PublicSector
Leading from the front
The role of finance leaders in the public sector is changing, as well as the skills they need to thrive. Rachel Willcox reports
Image: Alamy
Leading from the front
The role of finance leaders in the public sector is changing, as well as the skills they need to thrive
Words Annie Makoff Photography Richard Gleed
One in five local authority leaders believe their senior leadership is ineffective, while two in five say management is also poor at motivating staff or fails to do so at all. That is according to a report published in January by the Social Market Foundation in partnership with the Chartered Management Institute, which paints a worrying picture about the state of leadership across the public sector.
However, years of reduced fiscal support and increasing demand for public services mean that the leadership skills of public sector heads of finance have never been more important. Here, we look at how the demands being placed on finance leaders are changing the skills they need for success.
My role is entirely about conveying messages, trying to influence people and talking about the strategy of the organisation.
Paul Clarke, director of finance, Islington Council
Broader spectrum of skills
Although technical expertise in finance – budgeting, forecasting and compliance – has traditionally been indispensable for public sector finance heads, the current climate requires a broader spectrum of skills, says Adam Rouse, senior business manager at specialist recruiter Sellick Partnership.
Paul Clarke, director of finance at Islington Council in London, agrees. “The further you progress in a finance career, the more removed you are from detailed numbers,” he says.
“Leadership is about aligning what the finance team is trying to achieve with the numbers and what the local authority is trying to achieve as a service.”
Leadership is not just telling people what to do but creating a nice place for them to work.
Mike Sole FMAAT, cabinet member for finance and leader of the Liberal Democrat group at Canterbury City Council
Communicating and influencing
Beyond technical acumen, effective communication and influencing skills are increasingly needed to steer finance teams and the broader organisation through turbulent waters. “The ability to inspire and motivate amid uncertainty is indispensable,” Rouse says.
“If you are in charge of the money, everyone will want some of that, so how do you bring people along to get what you think you need to achieve?” Clarke adds. “Today my role is entirely about conveying messages, trying to influence people and talking about the strategy of the organisation.” The CFO in a local authority is appointed by the members, not the chief executive, “so you need to be adept at navigating the small ‘P’ and big ‘P’ political challenges,” Clarke says.
“It’s about helping people to understand the situation and the thought processes you’ve gone through to reach your decisions,” says Councillor Mike Sole FMAAT, cabinet member for finance and leader of the Liberal Democrat group at Canterbury City Council in Kent. “But you can’t dumb things down too much, otherwise people who are experts will challenge you.”
Rearguard action
As CFO, your job is so much bigger than just the numbers, it is about how much risk tolerance you have, explains Clarke. “If you’re blind to risk, you’re going to be torn apart in a CFO role because the risks come at you from all angles and when you’re least expecting it.”
Clarke cites the recent hikes in energy prices as a sector-wide example. “When energy costs went up by a multiple of eight overnight, no risk assessment in the world would have picked it up.”
But mitigating risks is a tricky balancing act, he warns. “It’s about understanding what risk mitigation is versus what level of risk you just need to live with.”
Governance mechanisms
While finance leaders can’t possibly double-check every number in the accounts, it’s the section 151 officer (usually the chief financial officer) of the local authority who is ultimately responsible for the council’s finances.
Mitigating risks is about having frameworks in place where decisions that will lead you down a bad path cannot be made.
“That’s about putting safety mechanisms in place and having the right people around you with the right skills that are eyes for the detail,” Clarke explains. “But you need to know enough about what you know, and you need to know enough about what you don't know, to know when there’s trouble. It’s a bit of an art.”
Dealing with the unexpected
The last few years have thrown a series of curveballs at finance leaders – Covid-19, changes of government and policy, and rising interest rates to name but a few. “You might have been thinking, ‘We’ve got just enough headroom to get through this’, and then Covid comes and you lose £40m overnight. Suddenly, the best laid plans in the world are unable to navigate that,” Clarke says.
Against a backdrop of uncertainty, demonstrating leadership when you don’t have all the answers is a challenge of the role, Clarke says. “You’re making big decisions on strategic direction with only bits of information. You can always look for confirmation bias to support your decisions, but you won’t know if it is the right thing for a few years,” Clarke says.
Cultivating ESG
As climate change storms up the agenda, sustainability and environmental considerations need to be embedded in absolutely everything finance leaders do, Clarke says. His finance department includes a person entirely dedicated to all things climate. “From a leadership point of view, you need to be building that into long-term strategy,” he says.
People management
Having an upskilled and motivated workforce has a direct impact on the quality of service provided, Clarke says. It is important that people can see how they contribute. Similarly, enabling progression is key. “What I’d really like is a conveyor belt where good people at the top go somewhere else to make their mark, and the people behind them in the chain all get their opportunity to step up,” he explains.
“Leadership is not just telling people what to do but creating a nice place for them to work,” Sole adds. Growth in flexible working demands new people management skills, trust, and creative ways to engender a sense of team. “That’s about making sure that everybody has an eye on the goals you’re working towards and making sure everyone feels valued. It’s important that no one feels taken for granted. And yet so many people forget to say thank you.”
Meanwhile, you have got to hold people to account when they are not performing and do that in a supportive way, Clarke says. “There’s a fairness point for the whole team if someone isn’t pulling their weight. What I’ve realised throughout my career is if you don’t deal with the problem, it can create a bigger problem down the line.”
Be approachable and self-reflective
Mistakes are a fact of business life, but creating a culture of openness where members of the team feel like they can give honest feedback will pay dividends, Clarke says. “It’s important to nurture an environment where people can tell you if you’ve made a mistake and then genuinely reflect on it.
“Giving genuine consideration to other viewpoints engenders an empowered workforce and it sets the tone for my managers to manage their teams.”
