No two corporate treasury teams are alike. But while different treasuries will vary considerably in their size, scope and focus, there are nevertheless five essential traits that are shared by high-performing treasuries around the world.
From team development to a technology-first attitude, here are the key characteristics that successful treasury functions have in common:
Arguably, the first of the five traits is the most important. As one treasurer points out, “If you don’t focus on your team and you don’t ensure you’ve got the right skill set underneath you, you really can’t do anything else.” But what does this look like in practice?
For one thing, high-performing treasury leaders are likely to create an environment where people can take on responsibility and grow their skills.
It’s also important to ensure team members feel valued, respected and able to take risks in a controlled and appropriate way, without fear of failure.
Communication is key to effective team development. Daniel Tromans, the United Arab Emirates-based director of treasury at Etihad Airways, emphasises the importance of strong communication throughout the treasury function.
He explains that the Etihad treasury team holds departmental town halls, attended by 50-100 people, as well as some smaller meet-ups.
“I find people are more motivated when they have some insight into the bigger picture, so they know what’s going on and what the company’s strategic direction is,” Tromans says.
To support team development, offering job rotations can be a big enabler, says Adrian Sargent, treasury operating officer at Virgin Money.
From entry level to mid-management, this approach can give people access to additional perspectives, whether or not they ultimately decide they prefer the new role. “Either way, as their career progresses, it means they have a broader base to grow from.”
Sargent emphasises the importance of an inclusive environment. “Like any modern workplace,” he notes, “people in treasury teams need flexibility and support in different ways, for example, providing care for family members.
“But if you are an inclusive leader, you’ll get that commitment back in spades.”
However, Sargent acknowledges, enabling flexibility can be challenging in small treasury teams.
It goes without saying that any treasury team needs to include people with the right technical skills.
For many companies, professional qualifications are an essential tool when it comes to building skills in-house and recruiting top treasury talent.
“We place a strong focus on professional qualifications – The Association of Corporate Treasurers [ACT] is our preferred qualification, and we have a number of people who have come through the programme and received the full suite of ACT qualifications,” says Tromans.
“We also encourage people to pursue CFA, CIMA or any other specialist qualifications in tax or insurance that are directly relevant to their role.”
As well as developing existing employees, Tromans says qualifications are a major focus when it comes to hiring new talent.
High-performing treasury leaders ensure team members feel valued and respected
Although treasury is a complex and technical discipline, Sargent believes that technical prowess doesn’t just come from highly qualified treasury hires.
Motivated school-leavers or graduates can be recruited and trained on the job with great results, he says, adding that “having a relationship with a local school or university, or signing up to an industry early-years careers initiative, can be very worthwhile”.
In addition, Sargent says that treasurers should lean on their own networks in order to supplement and build their technical skills.
He gives an example of tapping into such knowledge: “A good relationship bank will be happy to come and educate a treasury department in order to demonstrate their expertise in that particular area, with a view to gaining business in the future,” he says.
“So if there’s doubt about a technical issue, don’t be afraid to ask.”
With the role of the treasurer becoming increasingly strategic, high-performing treasuries need to build strong relationships across the business, while ensuring that treasury staff understand the significance of their activities within the context of the wider organisation.
“I think this is absolutely critical,” comments the treasurer of a UK retailer. “If things are running quite well and you’re not doing a bond issue this year, you can get out of the loop because of the perception that there’s no need to bring you in.
“So sometimes you have to force yourself to be an extrovert, to go out and build those relationships with people who might otherwise think they don’t need to see treasury this month.”
Tromans says that he tries to encourage everyone in treasury to gain a broad understanding and knowledge of all aspects of the business.
“We invite people from outside treasury to speak at our town halls and give presentations on topics such as engineering or revenue management,” he says. “People are given the opportunity to ask about what’s going on beyond treasury and how that impacts the broader business.”
It’s not just about building bridges with the rest of the organisation – there may also be opportunities for treasury to take a more proactive role in growing revenue.
Tromans says that at Etihad, treasury has become a “strategic lever” for the business through its ability to reduce costs, both through automation and process enhancement, and by negotiating better financing deals and lower transaction charges.
Looking forward, he says he is looking for ways to drive revenue – for example, by facilitating new sales channels in countries where traditional payment methods are not prevalent, or by driving increased top line through leveraging new distribution capabilities.
Treasury teams are pivotal to the success of an organisation, and business partnering is at the heart of this.
Sargent points out that at all levels, treasury professionals need to be “credible, authentic and respected”, adding that this means treating people well – but also being direct and firm when necessary.
Technology can play an important role in helping treasurers to achieve efficiency improvements and to inform decision-making processes – but it’s also important to approach technology in a strategic way.
Manu Taneja, executive for cash management and treasury services for GE in the Asia-Pacific region, says that where technology is concerned, “strategic thinking is critical for treasury professionals – they should have the ability to take a broader view of things and understand the possibilities of technology”.
All too often, he says, treasury professionals focus on using technology to solve a single problem without realising the implications of a particular technology on the broader treasury group, or on the organisation as a whole.
“So strategic thinking and the ability to connect the dots is essential when it comes to leveraging technology,” Taneja adds.
When it’s harnessed in the right way, technology can help treasurers achieve great things
One important consideration is the ability to understand the practical implications of different types of technology on offer, for example, by weighing up the pros and cons of off-the-shelf solutions and highly configurable solutions.
Sargent points out that a bespoke solution “can do exactly what you want – but it takes time and money to implement and more to change later, whereas if you have the right off-the-shelf product it can be easier to implement and update later”.
Of course, when it’s harnessed in the right way, technology can certainly help treasurers achieve great things.
The treasurer of a UK retailer explains that some of the company’s graduates are being trained in data science, which has already translated into improvements for the company’s treasury function.
“One graduate has compared how we forecast our cash in treasury with how the business planning team forecasts cash, and he’s written an algorithm that mechanically forecasts cash based on past behaviours,” they explain. “The forecast that has been the most accurate is his.”
Transactional know-how is clearly an important asset for treasurers. Taneja points out that the treasurer’s depth of understanding and confidence are important factors when it comes to engaging with external parties such as banks.
“Once you have that conviction and understanding, you can then think of creative solutions – but the key is to have that understanding,” he says.
What constitutes transactional expertise will vary considerably across different sectors and geographical locations. For example, Tromans explains, Etihad is particularly focused on opportunities for finance from a diverse range of financiers.
“Having access to the sukuk market, as well as the traditional debt capital markets, is particularly important for us in terms of our unsecured funding,” he explains. “We also maintain relationships with lessors for our aircraft, and we have multiple banking relationships.”
Tromans also underlines the importance of teamwork within the organisation.
“The average financing transaction for an aircraft involves not just the treasury and corporate finance teams – we also have to engage with engineering, network operations and fleet planning to make sure the aircraft we’re financing is in the right place at the right time,” he says.
“So it really is a group effort, and it involves a lot of collaboration and working across the whole organisation to make sure the transaction is a success.”
When it comes to transactional know-how, treasury teams also need to be able to access – and, when appropriate, challenge – advice from external sources.
“For example, if you’re going into the securitisation market for the first time, you’ll know about the market but not about the product,” says Sargent. “Being confident enough to ask the right questions and challenge advice when appropriate is vital to get the right solution for the firm.”
While the five traits listed above encapsulate much of what makes for a successful treasury function, there are of course many other characteristics that contribute towards the success of a high-performing team.
For example, Sargent insists, a treasurer has to be “credible, authentic and respected”, adding that this means treating people well – but also getting to the point when necessary.
Meanwhile, the UK retail treasurer emphasises the importance of understanding where the business is positioned within its sector, as well as the benefits of connecting with both other treasurers and the company’s suppliers.
But while every company will have its own challenges and ways of working, adopting the five traits listed in this article – from business partnering to transactional know-how – can go a long way towards creating a high-performing treasury.
The importance of a balanced skill set is highlighted across the ACT curriculum and particularly within the Advanced Diploma.
In an Advanced Diploma podcast – The Strategic Treasurer – a panel of seasoned treasurers agreed that success comes from a blend of the technical and the interpersonal. Here are two, key quotes from that podcast:
“You’ve got to be able to communicate and have a relationship with the people you are communicating with. However, if you are not credible, if you don’t have the nuts and bolts behind you from a technical point of view, you won’t be able to persuade and influence.”
Alex Lewis, National Grid
“Think big, but plan small, because you have really got to think about the strategic area that you are operating in, while ensuring that you really do have it nailed at an operational level.”
Jono Slade, AstraZeneca
Treasury is something of a moving target – so how is the treasurer’s skill set evolving, and which skills will be particularly important for the treasury professionals of the future?
Last year’s The Business of Treasury report by the ACT noted that while new-entrant treasurers need technical competence, “they must also bring great attitude, great communication skills and an understanding of the wider business context and operations”.
The survey found that 46% of respondents regarded communications and relationship management as the most important skills for new-entrant treasurers to acquire, while 26% cited ‘understanding wider business operations’.
“Thinking about the treasury of the future, something that has changed quite significantly is the importance of business partnering,” says Yann Umbricht, partner and head of treasury and the commodity group at PwC UK. “I think helping the business to do treasury really well is one of the most important factors for leading treasuries nowadays.”
Umbricht also notes the growing importance of being able to build relationships, both internally and externally. “Some of the best treasurers I know build such good relationships that they can get all the answers they need – you don’t need to be the expert,” he observes.
Rebecca Brace is a freelance journalist specialising in corporate treasury and banking
This article was taken from the February/March 2020 issue of The Treasurer magazine. For more great insights, log in to view the full issue or sign up for eAffiliate membership