1. | Page 1 Finance Panel Managing the Finance Team June 2008 Aretai Innovation in Performance Data analysed by

2. | Page 2 Background In an earlier MPF study it was found that the typical FD of a professional services Firm spent more time working on issues regarding his team as he did on most technical and advisory matters The MPF Finance committee decided to examine these matters in more detail by a follow up study The data in this presentation is drawn from the second study which was conducted in May and June 208

3. | Page 3 Executive Summary © Aretai Limited - 2007 Aretai Innovation in Performance  The typical Finance function team of a Professional Services Firm is  A team of 48 people  Supporting a Firm of 139 partners  With fee income of £191 million and  an median efficiency rating (Revenue per FTE) of £3m  The FD spends between 10 and 15 hours a week supervising his team directly  The FD will typically have between 4 and 5 direct reports  Tenure of the team is high. Most team members stay with their Firms between 5 and 6 years  The vast majority of the Finance team is in Accounts Payable  Training of Finance teams if heavily weighted towards technical training  20-25% of a typical Finance team consists of qualified professionals

4. | Page 4 Demographics of study

5. | Page 5 Demographics of study - Sector

6. | Page 6 Demographics of study – Firm size

7. | Page 7 Team size and efficiency The number of heads in Finance teams amongst respondents ranged from 4 to 300 On average just under half the team is engaged in Accounts Payable and Receivable matters Planning and Statutory reporting roles account for 10-15% of team members Very few permanent heads are employed in Tax or Payroll function, perhaps reflecting the proliferation of advisors (Tax) and outsourcing (Payroll) More tax heads in a global function (up to 18%) Median revenue per FTE is £3m Range of revenue per FTE is £750,000 to £7.3m On average Real Estate functions tend to be more efficient than Law Firms There appears to be little correlation between efficiency and Firm size (economies of scale not obvious in the survey)

8. | Page 8 Revenue per FTE

9. | Page 9 Revenue per FTE by sector

10. | Page 10 Revenue per FTE – by Firm size

11. | Page 11 Supervision of team The FD spends between 10 and 15 hours a week managing the Finance team Equates to an FD working week of between 56 and 83 hours!! The FD typically has 5 direct reports Over a third of FD’s have more than 5 direct reports Law FD’s tend to have more direct reports than counterparts in other sectors 85% of FD’s are happy with the number of direct reports they have

12. | Page 12 Supervision hours

13. | Page 13 Direct Reports

14. | Page 14 Law vs Real Estate – Direct Reports

15. | Page 15 Tenure of team The median average team member has been in the PSF Finance function for between 5 and 6 years However over 30% have a tenure in excess of 7 years Only 4% tend to stay with their Firm less than 3 years Interesting to compare to FD tenure Legal teams have, on average, a slightly longer tenure than their counterparts in Accountancy and Real Estate Is there a link to average efficiency here? The overwhelming majority of FD’s are comfortable with this level of tenure/turnover No one thought it was too high…… a couple of (brave) respondents thought it was too low

16. | Page 16 Tenure of FD’s

17. | Page 17 Average tenure of team members

18. | Page 18 Training, qualifications and appraisal 20-25% of team members are professionally qualified About the same are studying for professional qualifications No significant difference in approach in this regard between Firm size or sector Vast majority of Firm offer some sort of training to Finance team members About 2/3 of such training is technical in nature with training in ‘behavioural or people matters’ constituting another 25% of training time Appraisal of staff are universal with the majority favouring annual rather than six monthly appraisal An appraisal will last between 45-60 minutes for most Firms and 77% of FD’s think that’s about right Just under a quarter of you consider it too little

19. | Page 19 Qualified staff

20. | Page 20 Nature of training for team

21. | Page 21 Team location Just under 60% of the survey respondents had teams organised on a multi site basis with the remainder having teams in a single location The advantages of a multi site strategy are reported as –Getting close to customers –Local knowledge and –Meeting local demands The advantages of a single site strategy are reported as –Efficiency –Better communication –One team culture –Segregation of duties –Cost was infrequently mentioned

22. | Page 22 Team interaction Less than half of the teams surveyed had formal team building days organised for them Where they are held they are universally seen to be useful –Builds rapport –Helps understanding of roles, use Belbin –Interpersonal issues can be managed Rather more popular were visits to other departments –Develops cross functional assistance –Helps team to understand the Firm –Improves mutual understanding –Finance brand can be better communicated Nearly 2/3 of teams complete employee surveys and morale seems good –Positive and improving –Like work environment, dislike low recognition for effort –A ¼ glass half empty, ¾ glass half full

23. | Page 23 You all understand how important this is Sometimes its like spinning plates, light touch but keeping an eye on them all Achievement is about having good people and giving them scope It’s people, people, people An FD is only as good as the people in their team As an accountant technical knowledge helps, but managing our people is much more of a challenge Listen, learn adapt – provide support, provide challenge – find and develop the hidden talent

24. Aretai Innovation in Performance Finance Panel