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At times like these, a finance director's role is one of leadership, says Mike Ellesmore. I was recently interviewed for the post of director of finance at Bexley LBC and, as can be seen from the credit at the end of the article, was fortunate to be successful. One of the issues raised throughout the interview process was the question: ‘What will be the impact of the recession and how will we cope with it?' Finance people have become quite adept at assessing the financial impact as our property-related budgets, such as planning fees and building control, take a dive. Added to this is the impact on the capital programme as capital receipts are either reduced or deferred, waiting for the day when the property market recovers. And then there are our interest earnings, which are beginning to dwindle whilst the feet of Fred Astaire are required to avoid the elephant traps of credit ratings and investments with countries beginning with the letter ‘I'. The Treasury management function, once a backwater of local government finance, has now become politically charged and attracts much media attention. All of this is difficult enough, but what about the pension fund? Most of us dread the next triennial valuation in 2010, following the decline in stock market values. The only ‘good news' will be our actuaries telling us ‘we can all expect to live another eight months longer and, oh, by the way, this will add 0.6% to your contribution rate'. Money is one thing but the recession will undoubtedly impact on the wellbeing of communities. Regeneration schemes will be put on hold, homelessness will rise, housing benefit and social services will come under increasing pressure – as the LGA warned last week. Council tax and business rates will prove difficult to collect. Many also see a link between rising unemployment and crime. Apologies if this reads like ‘Apocalypse Now‘ but my purpose in painting this depressing picture is to advance the need for strong leadership. Leadership and management skills are often not given the attention they deserve. Look at most Premier League football clubs where, with two or three notable exceptions, man management is lamentably bad. Role models are often difficult to find but a look back at the early part of the 20th Century provides an example of exceptional leadership. Having got within 97 miles of the South Pole in 1908, Ernest Shackleton returned in 1914 with the Endurance expedition. With a squad of 27, similar in size to the average Premier League club, Shackleton's team became stuck in ice floes for the best part of two years after their ship broke up in pack ice, stranded 1200 miles from civilisation. They subsisted on a diet of penguins, dogs and seals, and finally made their way to an inhospitable piece of rock – Elephant Island – before Shackleton and five others sailed 800 miles in a small lifeboat to South Georgia. He returned to Elephant Island months later in a tug borrowed from the Chilean government to rescue the rest of the crew. Amazingly the entire squad returned, healthy and without a broken metatarsal in sight. What was Shackleton's secret? He was careful in choosing his team; he selected optimists, people who worked hard and people who had the skills he lacked. Above all, Shackleton sought men who really wanted the job. He then worked hard at developing ‘an esprit de corps', maintaining morale, and made sure he got the best out of each individual. What set him aside from most leaders was his ability to lead effectively in a crisis. After the sinking of his ship, the Endurance, Shackleton's attitude was one of ‘what has happened has happened'; he immediately looked to the future, setting new objectives, looking after his men's welfare and planning their survival. This brings us back to the recession – it looks increasingly like this is going to be the worst recession of our working lives. But it is here and local authorities have to position themselves to deal with it. Our local communities will look to us to give a lead. Senior managers and political leaders will need highly committed teams, carefully chosen to get us through this difficult time. We can, however, justifiably maintain an optimistic outlook. Local authorities have had to cope with constant change and challenge. Like Shackleton, we have people with the ability and skills to cope in seemingly impossible circumstances and to rise to the challenge of the ‘R' word. Mike Ellsmore is director of finance at Bexley LBC

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FINANCE

How to get through the recession

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