As Dodd Frank and now Volcker seep their way into today’s finance and risk function’s collective conscience and business-as-usual with the prickly inconvenience of an occupying army, stalwart finance professionals are seizing the chance to put their best face forward, their best public face.
In this chilly atmosphere, the importance of representing the organization externally to build stakeholder confidence, secure funding, or capitalize on opportunities cannot be underestimated. Finance professionals are increasingly finding themselves called into meetings with regulators, seeking out advantageous deals to stimulate sluggish growth or reinforce a shaky competitive position. The fourth and final element of our Finance Excellence Model speaks to this reality: how to be an effective External Advocate to moderate these outside forces.
External Advocates play an ambassador role that—tactically and strategically—serves both a defensive and an offensive purpose. Defensively, what is required is building trust to help solidify the company’s external reputation in the market. This requires first winning the license to build, then proactively engaging in strategic, mutually beneficial, often durable relationships with government, legal and regulatory bodies as well as investors and the wider community. Offensively, it means forming alliances to better interpret and manage new expectations and rules of engagement.
In order to deliver, External Advocates must manage reputational risks by developing methods to represent the company’s interests while suspending judgment and objectively respecting others’ differing needs and viewpoints. For example, investor relations must be able to accurately and credibly represent company financial performance on analyst calls and stand up to shareholder scrutiny. The prize is a depository of trust and reduced exposure to reputational risk. We call those who embody these behaviors and use them skillfully Reputation Builders. When done well and systemically, Reputation Builders enable companies to level the playing field.
The second critical role External Advocates play is generally regarded as more transformative and sexy; it is also often the reserve of a smaller cadre of resources found in the inner sanctum of a company’s Corporate, Development or Strategy office—what we define as Deal Makers.
Deal Makers are critical for securing funding and also delivering opportunities. They channel their energy into the high profile, fast paced task of leveraging external partnerships in order to create long-term value for the organization. They often operate at the tip of spear in terms of being both market facing and externally focused while responding and accommodating to shifting economic factors and current events. However, as sought after as this tool set is, it is hard to master given the intensity, speed, and mix of specialized skills and competencies required for success.
As with Reputation Builders, Deal Makers require a foundation of solid negotiation skills and a capacity for perspective taking. Commercial edge and intellectual curiosity are also valuable commodities based on the steep learning curve involved in due diligence and the compressed yet strategic nature of the work. When taken into account, being a seasoned External Advocate requires a sophisticated mix of skills, experiences and leadership practices not often fully achieved until later in one’s finance leadership journey.
What we have found in our research is that the key success factors for an External Advocate involves acquiring core skills early in one’s finance career, such as investments, financial literacy, internal consulting, financial planning & analysis, public company reporting, and industry knowledge. Building off this foundation during mid-career, as you progress, these experiences and skills are integrated and honed through broadening experiences such as M&A exposure, strategy development, and matrix management. Finally, the more advanced skills that underpin an External Advocate—external communication and stakeholder management—evolve as part of the senior finance professional’s standards of practice as the scope and significance of their responsibilities grow.
Over the past five months, I have shared some research-based guiding principles around the four components and eight competencies that differentiate average from highly effective finance executives. Using even a few of these indicators as a roadmap will help you to redefine and target your development and thereby aid you on your way to becoming a more well-rounded and effective finance professional.
Latest posts by Denny Taylor (see all)
- Financial Excellence Model: External Advocate, Part 4 - April 28, 2015
- Finance Excellence Model: Champion of Rigor, Part 3 - January 26, 2015
- Finance Excellence Model: Strategic Function Builder, Part 2 - November 25, 2014