Just before his presentation to a group of about 70 investors and analysts last February, James Condon did what he frequently does before such occasions: he ducked into a bathroom and threw up. A few minutes later, the CFO of CyberCash Inc. was on stage and in command– confidently telling his company’s story, making eye contact, even cracking a few jokes. If it weren’t for the prespeech nausea, you’d never suspect that Condon had any fear of facing an audience.
For Condon, a self-proclaimed introvert, mastering the fear of public speaking was an essential career move. If he hadn’t done so, he says, he wouldn’t have landed the CFO spot at CyberCash, a $4.5 million start-up Internet commerce company based in Reston, Virginia. “The ability to be a good communicator isn’t optional, it’s required if you want to succeed in this job,” he says.
That’s true not just at CyberCash, but at companies everywhere. More than ever, finance executives are in the spotlight. They are devoting increasing time to investor relations, as a bullish but skittish Wall Street steps up the demand for information. “You don’t want a CFO who appears nervous or evasive,” says William Milton, an analyst at Brown Brothers Harriman & Co. “You get the impression they’re hiding something.”
AT&T Corp. recognizes the power of effective communication, in more ways than one. Searching for a successor to CFO Richard Miller last year, the company settled on a former analyst–Daniel Somers, the CEO of Bell Cablemedia Plc, a British subsidiary of Bell Canada. Somers had less big-company experience than some of the other candidates, but he certainly knew how to talk to Wall Street. (Miller, in contrast, was known as someone who had a tough time opening up to the financial community.) “We need to explain what we’re doing better and get our vision across to the financial community, investors, and customers,” Somers told CFO shortly after he was hired.
Public speaking and communication skills can be decisive in separating the future CFO from those who remain controllers or treasurers. They can also determine whether a CFO keeps his or her job when a company goes public. Marianne Pritchard, CFO of Berkshire Realty Co., in Boston, credits her ability to make the real estate business compelling as one of the reasons she was able to make the transition from private to public company after Berkshire’s initial public offering in 1991. She says she now spends about 50 percent of her time on investor relations. “The ability to perform in front of an audience is so important,” says Pritchard.
But there are other audiences and constituents besides investors. Increasingly, CFOs must represent their companies to boards of directors, regulators, the press, even employees. Effective communication may still be considered a “soft” skill by many financial executives, but it has also become an essential one.
An Unnatural Art
All this is good news for those who have the gift of gab and an extroverted personality to match. But what about those who don’t? What about the many people who, if surveys can be believed, fear public speaking more than death? “For most people, public speaking doesn’t come naturally, but these skills can be learned,” insists Bess Gallanis, partner and co-director of national media for The Financial Relations Board, a Chicago-based public and investor relations firm.
Gallanis, who runs a CEO and CFO spokesperson workshop, says stage fright is perfectly normal. “The first way to get over it is to remember that you don’t have to be perfect,” she says. “Other than that, preparation is the key.” But that means more than merely assembling a slide show. According to Gallanis, many CFOs make the cardinal mistake of focusing too much attention on the numbers and dry details. “They’re just interested in the facts, not a polished presentation,” she says. “But if you don’t tell [your story] effectively, the audience won’t hear the facts. They’ll be asleep.”
CFO Pritchard, who recently finished a road show for a secondary offering of $100 million, compares that experience to a traveling salesman’s. “You have to put the sizzle in the steak,” she declares. “You have about three sentences to get the message out, and when you walk away, you want them to remember the difference between your company and the one that comes in five minutes after you.”
Putting in the sizzle is the number one lesson in building a better financial presentation, say experts. “The numbers are the scorecard,” says Gallanis. “The CFO’s job is to give the color commentary. Tell your vision for the company.” To that end, she has her students prepare a vision statement, then write a script for the presentation. The goal is to rehearse the script to the point where it’s no longer needed. “Preparation is everything,” she says. “You would be surprised how many people just wing it.”
Condon of CyberCash spends at least three hours scripting his presentations, and he practices in front of a mirror. One thing that particularly helped him face an audience was teaching a class on finance at Fairleigh Dickinson University School of Business, in Madison, New Jersey. Getting up in front of students a few times a week was invaluable experience, he says; “If you can handle that, you can handle anything.”
The same principles of effective communication apply when speaking to the board. “You need to place less importance on the in-depth financial details, and more on the quality of the message,” advises Bruce Edwards, president and CEO of Powerwave Technologies Inc., an Irvine, California, maker of amplifiers for the wireless market. “The board doesn’t want to hear the CFO just recap the historical financials, so the CFO needs to show he has a strong grasp of what the company and the management team are going after,” says Edwards, himself a former CFO.
Not all communication is verbal. A speaker’s body language can reinforce or subtly undercut an otherwise polished performance. Gallanis asserts that speakers make 80 percent of their impression in the first 30 seconds of a presentation–even before they open their mouths. She teaches her students to relax and maintain good posture through breathing techniques and videotape analysis.
One exercise Pritchard finds useful is to toss a ball with a colleague while rehearsing a presentation. “It helps you to focus on the interaction with the audience,” she explains. During her recent road show, she got an unexpected chance to deal with a distracted audience. On the day she was to meet the make- or-break investors at Fidelity Investments, the market went into a tailspin. Pritchard thought Fidelity might cancel the presentation, but the show went on, and she was a success.
Unexpected market swoons are one thing; unexpected questions are another. Even polished speakers can trip up on a tough question from an analyst. The most common response–go on the defensive–is also the worst, says Gallanis, because it lowers credibility. Acknowledge the weakness, she says, and get right to the plan for a solution. Gallanis notes that many people use humor in responding to a tough question, but advises caution in doing so: “You have to be careful not to minimize the question.”
If CFOs think the spotlight is bright now, they haven’t seen anything yet. It won’t be long before the quarterly teleconference is broadcast on video, over the Internet. Investors around the world will be tuning in to see the CFO in action; their expectations will be high. Says Gallanis, “In the information-saturated, media-saturated, short- attention-span world, television has established a standard.” This could lead to a new corporate trend: makeup workshops.
Joseph McCafferty is an associate editor at CFO.
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