Published first on http://www.gtnews.com and http://www.afponline.org/ in December 2013
The establishment of the London financial planning and analysis (FP&A) Club this year as a networking and knowledge sharing forum for FP&A professionals has been a highlight of 2013 for some finance professionals, with four meetings held to date sharing tips and experiences in an informal setting that is dedicated to advancing the sector, and spin-off events in Kiev, Dubai and Moscow successfully held.
In order to guide the Club and to detail some best practice guidelines that can be used by fellow professionals in the years ahead, however, it was deemed necessary to set up a London FP&A Advisory Board that could guide the new body and help to plan its future development, institute formal conferences in 2014, and generally assist in guiding the strategic advancement of the sector.
Comprising of senior FP&A practitioners such as Frederik Reynaert, head of financial planning and reporting at Thomas Cook; Toby Burton, finance director, global circulation analysis at The Economist; and Marc Lloyd, head of FP&A at Hermes Fund Managers, among others, the new Board meets once every quarter.
Its first full meeting after inventing itself into being at an informal gathering in the autumn was held on 5 December at the headquarters of the Pure Search recruitment firm in Blackfriars in the City of London, with Adam Akbar, director of the senior finance and treasury recruitment team, kindly acting as host to Larysa Melnychuk, the founder of the London FP&A Club and the new Advisory Board.
A visiting member of the Moscow FP&A Club, Denis Zaykov, chief financial officer (CFO) at Eastwood Capital, also attended the gathering to see if there were any best practice tips he could take back to share with colleagues in Russia. Other Board members attending on the night included Peter Bitsakis, European CFO at ValueClick and Jay Mehta, interim associate director of finance at the NHS Northwest London commissioning support unit in the UK and an experienced FP&A professional having worked at UK Power Networks, P&O Services Group and the Legal Services Commission.
Melnychuk set out the founding principles of the strategic Board which are principally that it is open to senior FP&A professionals only and has a strict no vendor, non-profit stance, where the topics discussed and eventual best practice guidelines produced will be mutually agreed upon by democratic voting. Board members may, however, request certain non-marketing vendor speakers attend in order to assist in strategic initiatives such as the planned compilation of a set of recommendations about the requirements of a good FP&A IT system.
This will examine Cognos TM1, Hyperion Planning, SAP, Anaplan and many other tech offerings in the new year, with a view to detailing the pros and cons of each for the later use of FP&A corporate practitioners, and will benefit from the assistance of Michael Coveney, managing consultant at STW Consulting and formerly of Comshare and other tech firms.
For now, however, the inaugural full meeting of the London FP&A Advisory Board confined itself to detailing the attributes required of an FP&A professional and the evening’s roundtable discussion produced a set of best practice recommendations detailing the necessary skills and mix of different personalities that should go into building a successful FP&A team.
Recommendations for the Ideal FP&A Professional
A summary of the key skills required of an FP&A professional, as agreed upon by the Board members during the roundtable discussion, was the need for:
- Commercial curiosity and business acumen to spot growth opportunities.
- Strong leadership.
- The ideal FP&A professional must also be a good interpreter of data with an ability to see the big picture cross-departmentally.
- Good communication and stakeholder management skills are necessary.
- The ideal FP&A professional possess an understanding of technology and how it can help deliver effective forward planning and analysis to support the everyday running of an FP&A team or function, with automation frequently freeing up time for the all-important analysis.
- Creativity: This is the paramount skill. It was taken as read by Board members that analytical and numbers-based finance skills are a prerequisite for an FP&A professional, but the ability to be creative and to be able to map out and communicate future plans and identify new growth opportunities are what truly separates an FP&A professional from a general finance or accounting professional – this is why the skill should be actively sought out when hiring. Personality types that thrive on new ideas and creative thinking, rather than just number crunching, should also be encouraged at existing teams in treasury and finance departments at multinational corporations (MNCs), which typically have the resource to do evidence-based strategy.
All of the above skills are necessary and can be taken as an ad hoc best practice guideline to what to look for in a finance professional. If you are looking to form an FP&A function or team at your corporate then you could do worse then follow the above set of recommendations.
According to one London FP&A Advisory Board member who wished to remain anonymous, it is also worth checking to see if FP&A staff under assessment at the job interview stage have the desired creativity by setting them a test to evaluate their thinking. Use some old figures and datasets to see if they spot any anomalies or interesting cost-saving or growth opportunities, he recommends.
As part of the Board’s remit to share knowledge and advance the FP&A segment, a CFO member shared a library of free resources available online that he believes could help FP&A professionals to develop themselves, their colleagues, and a habit of open-minded thinking. For influencing skills he suggests reading Deepak Chopra’s ‘Five Ways to Change Someone Else’s Mind’ to help develop your communication skills as an FP&A professional. The Board member added that Harvard Business School and other educational bodies such as the University of Pennsylvania’s Wharton School offer free online seminars and training tools, typically via Coursera or other means, which can help career advancement too. The new FP&A certification from the Association for Financial Professionals (AFP), which is launching shortly, may also be helpful because, while not free, it does contain key communication skill modules among much else. The AFP is seeking to make it the key FP&A certificate to possess with the support of Microsoft, who’ve hosted a discussion group in the US, and other major MNCs.
Defining FP&A to Achieve Success
FP&A is a ‘defined area of expertise that sits at the centre of the business to manage business performance (current and future) and provide clarity to the business and the boardroom’. This was the definition of FP&A provided by Lewis Girdwood, head of FP&A at easyJet, on the London FP&A Club LinkedIn. It was cited and shared by Advisory Board founder, Larysa Melnychuk, as a good way of thinking about what the profile of an FP&A practitioner should be and an aid to building influential teams that can catch the ear of the boardroom.
Speaking in his personal capacity as an experienced FP&A professional, Jay Mehta, a fellow attendee on the night, also shared a number of definitions, commenting that: “FP&A is a process that an organisation undertakes to plan the allocation of its (often scare) monetary and human resources, in order to achieve its business objectives”. The function involves the subsequent monitoring of deployed resources, an assessment of the success or otherwise of the deployment, and collective communication and agreement about the way forward for the business based upon sound metrics and procedures.
However, you define the function there is no doubt that the combination of cheap big computing power releasing ‘big data’ analytical capabilities and a corporate desire for strategic thinking means that FP&A as a function is enjoying a mini-renaissance at the moment. As Marc Lloyd, head of FP&A at Hermes Fund Managers (and host volunteer for the next planned Advisory Board meeting on 6 February 2014) looking at the IT behind FP&A systems, said: “It’s a good time for FP&A at the moment. My firm, like many others, have done the basics right first and installed good procedures and practices. We are now moving into the exciting analytical phase and beginning to plan beyond tactical time horizons into long-term ‘what if’ scenario modelling, developing innovative ways to harvest data and inform a growing business. Capital scenario stress testing (ICAAP) is a key management indicator in the financial services industry that FP&A is adding value to.”
The roundtable discussion session of the London FP&A Advisory Board meeting continued with Frederik Reynaert, head of financial planning and reporting at Thomas Cook, mirroring many of the attendees opinions when he commented that “a combination of creative and numerical skills is what is important and this is the key skillset required of an FP&A professional. Strategy and analytical creativity are crucial.”
Board founder, Melnychuk, added that an ability to understand organisations as a system and adopt a “helicopter overview” was also important, alongside softer skills such as relationship management and communication skills for the boardroom. The need to place the FP&A function under the direct control of the chief executive officer (CEO) was also emphasised as this frees it up from the dead hand of financial controllers who can be too focused on the numbers to spot creative patterns and strategic opportunities. “Don’t get mired in just reporting and compliance duties either,” she warned while explaining that this would restrict the scope and ability of FP&A to grow a business.
Multiskilled and cross-departmental focused employees who can communicate well and organise evidence-based figures into effective presentations to win strategic boardroom investment are what is required from FP&A professionals, therefore – no small order, but the London FP&A Advisory Board thinks it can help practitioners develop these skills. Allied to the existing FP&A Club networking events springing up across Europe, there is a developing group of senior professionals prepared to share their experiences and knowledge that may just be able to make these wishes a reality. Time will tell.