Corporate Finance vs Corporate Strategy: The Never-Ending Debate?
Finance vs consulting, and corporate finance vs corporate strategy: These debates never seem to go away.
The one about finance vs consulting is (in?)famous thanks to that Leveraged Sellout video from a decade ago.
But when it comes to working internally at a company – corporate finance vs corporate strategy – the stakes and trade-offs are less well-known.
I wanted to find out more, so I recently spoke with a reader who’s had experience in both fields in Dubai.
He weighed in on the recruiting process, the trade-offs, the merits of these roles at large companies, and which one would win in a fight:
Breaking into the Corporate Finance vs Corporate Strategy Debate
Q: Can you summarize your story for us?
A: Sure. I graduated from a non-target university in “Europe/Asia,” and started out working in real estate.
I accepted an offer at a property development firm in Dubai, and it went well at first – until the entire property market there crashed.
Sensing that the end was near, I moved to a boutique strategy/consulting firm in the region, which was modeled after Bain.
I knew a particular language that the firm needed, and it seemed fun to travel to Saudi Arabia, Kazakhstan, Iran, and other countries in the region for projects.
After a few years, I wanted a better lifestyle, so I moved to a large multinational company (we’ll call it a “Global 500 company”) in a corporate strategy/consulting role instead.
I spent a few years there, and I recently transferred to join the Regional Financial Planning & Analysis (FP&A) team in the corporate finance division in a more senior role.
Q: OK. So, how do you normally win these strategy and corporate finance roles?
I’m assuming your story is not too common…
A: In strategy roles at big companies, it’s 90% ex-consultants from a mix of MBB and boutique firms.
For the most part, companies do not hire undergraduates or recent graduates – you need consulting work experience to get in.
Consultants move into these roles in search of a better work/life balance; they don’t have to travel each week because they’re at one company working on projects at that company.
In corporate finance, many large companies have rotational programs for undergraduates and recent graduates, but you usually won’t get to do FP&A-style work.
Instead, they usually assign younger candidates to accounting and operational work because most companies need more help with accounting than they do with budgeting/planning.
You couldn’t start at my level (Senior Financial Analyst) right out of school, but you could start at the entry-level and advance up to this point.
Most large companies have either a “promote from within” or “hire from outside” philosophy for corporate finance roles.
For example, Procter & Gamble likes to promote candidates from within and keep them around for a long time.
Other companies prefer to save time and money by having other firms train candidates and then hiring those candidates.
Q: I see. And what about the mix of people in Dubai? Is it mostly foreigners?
A: Dubai’s overall population is roughly 80% ex-pats/foreigners and 20% Emiratis (though the exact numbers vary from year to year).
Most of the foreigners are from India and Pakistan, but quite a few also come from elsewhere in the Middle East and North Africa (MENA).
Some also come from the Philippines and China, and others are from Europe, Australia, and South Africa.
However, in the private sector, there are virtually no Emiratis, so you compete exclusively with other foreigners.
Q: What should you expect in interviews for corporate finance vs corporate strategy roles?
A: There’s nothing specific to Dubai unless you’re applying for a highly technical role that’s dependent on local laws and regulations.
For example, one colleague in Tax and Treasury had to answer questions about the tax laws here (there are no personal income taxes, but there are corporate taxes for oil & gas companies and others).
For both the corporate strategy and FP&A roles, I had to complete a consulting-style case study in front of a panel, similar to what candidates at assessment centers in the U.K. do.
There is a big emphasis on fit, and they heavily favor internal candidates for all these roles.
My company encourages people to rotate into different roles, so they tend to ask behavioral questions and qualitative case studies (e.g., “What would you in Difficult Situation X at work?”) rather than specific technical questions.
Some companies, especially non-public ones, tend to present their P&Ls and other financial statements in non-standard ways (vs. what you are taught in school or through certifications).
You don’t need to know all the details for interviews, but you’ll have to learn them quickly once you start.
Certifications like the CFA and CMA (Certified Management Accountant) can also help with corporate finance roles at many large companies.
You can advance without a financial certification, but past a certain point, they’ll start asking about it because of corporate governance standards.
For example, it’s highly unlikely that you’ll become a financial controller for a $100 million department unless you have a certification or a finance degree.
Companies often sponsor you to take these exams, but you have to set aside time to prepare.
The Eternal Debate: Corporate Finance vs Corporate Strategy
Q: Thanks for that summary.
Can you walk us through the corporate finance vs corporate strategy roles and explain the one you prefer?
A: Corporate strategy (also called “internal strategy”) is very similar to management consulting, but with a more limited scope and a better work/life balance.
It’s a transitory role because there isn’t a real “path” to the top: Most people join from consulting firms or other roles in the company, stay for a few years, and move on.
The best part of the job is that you get high-level exposure to senior executives all the time and you can move from project to project, so you rarely get bored.
The worst part is that you always have to think about what’s next.
FP&A is a core finance role at all companies, driven by the business cycle: You’re busy when you’re closing months and quarters, but the periods in between are quiet.
If your division’s numbers meet or exceed the planned numbers, it’s a pretty relaxed job.
But if your group isn’t doing so well, it becomes more stressful because you’ll need to come up with stories to explain what’s going wrong.
As with internal strategy, you interact with different units and the global headquarters a fair amount, but you spend more time with the mid-level staff rather than top executives.
The worst part is that it can become boring and monotonous after a while since you complete similar processes each week, month, and quarter.
But it’s also better for career progression since there’s a clear path to the CFO position.
Q: That’s a good comparison; thanks.
How do you interact with everyone else at the company in your current role (FP&A)?
A: Our Regional CFO is responsible for delivering Sales, Cash, and Net Income figures, and he works with different business units to meet or exceed the targets.
A lot of it is a “game of negotiation” – one unit might say it can’t deliver a certain target, so the CFO has to go to other units and see if they can cover for the under-performing one by changing the reserves and other items.
As your previous accounts of corporate finance have covered, there is a lot of subjectivity in the reporting of financial results.
The Regional CFO must also have a good story to explain the results, especially if there’s a miss or something else unexpected comes up.
He/she works with the CFOs of the other units and several Senior Financial Analysts in his/her team.
We typically split our work across different P&L lines and also have dedicated “eyes” on Cash. I’m the “Cash guy” in the team, though I cover other metrics as well.
Last year, for example, I had to figure out how to meet the region’s Cash target as we were falling behind.
To do that, I worked with the business units in our region to optimize their projected Working Capital levels, and I made regional-level decisions about cutting certain non-core CapEx to help land the target.
Q: Thanks for explaining that. What is the compensation like in Dubai?
A: The packages are in-line with those in major financial centers, but the cost of living is lower, and there are no personal income taxes.
In corporate finance, you might start out at around $70K USD, move up to $100K over ~5 years, and move up to $200K USD over ~10 years as you become more senior.
However, those compensation levels are for multinational firms; at domestic companies, the pay is 30-50% lower.
(NOTE: Compensation figures as of 2017-2018.)
Overall, you’ll likely earn higher take-home pay at a multinational in Dubai than you would in other financial centers.
In fact, our company has had problems with candidates who move from the Dubai office to other parts of the world.
Candidates assume that they’ll earn the same amount if they move to London or New York – but the take-home pay is far lower, and sometimes candidates demand higher salaries to compensate.
Q: I would love to see that conversation play out in real life…
Do most professionals in Dubai tend to stay in these roles for the long term?
A: No. The entire city is very transitory, and people tend to move around more quickly than in other markets.
Especially if you’re at a large company, you can easily find ten similar positions in different parts of the world; management even helps you transfer.
At my company, there’s a concept of “time in role,” similar to “up or out” in consulting, where you’re encouraged to move into a new role after 3-5 years (unless you get promoted).
Regarding external exit opportunities, most people in corporate finance tend to move into other roles here or similar roles at other companies.
I haven’t seen anyone move into investment banking, and many team members come from non-target schools and aren’t even aware of IB/PE-type roles.
In corporate strategy, many people go back into management consulting or even enter fields like private equity, especially if they’ve had prior experience.
Awareness of “high finance” is much higher on that side of the business, and it’s easier to win recruiters’ attention.
Q: So, bottom line: Thinking about corporate finance vs corporate strategy, how can you decide which one is right for you?
A: Corporate strategy is good if you’ve done management consulting, you want a better lifestyle, and you want to keep your options open.
So, if you’re not sure whether you want to stay at a normal company or go back into consulting or finance, strategy is a better bet.
Corporate finance is better if you want to stay at a large company for the long-term and advance up to the CFO level, or move into a different division and advance up the ranks there.
If you don’t enjoy completing similar weekly/monthly/quarterly tasks and processes, stay away because it will be a poor fit for you.
Q: Great, thanks for your time.
A: My pleasure.
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