail, another director’s knowledge was all about product and our early financial expertise was from a non-exec investor who couldn’t devote the time we needed,” says Schwefel. He raised it up front with venture capital investors who helped finance the roll out of further stores. “One of the conditions of the deal was that we got an FD within three months of completion of the investment.”

The company didn’t need and couldn’t afford a full-time FD, though. “We were very aware we needed an FD to tighten up our finances and deliver the extra reporting the VC wanted, but couldn’t justify a full-time one as there wasn’t enough work,” says Schwefel. “What’s the point of paying someone a top salary when you don’t need to?”

Instead, Schwefel’s non-exec turned to one of the rising number of specialist FD recruitment agencies, The FD Centre, to source an FD on a part-time basis. After meeting a couple of prospective candidates, the company took on the services of Alison Clifford-King, a former FD of Mothercare. “It was an amazing fit for us; a perfect match. We went from not being able to generate the degree of reporting we needed to having someone with deep knowledge, experience and empathy for our sector and product.”

After an initial period getting to know the business and updating its forecasts and business plan, Clifford-King now spends on average four days a month with the company. Her role and influence, Schwefel insists, has gone far further than he originally anticipated. “She’s used to very high level reporting and has brought something to the business that I can now see was lacking,” he says. “By benchmarking our stores against current industry standards she has highlighted several areas where we can improve our business, which has helped enormously.”

Schwefel says the willingness to fully integrate his FD’s skills and opinions to the core of the business is based on trust and chemistry – prerequisites for such an appointment to work. “You have to choose someone you’re going to be able to work with as well as someone acceptable to investors,” he says, “and someone you can trust to be professional enough to work the right number of hours. For us this has worked very well indeed.”

For Gary Laurence, MD of recruitment agency Huntress Group, it worked less well. A poorly managed acquisition had highlighted the need for him to appoint a top-level FD. “We asked the FD we had, who was really a financial controller with the title FD, to assist in the acquisition but it was abundantly clear he didn’t have the experience. It made us realise he was peddling fast to stand still and that we needed someone with the necessary skills and experience going forward.”

Until then, the company’s strategy hadn’t had financial input despite the Huntress Group building a £25m turnover. “There was a general realisation that we needed someone planning for the future not just yesterday’s performance,” says Laurence. Consequently, he over-recruited and found a vastly experienced independent FD with a track record of working with £500m-plus turnover public companies.

However, the candidate was also a non-exec for a listed company and didn’t want to give it up so requested to work part-time. Assured the FD would be able to manage the company’s finances part-time and recruit a strong finance function below him to cope while he was away, Laurence agreed. However, it was soon apparent the appointment wasn’t going to work. “He was more heavily involved with the public company than we realised and it appeared to be his priority,” says Laurence. “He couldn’t turn off his phone and it was eating into our time. The crunch came when we had a group of frustrated clients waiting for a meeting while he was sat in his office on our time talking to the other company.”

Laurence acknowledges there are advantages to part-time FDs, although he insists he’d never use one again after such a bad experience. He also accepts that the stage his company was at, it probably warranted a full-time FD and it was unrealistic to expect a part-time FD to manage the workload with other outside responsibilities. The overriding lesson he learnt though was the critical need to establish both parties’ expectations right from the start of the partnership. “It’s essential to settle it contractually from the outset,” says Laurence. “They need to know what you expect of them and when.”

WHAT DO YOU NEED THEM TO DO?

The key to deciding if you need a full-time or part-time FD is to establish clearly what you need them to do. Then try to work out how long that might take. Of course, the hard part is to establish that task list in the first place.