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COMMUNITY UPDATE

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Storytelling is a crucial skill for all high-performing CFOs. They need to be able to explain an organisation’s strategy for growth, including its purpose, in a way that’s compelling to a wide and complex mix of stakeholders.

Brian May has been Group FD of Bunzl, the FTSE 100 specialist international distribution and services business, for over 13 years. In his view, being able to tell authentic stories is vital. “Generally, accountants don’t naturally want to sell themselves, but if you are passionate about the organisation you’re in and you can reduce complex ideas into simple stories with great examples, then that’s so powerful,” he said.

“To do that you need to understand and be inside the business – it’s not good enough to spend your time mainly with the finance team."

Talking at Criticaleye’s CFO Retreat, held in association with Capita, Antworks, Brewin Dolphin and E.ON UK, Brian noted that in the early days of his role, the share price of Bunzl was languishing and therefore a lot of effort had to be put into investor relations. “Telling those stories about the business, giving confidence to the shareholders, explaining the strategy very clearly and simply, was hugely important. Eventually our multiple started to rise and our share price went up considerably.

“Investor relations has a mystique, but really it is simple. IR is talking about your company and selling the future growth prospects. It’s about relationships and getting your message across,” he said.

An authentic business purpose is perhaps the most powerful narrative business leaders can present to their investors and wider stakeholders. Matt Davies, CFO of telecoms infrastructure company Openreach, commented: “Purposeful business is embedded in what we do. We’re rolling out ultra-fast network to the UK which will be great for UK productivity; it will enable social diversity and allow people to set up businesses outside London that can be successful, so a lot of benefits come with the types of investment that we plan to make."

An effective CFO will understand the wider impact a business has above and beyond the service it delivers. “The population at large is increasingly looking to business to solve some of the real social and economic challenges we face,” Matt added. “Governments are very transient so there’s no stability – I think what you get with businesses is stability. Because of this need, purpose is becoming as or more important than having a vision."


Taking Responsibility

In a poll conducted at the Retreat, 67 percent of attendees said that purpose should be more important in a business than shareholder return.

Mike Hughes, President for UK & Ireland at Schneider Electric, a digital transformation and energy management concern, commented that honing and refining purpose has been fundamental in the recrafting of the organisation’s strategy.

“The narrative is evolving into a very powerful force in the company,” he said. “Reflecting on all my years of hiring people, I can’t remember too many people who came in and told me they wanted to add shareholder value. But I remember a lot of people, particularly in the last five to seven years, saying: ‘What you’re doing around sustainability, efficiency and technology, I want to be part of that.’ It’s been a very positive story for us."

During the discussions, the point was made that ‘purpose’ and ‘shareholder return’ should not be mutually exclusive. Mike added: “It certainly influences the strategy of the company, its direction, what we will and won’t invest in, and our culture. I keep reminding people we’re a commercial organisation designed to make money, but this concept that they are two diametrically opposed things is totally wrong."

Phillippa Crookes, Senior Relationship Manager at Criticaleye, noted that senior executives are increasingly discussing how to tell a story about their organisation that goes beyond profit, as can be seen by the interest in environmental, social and governance (ESG) matters. “A strong sense of purpose will accelerate an organisation’s performance by creating a sense of pride in employees and confidence among customers, investors and suppliers.

“There’s a real sense that companies are going to lose their competitive edge unless they are matching actions with words when it comes to articulating their direction and reason for being,” she said.

It’s a point that Mike came back to. “You need to be honest as a company and say, ‘This is what we do; this is where we think we have a purpose,’ and then act on that. You need to be very realistic. You are a commercial organisation, competing in the market. You have to be as authentic as you can and avoid purpose just being another statement on the wall."

Paul French, Director of Business Solutions at E.ON UK, said: “We have historically been an energy provider. We have transitioned to make our purpose the provision of sustainable energy solutions and building long-term relationships with customers at home and in business.

“The key thing is how we bring this to life for our customers. The whole point is to think about how consumers can reduce their carbon footprint while keeping their homes and businesses warm, comfortable and energy efficient."

And this sense of purpose must extend to your employees too. Lily Liu, CFO of Essentra, explained: “We have three different businesses with different strategies, markets and customers, but when it comes to purpose, we aggregate it. That’s because we want to unite our employees and make sure we cover all our stakeholders."

All of this can provide a competitive advantage as businesses vie for the best talent. “We find that people join us because they want to contribute to this. Not just on behalf of the company, but also for society. They want to have that sense of purpose in what they do day-to-day and the energy industry puts them at the heart of responding to the climate crisis,” Paul said.

For CFOs and senior leaders alike, the question will be how authentic organisations are in terms of the decisions they make. In the current environment, there is very little patience for companies that are simply saying the right thing.


Marc Barber, Managing Editor, Criticaleye

Next week’s Community Update will look at how leading CFOs are navigating disruption.