Creative Accounting

A prominent CFO recently described good finance officers as being as rare as hen's teeth. While many candidates have the right professional qualifications and seem to tick all the right boxes, finding creative staff who function well within an often demanding and stressful environment is never easy.

It is a problem to which Andrew Silverbeck, CFO of leading environmental consultants Environmental Resources Management (ERM), believes he has the answer. He first seeks to find finance talent among existing staff and only hires in skills that are not available. And when he does go recruiting, he has some boxes that other hirers might not be looking to tick.

SEARCHING WITHIN

He says: 'I would rather go internally to identify people and ask if we can develop their capabilities. What I am particularly looking for is people who are bright and communicative self-starters who can get things done, because a lot of what we do as finance professionals relies on really good project management skills. We can buy in, source or share the technical skills with our colleagues, but we actually need to be able to manage the project. Part of that is communication with other people and within ourselves.'

Silverbeck says he looks for people who can influence and collaborate with colleagues as part of their management skills. The finance function, he believes, cannot sit in isolation. He wants finance professionals who understand businesses operation basics really well and can think like business people.

'We cannot think just in terms of the numbers,' he says. 'We have to make ourselves a real partner to the managing director. We have to have people at every level who can leverage the work in the right way, and that means a blend of people who can crunch numbers and those with the experience to be able to interpret, see trends and identify issues and find potential solutions.'

He adds: 'Another characteristic is integrity. Part of that is behaving fairly and reasonably; being transparent about issues and making sure that we have consistent standards across the group. If it is not right, it is not right. There are no shades of grey.'

LEARNING THE STRUCTURE

When he came to his last job at Bovis and then again in autumn 2006 to ERM, the first thing he did was send out a questionnaire. At ERM it went to all of the 180 finance staff among the company's 3,000 employees working in 40 countries.

'Although it may sound like a silly thing to say, I have not come across that many people who know the statistics associated with their finance group,' he says. Silverbeck elicits information on the number of staff, their distribution, and their accountancy and other qualifications. 'This is not because the qualified are better,' he explains, 'but because there are different roles. Then I want to know how many of those people actually have a development plan that is being actively managed and to what extent.'

He then examines staff turnover in the previous 12-month period, including how many voluntary departures have occurred and the number of staff with less than 12-months' service with the company. He also checks how many people have been promoted and how many have moved between business units during that period.

He believes that the responses to this questionnaire enable him 'to identify the rigour – the strength in depth, if you like – on the technical side of the business. I encourage others to carry out this exercise because it is very interesting and it gives you some benchmark statistics; and, being accountants, we must, of course, love statistics!'

STAFF AND DEPARTMENTAL DEVELOPMENT

Describing professional development plans as one of his 'heart buttons', Silverbeck wants to offer his people great careers. 'I happen to work in a global business working in 40 different countries, so if people want to move around within the finance function, we can enable that to happen.'

He says that ERM has a partnership-style mentality and he therefore needs to know if his finance people are actual partners. He is actively encouraging finance people to get out into the field to see and understand ERM's operations and see the 'bigger picture'.

One of the key areas in a consultancy business, he explains, is the operational excellence involved in staff utilisation. The managing director of a business unit does not need to spend all his time working out staff use. 'Our finance people can think about these operational issues. This is not, I accept, a direct financial issue, but the finance function can provide someone who thinks like the managing director and pretty much handles staff utilisation. The more business management the finance function takes on – whether that involves dealing with staff or margins or cash or risk, or even safety – the more the managing director can handle other developments.'

In costing projects and pitching for deals, the finance team plays a key role, even though Silverbeck says that consultants tend to be the lead drivers in the pricing.

'We generate a lot of cash. We are not capital-intensive, but we are private equity-based and we do have banking covenants to adhere to. Even if we didn't, we would still want to convert our sales into cash, and like all consultants, we measure days sales outstanding (DSO). We carefully track the constituent parts of that and look at the cash conversion of our profits because there is a funding cost associated with not doing so.'

PERSONAL RESPONSIBILITY

At the same time Silverbeck has high expectations: 'I am not looking for people who merely apply a tick-box mentality. That is not to say, however, that we do not have good governance in place. I have instituted a number of governance-related measures that are not strictly necessary because ERM is not a public company. But they bring in the best of public company governance. One example is that every business unit managing director and finance head signs a year-end representation letter, which in a public company, the CEO and FD would sign. I am pushing that down onto business units so everyone understands what they need to take responsibility for.'

Silverbeck is contemptuous of the blame game. 'One of the things I always impress upon my finance teams is that it is no good just sending an email and thinking that you have done your bit – that is simply not good enough. This is why I am always after people who can say to a colleague: "Read this and come back to me. Let me know that I have taken your issues on board and you have bought in to what I am doing."'

In such a cooperative environment, exculpatory manoeuvres are unnecessary. 'We are one business,' he says, 'and part of that is that we praise each other and promote the achievements of the whole finance function.'

THE CLINCHER

So when suitable internal talent is not available, how does Silverbeck set about recruiting financial professionals?

'I am looking, I suppose, mostly for engagement. By that I mean interest; that the candidates have done more than simply visit the website. I want to see that they have used their initiative to ask around and find out something more about us.

'For example, I have just recruited someone in Buenos Aires who tracked down a client of ours in Peru through his network. He had managed to talk to this person about what it was like working with this consultancy firm and what he thought about us. And I gave him the job because this demonstrated that he cared and he had the necessary initiative and wanted to find out the answer. He had all the other qualifications, but this for me was the clincher.'

The other key part of his interview approach, says Silverbeck, is candidates' appreciation of their current workplace. 'I always ask applicants about their business. If they understand what makes their business tick, then I know they can get in and understand mine as well. If they know and can talk clearly in such a way that I understand that they understand and I can begin to relate to some of the KPIs, the non-pure financial KPIs, then they have demonstrated the qualities I am looking for.'

Explaining how his views on the recruitment and handling of finance staff have been informed, Silverbeck says: 'I have had the real benefit of a couple of people I really admired. One was an Australian colleague who had such a positive, interactive attitude with the whole finance community and the business. He was well respected. And I liked the idea of being viewed the same way that he is. I have therefore learnt from the positive rather than the negative.'

Much in the way he would like his employees to think outside the box, it seems Silverbeck himself brings a refreshing approach to the recruiting process.