People, Process & Technology in Finance – What is the Right Proportion?

Mary Driscoll wrote another valuable piece for CFOs. Her article in CFO.com – Metric of the Month: Finance Function Costs – gets to the chase on a subject that many Chief Financial Officers face. CFOs have told me that it is hard to be a corporate leader in cost reduction while they need to come back to request and get approvals for increasing their costs to be a better business partner across the business, operationally and strategically.

Proportionate costs of Finance © APQC

You should read the article.

I’d like to address the question Mary asked as she ended her article. In discussing the management of Finance costs, which are composed of People, Process and Technology,  Mary asks – What is the right proportion?

Mary believes it is up to each CFO to figure out.

Sounds simple.

But most CFOs are hard pressed to figure it out. If it was easy, the proportion of costs wouldn’t look like this graph.

So where should a CFO start?

  1. Figure out what you’re actually doing. You can hire a consultant to figure it out, but you could, with a little effort and honesty (with yourself), can see what your Finance team is actually doing.
  1. Benchmark and compare. APQC benchmarks are a good place to start, and there are others that exist as well. While they may not be directly correlated to your business.
  1. Prepare a plan. Any plan to improve Finance is a good plan. It is certainly better than just letting things be in Finance. “That’s the way we’ve always done it” is not a plan.
  1. Aim for low hanging fruit. When you benchmark and compare, you’ll see obvious areas for immediate improvement. Identify them and act on them.
  1. Communication & Leadership. CFOs sometimes forget that their leadership role requires that they stand up and stand out. Communicating what you’re doing in a refined and positive way to your team and your company will help get the support you need to make your plan a success.

What about People, Process and Technology? Here is what CFOs need to keep in mind.

  1. Bring on the right People. Bringing on and developing higher level value adding senior finance talent will help you reduce the costs of lower level transactional staffing costs.
  1. Rejig Processes. Does your Finance function have to run like it always has, even though your business has changed significantly in the recent past? If you are running Finance like it’s 1999, and your business looks nothing like it did in 1999, processes need to be significantly updated to fit.
  1. Technology is always a challenge for Finance. Systems, software and other technology solutions can be expensive. Unless your enterprise is going through a wholesale ERP change, focus on Processes and People first. Once that part of your plan is in place, you will have the right Finance ecosystem and culture to properly take advantage of. Dollars on technology needs to be well thought out and prepared for (on the People and Process side) before making significant investments.

Reducing the costs of Finance while improving its impact on the business is possible. Studies show this. While it may sound counterintuitive to someone who has not done this before, learn from the literature.

And if you’re still not sure, ask your CFO Peers about their success stories in making this work.

The Challenges CFOs Face Alone (But They Don’t Have To)

CFO Peer Groups: A mid-year updateCFO Peer Group

Since the release of my book, Guide to CFO Success in 2014, I have been reminding CFOs that they need to build and develop their relationships within their organization.

Last fall, when speaking with some of my key Chief Financial Officers that I keep in regular touch with, I was reminded that while CFOs are lonely, there is a solution to their loneliness. These conversations with my Chief Financial Officers led me to develop my CFO Peer Groups.

Starting this past winter, I created 3 groups of 10 CFOs from across the USA and Canada, with the express goal of getting them to talk, learn, share and network with each other. Each month we had scheduled conference calls, with questions from CFOs sent to the group in advance that prepared the group. These CFOs were able to call on their peers both during and outside of our meetings on the issues and challenges facing them.

This fall, we will have our first in-person meeting in Chicago. At this meeting we will take our phone conversations to the next level and set the stage for where we take this in 2016.

Here is a sample of some of the discussions we have had so far this year in CFO Peer Group.

Topic addressed Question discussed
The ability to grow while stabilizing the core business. How to grow while investing in the core and changing the culture?
Scaling the organization to handle growth efficiently and profitably. What changes have you made both to the finance organization and encouraged throughout the organization to deal with top line growth year-over-year in the 20%+ range.
Having sufficient cash for all initiatives and not wasting time or money to get there. What strategies have you used that have had success or failure? Why?
Integrating 4 recent acquisitions How have you dealt with integration challenges? Staffing, IT, timelines, etc.
Scaling without rapidly increasing costs and maintaining quality What systems, processes or frameworks have they utilized to be successful in the past?
Best practices for managing tight cash flow. How do you redirect the culture of an organization to be conscience of tight cash flow when the CEO wont.
Describe your day to day activities and how this has changed over the course of your tenure What are your thoughts on how the role of the CFO evolves over time and how do you build your team such that you focus on the highest priorities? What functions report to you?
Outsourcing of non-strategic functions To what extent have you outsourced? What did you outsource? What was kept in house? Which outsource partners would you recommend?
Acquisition Process Do any of you have a well defined non confidential process around acquisitions that cover everything from target evaluation, negotiations, financing, due diligence and all legal documentation through purchase? Or is it more ad hoc project planning as circumstances warrant? In either case are roles and responsibilities clear and what role does the CFO and his / her organization play?
The Finance Team How do you ensure a strong, engaged team? How do you ensure they are treated with the respect they deserve by the non-finance departments? What are some good tips and tricks for finding and retaining a strong team? How do you prevent burnout and staff turnover? How to you create a culture that values the finance staff and the role that they play?
Building your Finance and Accounting team Do you have separate Accounting and FP&A functions? Do you lead each of those functions or do you have a #2 Executive in your department that manages these functions (or others?) If so,
Business Unit Structure Have you structured business units in a complex multi-product environment? If so, how did you do it and what worked well and what didn’t? Would also like to know how you structured the management of the business units
I am currently focused on CyberSecurity and efforts to be in front of the issue. What best practices have you put in place recently? Have you reviewed insurance coverage for security breaches? Recommendations for Outsourced CTO services.
Asia expansion. Anyone have experience with hiring/establishing a local presence in Asia?
Budget Planning Has anyone used Zero Based Budgeting as a means to get deep into spending areas? If so, was it worth the time and how did the process
Internal Audit Process Curious on rigor of Internal Audit Process and role of group within your company (financially vs. operationally focused, approach to audit planning, consultative vs. enforcers, etc.)?

These are only A FEW of the discussions we have had in CFO Peer Group so far in 2015.

As the year progresses, my CFOs will be sharing, learning, growing and networking, both in our continued conference calls, as well as at our first in-person meeting this November in Chicago.

My questions to you

As a CFO, wouldn’t you want to be able to share these types of questions with your peers?

As a CEO or Board member, aren’t these the types of things you want your CFO to have the support for?

There is help for the Lonely CFO.

Create your own CFO Peer Group. Or ask to join mine. I might be able to make room.

A CFO Success Story: Christine Russell, CFO of UniPixel

Christine Russell, CFO of UniPixel

The following is from an interview with Christine Russell, recently hired as CFO of UniPixel, as announced in CFO Moves. This interview was edited for clarity.

SD: Congratulations on your move to UniPixel. What are you excited about in your new role?

CR: I have been a Silicon Valley CFO for 30+ years and I’ve been involved in all kinds of different technologies. I’ve worked in many different industries, but there is a fundamental formula consisting of three elements for success that I’ve found in my companies and if they have this formula to start with, then they are going to meet with success.

First, the company really needs to be serving a large market (in the multi-billions) and that way in your growth cycle if you’re capturing only 10% of market share, you’re still a company with hundreds of millions of dollars in revenue. I’ve never enjoyed going to companies that are targeting a niche market where you don’t need 80% of the market and you’re a 200 million dollar company and there’s nowhere to go from there.

The second criteria is the product needs to be something that’s really useful and can be differentiated in the market. It can be either technological advantages, cost advantages, usability or some combination of these. It has to be something that people really need, and not something that we need to go out and convince everyone they need. Finally, the CEO needs to be a leader – somebody thoughtful, decisive, and with a bias for action. They need to have an impeccable reputation in the industry. Someone I’m really proud to present to investors and who customers can stand beside. To me, UniPixel has all of these elements – a multi-billion dollar addressable market in touch screen devices that have both technological and cost advantages and a CEO with a deep background in display and optical and who has run public companies before with great success.

  • Quick Takes from Christine on… 

    The formula for a great company:
    1) Serves a large market.
    2) Creates a useful and differentiated product.
    3) Has a really well-rounded CEO.

    Networking: Successful networking means making lifelong friends and giving back.

    Successful Female CFOs: Executives need to make their career a priority. There is no such thing as balance. It’s a compromise. It’s what you choose to do with your life.

    Females on Boards: Recruit your board by individual, irrespective of race, sex, country of origin. Hire the best for the board. Period.

    Managing your Board: Over-communication and transparency creates trust.

    The Best CEOs for CFOs: Confident CEOs are able to share their powerbase with the CFO and treat them as a trusted partner.

    Advice to up-and-coming female CFOs: Be absolutely fearless. Brainstorm with your other executives, and shut up and listen – you will learn a lot.

SD: How do CFOs get matched with great companies? What did you do to get to this company?

CR: I was approached for the UniPixel opportunity by a colleague who I knew in Silicon Valley for many years. He introduced me to the CEO, Jeff Hawthorne, and told me that he had worked with Jeff before and that he was an excellent and effective CEO. He told me that Jeff was respected for his deep knowledge in the display and optical industry. So a personal recommendation is extremely valuable. Always.

The way I joined my prior company was through a board member who was a committee chair who I knew from professional organizations. So again, it’s about who you know.

SD: How did you become so well networked?

CR: First of all, because I don’t really like the concept of networking, I think of people as friends. Friends help one another. I’ll tell you a little story about how I came to know some of these people, especially the gentleman who recommended me at Vendavo: I belong to a professional organization called Financial Executives International and I always enjoyed attending the Silicon Valley meetings. One day they approached me and asked if I would be willing to become the president of the organization. I was doing an IPO for a company at the time so I said I was too busy. I was set straight by one of my corporate outside lawyers. He looked at me and asked if I enjoyed going to the organization and if I found it helpful. So I said oh yeah, the people are wonderful. And he said, so when do you give back? I left his office and I immediately called up the board and told them I would accept the position. I have no idea how I did that while I was doing an IPO, but I did it, and then those people went on to become very good friends of mine and they really helped me. They help you and you help them.

SD: Most Senior Finance Executives don’t do enough networking.

CR: No they don’t, and I think they’re missing an opportunity to meet people who can be a lifetime friend and find out about opportunities that go both ways. They look out for you and you look out for them. And I will say that executive recruiting certainly has its own place. A search firm located me through my LinkedIn profile for a previous position that I held at Evans Analytical Group.

SD: If you look at the percentage of women at the CFO level, it’s not representative of the number of females in finance. What is your take on that?

CR: First of all, I think there are more women in HR and finance than there are in many other positions. I think that you have to have a certain amount of ambition and time that you’re willing to devote away from your family if you want to see the executive staff table. I was once on a panel where one of the panelists got a question asking a woman how she balanced her work and home life. Her response was you don’t. She devoted a lot of time to her work life at the expense of her home life. There is no such thing as balance. It’s a compromise. It’s what you choose to do with your life.

SD: What are your thoughts on the social discussion about females on boards?

CR: I’ve always thought that you should recruit your board by individual, irrespective of race, sex, country of origin, or anything that is unrelated to finding the best people you can who will accelerate your business. I know I’m going against the grain by saying that, but I think that a board member has to be highly qualified to be a board member. Especially in these times of challenges and activist investors. You need to have the very best qualified individual you can find.

SD: How have you as CFO managed to get the best relationship possible with the board that you had at various companies throughout your career?

CR: I have learned to over-communicate with the board. I will communicate very regularly and frequently and I wait for people to tell me “Christine, quit calling me!” Then I know that I’ve done enough communicating. I’m very transparent with them if there are problems or issues. If there is anything they don’t like about something, they can talk to me about it. But over-communication and transparency create trust.

SD: Some CFOs have said that the CEO can sometimes get in the way of effective communication with the board. What’s your take on that?

CR: I think that’s a valid comment. Just as there are all kinds of personalities of people in the world, there’s all kinds of personalities of CEOs. Some are very transparent and some are very controlling, but you’re not going to have someone become CEO if they don’t have a controlling personality. Some are more concerned about protecting their relationship with the board and trying to keep that relationship exclusive, seeing as it’s about power. More confident CEOs are able to share that powerbase with the CFO and treat them as a trusted partner.

SD: Where do you get the energy for all of the many accomplishments you have had in your career?

CR: I don’t know what else to do! I don’t have hobbies, I don’t play an instrument, and I can’t sing or dance… I’m a working cat! That’s what I do. And I’m good at it and I think as long as I have the ability to contribute and help create jobs, companies and ROI for investors, I’m going to keep doing it.

SD: What advice would you give to a young female CFO?

CR: I would say that you have to be absolutely fearless. One of the things that I did wrong earlier in my career was I thought I had all of the answers, but if you don’t get buy-in with some of the other members of the executive staff, it doesn’t really matter. Enter in the brainstorming conversations with the executives. Ask for everyone’s ideas, no matter how crazy those ideas may be. Create a common mind rather than coming in with all of the answers. Shut up and ask others what they think!

SD: What are you most excited about in your new role?

CR: I’m really excited about this being a pivotal time for UniPixel. We just acquired the Atmel touch film technology and the production facility in Colorado Springs. We are combining the best aspects of the UniPixel technology that we worked on with Kodak and the Atmel technology to come up with something that is more than just one plus one. I’m also very excited about the CEO I’m working with. The number of people he knows and who greeted him at a recent information display convention in San Jose was very heartening for me.

I recently visited the newly acquired Colorado Springs facility and the energy level there is amazing. These people are now able to work with a much smaller, more nimble and flexible company rather than being under a small vision of a large company. The energy level there is still like a start-up.

SD: What is the top thing you need to accomplish in this new phase of the company?

CR: Finance and admin are thinly staffed. I have to get comfortable with a minimum amount of support and identify the positions that I need to upgrade, as well as bringing in proper software and processes for finance. Even though that’s a lot of work, it’s an advantage because you’re not inheriting someone else’s ideas for a business.

SD: Is there something that you feel you would like to tell the CFOs who read this blog?

CR: Stick together! Form groups and partnerships. Join professional organizations and become a cohesive group so that if you’re ever in a bind –finding yourself in need of a boilerplate template for a sales commission plan for staff delivered software, for example – you can pick up the phone, email or text another CFO and ask if they have ever dealt with something similar. Those kinds of professional contacts and friendships are amazingly helpful and allow you to shortcut so many of the things that you would otherwise be handling alone.

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A CFO Success Story is a feature of Samuel’s CFO Blog, where Samuel Dergel follows up on his book, Guide to CFO Success, speaking with CFOs featured in CFO Moves, Samuel’s popular and comprehensive weekly report on CFO Movement across the USA.

A CFO Success Story: Ken Goldman, CFO of Everbridge

This following is from an interview with Ken Goldman, recently hired as CFO of Everbridge, as announced in CFO Moves. This interview was edited for clarity.Ken Goldman

SD: Ken, congratulations on your recent hire by Everbridge as their new CFO.

KG: Thanks Samuel. This is my 10th CFO assignment in 34 years. I had the advantage before joining Everbridge of having known Jaime Ellertson, the CEO, for 8 years. I had lots of points of reference that allowed me to come in with more information than most people have when they join a company.

SD: What is it about the tech space that keeps you coming back again and again and again?

KG: Of my 10 CFO assignments, 8 of them were in technology (new world), 2 in the old world.

What I like about technology is the fast pace, the amount of innovation that takes place. It is higher risk, higher reward. I love the feeling of the wind in my hair. I like the idea of driving fast. This is one of those opportunities where my only frustration is that there are not enough hours in the day. I feel very fortunate that 34 years into my career I am very excited to go into work every day. I get up at the ungodly hour of 4:45am and I’m in the office at 6 o’clock. Not because I have to but because I love what I do.

SD: It’s great to be in such an environment. You mentioned ‘higher risk, higher reward’. I’d like to touch on that just a little bit. Imagine you weren’t a CFO and that you only had general business experience, and you would say the words “Chief Financial Officer”. The perception of such a CFO would not fit who Ken Goldman is.

KG: If you think about, going back 20 – 30 years ago. CFOs were thought about as the Chief Accountant, Green Eye Shade, Risk Manager. They were someone to protect the company. While protection is part of my mandate, I would say that it really starts with enablement. My job is to enable the company to achieve success and greatness. I spend all of my time thinking about “How to do I do that?” Yes, protection is important, limiting the downside. But nobody ever built a company by just limiting downside. It’s about investing in upside.

SD: I’m interested in learning from you how you bridge the gap in a technology environment where you have visionaries and creatives that are running around you and coming up with hair brained schemes that can or cannot work, that needs to be thought through. How do you deal with being the grounded business person in an environment of giddy creatives?

KG: I’m not always the most popular person at the cocktail party being the voice of reason. The good news is that having done this a few times I can strike the appropriate balance between yeah, let’s jump out of the plane and put the parachute on the way down vs. let’s jump with 2 parachutes on firmly in place.

Part of the reason a company like this hires somebody with my amount of grey hair is because they want somebody who can do this. When I talk about risk / reward, downside, risk mitigation, alternatives, it’s from a position of having done it before, I’m not just thinking about it for the first time. I have the scars and the failures to prove it. It’s all about balance. You can be a gambler or put it all on red or black, you can win everything or lose everything, or you can be more conservative and take a more thoughtful approach.

As a good CFO, it’s about understanding the upside potential compared to the downside potential. It’s about making informed intelligent decisions as opposed to just rolling the dice.

SD: You talked about not enough hours in the day. In my peer group recently, I asked my CFOs how they are doing. They all say that they are busy. I have never met a CFO who ever said that they weren’t busy. How do you manage? What is your key to dealing with ‘there is not enough hours in the day’?

KG: It’s about being really good at juggling lots of balls at the same time. It’s about understanding the concept of triage. It’s about hopefully seeing around corners and out of the back of my head and hoping that in the 100 things that I have to do in any given day, I get the most important 99 done. I have what I call 51% days, where I consider it a good day because I got 51% of what I had to get done, done, but I’m frustrated that I didn’t get the other 49% done. In some ways I call it job security, because it’s not like I am going to die of boredom, but the other side of it is worrying about what was that one thing I didn’t get to today that was mission critical?

And a lot of it is because I am 3 weeks into the job and I’m still developing relationships with my team and making sure that they understand that if something is mission critical, don’t just send me an email along with the 150 that I got that day and assume that I understand the mission criticality of that email. If it is really important, come see me. If it is really important, text me. If it is really important, find the appropriate channel to communicate so that it does not get lost in the fray. Eventually I am going to get to all 150 emails, but like everyone else I use emails for time shifting. Some emails I’m going to take care of tonight when I get home. Some of them I will not get to when I clean up my emails this weekend when I get to the 400 emails I didn’t get to this week. I try as best I can to look at the header on every email as it comes in to try to figure out ‘is this something I need to drop everything else for’? Some of that is luck, some of that is skill, and a lot of it is experience.

SD: You talked about team. Most CFOs agree with me when I say that a CFO can only be as good as the team they have allows them to be. What is your approach to ensuring you have the best team possible to support you?

KG: In an ideal world, you get to go out and hire all superstars. Start with the fact that the hiring process is imperfect, all the people that you’d like to hire are not necessarily available at the time you’d like to hire them, and there is a time to ramp up. There is a lot of value to incumbency. I am very fortunate coming in to Everbridge that I have a team, some of whom have been here 5 to 7 years, They have incredible institutional knowledge, a good core skill set, and in some cases it is a question of the right management and mentorship. I believe that great employees are not necessarily hired, they are developed over time. I believe based on what I have seen so far, the people that I have today are keepers.

Even in my own job, in my own career, I believe I earn my job every single day. If I do a good job today, I get invited back tomorrow. If I don’t do a good job today, I probably don’t get called back tomorrow. It’s not that you are at risk every single day. The number one thing I look for in an employee beyond being qualified and capable, is work ethic. I want employees who have that solid work ethic, because to me, that is what gets you through the times when you don’t have enough hours in a day.

Again, I’m fortunate here to have a good core team. I think one of the things that experience teaches me is how to assess that pretty quickly. I said before hiring is imperfect because everyone puts on their best suit in the hiring process, we sell the candidate why are a great place to work, a candidate tries to sell us on why they can walk on water and turn lead into gold. It’s not till you’ve worked with someone for a while that you realize their strengths and weaknesses. If you’re lucky, you make a reasonably good choice. Perfect choices, sometimes happen, sometimes don’t. You try to do the best you can.

SD: Let’s switch over to what you are excited about at Everbridge. What’s on tap for you to accomplish going forward?

KG: Every time I look at a job opportunity I start with thinking at it from the standpoint of “if I were an investor, would I invest in this company”. As far as I’m concerned, if I’m taking a job, I am making an investment. I can either invest my money or my time, my career and my reputation.

I look for 4 things. Large addressable market, good financial results, company with a leadership position and elements of their business plan that make them / gives them a strategic competitive advantage and a great team.

At Everbridge, this is a team with a proven track record. They have all worked together multiple times. Jaime Ellertson, our CEO, is probably among the best CEOs that I have ever come across. We have a great team, with a large addressable market, great financial results, and lots of development that give us a strategic advantage. If I wasn’t given the job opportunity, I still would have invested in this company.

What I’m excited about is, we’re moving fast, we’re growing quickly, and that doesn’t happen just by momentum. We’re growing quickly, not because we are doing everything right, but almost everything right. I can say we are doing everything right, but nobody is perfect. We’re getting market validation, we’re growing at a rapid clip, picking up signature accounts, and rolling out new products. At the end of the day, the market votes with their dollars. If your revenue is growing, you’re probably doing something right. And we’re doing more than something right. That’s the most exciting thing because we have that growth, and that gives us options.

When I say options… I describe the role of the CFO – create, maintain, increase and ultimately realize shareholder value. At the end of each day, I measure each day by whether I helped create, maintain, increase or realize shareholder value. If I can check that box, than I can probably come back tomorrow. To me, this opportunity is about creating great shareholder value. We are a for profit company, we have investors, we have stakeholders besides outside investors (employees and customers). Increasing shareholder value benefits everybody.

SD: Ken, thanks for taking the time to share you CFO Success Story with my readers. Your passion for what you do comes through, and I wish you continued success and fun.

KG: Thanks Samuel.

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A CFO Success Story is a feature of Samuel’s CFO Blog, where Samuel Dergel follows up on his book, Guide to CFO Success, speaking with CFOs featured in CFO Moves, Samuel’s popular and comprehensive weekly report on CFO Movement across the USA.

Numbers Are Only the Beginning: Relationship Management Is Vital to a Controller’s Success

This article is an excerpt from the April 2015 issue of The Controller’s Report published by The Institute of Finance Management

Professional success for any finance leader is based on their brand (how others perceive them), their network (who knows them and is willing to support them), and their visibility (who knows who they are).

IOFM April 2015“Controllers can only impact the business if other leaders trust them and the information they provide” says Samuel Dergel, CPA, member of the CFO and Financial Executives Practice at Stanton Chase. “This trust is built over time when relationships are managed successfully. That is why effective relationship management is a critical tool for financial management.”

“Controllers need to move beyond ledger books and spreadsheets and act as business partners, providing
timely, actionable information upon which other parts of the organization can make profitable decisions,” says Dergel. “However, numbers alone cannot positively impact the business. Relationship management is essential.” Dergel offers the following advice:

1. Recognize the importance of “face time.”

“Relationship management in a corporate environment is based on strong communication,” says Dergel. “However, if a controller is communicating solely by e-mail, there is plenty of room for improvement. The telephone is more effective than using e-mail, but face-to-face communication is more effective than all the above. That’s why controllers must get out of their offices as much as possible.”

2. Develop a “relationship maintenance” plan.

“Be aware of the people you absolutely need to have a good relationship with, and create a plan on how you will maintain and improve those relationships,” says Dergel. Schedule time for relationship management with all these key people (see sidebar). You’ll need to make a special effort with people in other departments.

3. Never underestimate the value of simply sharing coffee.

Relationship building does not always have to be formal—in fact, it is often during informal interactions that the most powerful relationship building can occur. “Simply having coffee on a regular basis with people you want to build relationships with can go a long way toward learning their needs and how you can help,” Dergel notes.

4. Always deliver what was promised, when it was promised.

“Not delivering what is expected erodes trust, and this is a major cause for rifts in business relationships, Dergel explains. “Trust can be built only with people who know you and like you, and this is achieved by understanding what others expect from you and ensuring timely delivery on these expectations.”

CEO: When Your Brand New CFO Leaves

Dear CEO,

I noticed in the news that the CFO you hired with big fanfare only a couple of months ago has left. Your press release quoted your recently new and currently past Chief Financial Officer saying that he is returning to his previous employer because the role is too good of an opportunity to pass up.The CFO Revolving Doors

I have never been Chief Executive Officer of a publicly traded billion-dollar revenue company. I do imagine, however, that the conversation your new CFO had with you must have felt like a kick in the gut, among other places. I am sure that it was not a good day for you.

You know more than most that the past can never be changed. The question remains what can be learned from this ordeal.

While I was not involved in the drama that evolved both before, during or after this incident occurred, I have seen it happen too many times in my weekly coverage of CFO Moves across the US, Canada and the UK. Here are some pointers that you can give to other CEOs so that this does not happen to them.

1) Don’t fall in love with the wrong candidate. Technical, interpersonal, leadership, communication skills are all great. But to hire a great CFO to take you to the next level, you need to connect with motivation of the candidate.

2) Be honest with yourself. You may run a great company but your CFO to be is coming from an ever better environment, understand why they are saying yes. If you know you are runner-up, you may find yourself holding the bouquet at the alter.

3) It’s not just about money. Never, ever think that a CFO takes a role just because of the compensation package. Sure, CFOs are money motivated, but once basic needs are met, other needs are much more important.  (Maslow’s hierarchy of needs is the same for CFOs, except their basic needs are different than most).

4) Select your executive search partners carefully. I know that you understand the value of working with retained executive search for hiring your key leaders. Not all search firms are created equal, and not always should a search firm you have used in the past be the one you use for a critical search like your next CFO. One key differentiator you search firm needs to have is the ability to truly connect with the executive candidates. When looking for a Chief Financial Officer, a great retained search team has the ability to act as an advocate for the needs of the CFO candidate. The closer your recruiter can become a true partner to your CFO candidate, the better opportunity you will have for hiring a CFO where you will be his or her first choice.

If there is a cloud to this silver lining, it is that your recently retired CFO is available to cover until you hire again. I wish you all the best in hiring your next CFO. This time, I know you will make a better choice.

Wishing you continued success,

 

Samuel

Finance Executives: Should you take an overseas posting?

An article today in WSJ’s CFO Journal by Kimberly S. Johnson (Career Booster for CFOs: a Stint Abroad) discusses the opportunities that exist for finance executives in taking an overseas posting on their way to the CFO chair. The article is well written and researched, and has many positive points to consider for finance executives on the rise.

You may remember playing snakes and ladders as a youngster. The article makes it seem like an overseas posting is a ladder to get you to the top. I have seen instances that it has been such a ladder for up and coming finance executives.

But beware. What very well looks like a ladder could be a snake that gets you to slide down and out.CFO Snakes and Ladders

In my experience as executive search consultant, I have spoken with a number of disillusioned finance executives locked out of the most senior roles in an organization because they took an overseas role thousands of miles from head office.

From my perspective, one of two things happened. These finance executives either lost the opportunity to move up by being so far away from decision making, or they were pushed there because senior management did not consider the executive the “A” player they thought they were.

Opportunity or Kiss of Death? Ladder or Snake?

Here are some pointers.

Have the conversation – know what is expected of your time overseas. Listen and ask questions, especially for what comes after the posting. Only hearing vague promises of great things after your stint is not enough. You need to understand what is expected of you during your tour of duty, and what the plan is after. Also, have the conversation as to what knowledge, skills and experiences you should obtain during your expatriate experience, and how they are needed to “complete you” for your next tasks ahead. Oh, and get it in writing – who you speak with about the plan to leave and return may no longer be with the company when it is time to come back.

Stay close – In Guide to CFO Success, I discuss the importance of relationships to your success with your employer. Your Relationship Map will be a key tool to ensuring that you continue to manage the important relationships needed for your success overseas. Being in the corporate loop is difficult enough when everyone you need to speak with is down the hallway. Being an multiple times zones away makes staying close that much harder, and critically more important.

Impact your success – Use this as an opportunity for to impact your three critical career success factors (discussed in my recent book). Plan how this new posting will impact your Brand. Network inside and outside your company is more important than ever, and maintaining your visibility takes a lot planning and effort.

If you are offered an overseas move, don’t just jump at the offer. Make sure the move will land you on a ladder, not a snake.

Analytics, Shmanalytics? Why the CFO should care

The office and the role of the Chief Financial Officer continues to evolve.

This evolution may cause apprehension in some seasoned CFOs. These experienced financial executives feel this way because, in part, they have worked very hard to get to where they are. They believe that their past experience and success should speak to their future opportunities.

Yet for any executive, especially one in the finance side of the business, resting on your laurels is so 1980s.

The world is changing at a rapid pace, and the business world is either leading this change or trying hard to stay ahead. Organizations that do not continue to stay relevant wither up and disappear into obscurity. Ditto for CFOs.

Cindy Kraft, a CFO career coach, works with CFOs who want to stay ahead of the curve in their career. I like her work, and am always happy to refer senior finance executives to her. As a fellow blogger, she and I agree most of the time. In recent posts (here and here) she discusses technology and its relevance to CFO careers.

The statistics from Cindy’s questions on whether technology should be in the domain of Finance is interesting. I believe the results would be more telling if there was corresponding information on company size. From my experience, companies of a smaller size have CFOs responsible for IT, while larger companies have an executive in charge of Technology.

From my vantage point, CFOs who are able to stay ahead of the changes in the business world, including technology, are able to continue to stay relevant and add value.

So why does Analytics matter to the CFO?

In my book, Guide to CFO Success, I ask and answer “What is a Chief Financial Officer?” in the first chapter (you can preview a copy of Chapter One here). To summarize, I say that a CFO is a Strategist, Leader and Advisor.

Corporate value comes from making great decisions. Decisions based on analysis rather than gut is where Finance and the CFO have the ability to make a difference at the executive table. Technology is just a tool that helps intelligent people make great decisions.

CFOs need to be a Strategists, Leaders and Advisors to their businesses. If a CFO is not helping the company make decisions and adding value to the organization, they are not a Strategist, not a Leader and not an Advisor. In essence, they are not a real CFO.

To continue to be a real Chief Financial Officer today, you need to be able to help your organization make the best decisions possible.

The term Big Data has been bandied about as the cure-all for corporations. Technology vendors are very happy to use the term to get attention and their portion of corporate spending. But data itself is not enough, no matter how big the data is.

The Data Value Chain illustrates that data is only the beginning. It is the usable information that is pulled from this data, viewed through the lens of intelligence, either human or artificial (or both), that wisdom can be obtained.

As CFO, it is your duty to provide wisdom to your organization. This wisdom will lead to the creation of corporate value. Analytics is the point where you turn all that data into valuable decisions.

If you’re not providing the wisdom you would like (or think that you should) to the rest of the business, understand why that is.

Is it because…

  • You do not have the tools?
  • You do not have the people? Or,
  • You do not know where to start?

As CFO, no one expects you to be intimately aware of the available tools and be able to analyse this yourself. However, as CFO, you are only as good as your finance team allows you to be.

As CFO, no one expects you to choose the right analytical tools by yourself. As CFO, no one expects you alone to do the analysis necessary to come to great decisions. However, as CFO, you need to make sure your team can support you in this value added activity. As CFO, understand the power of these tools and information yourself of what they can do. Then you need to guide, lead and develop the team necessary to do so.

I had the pleasure of meeting RK Paleru at the AICPA CFO Conference last May. RK is the Analytics guru (Executive Director, Systems Analytics and Insights Group) to the CFO at George Washington University.

RK blogged about an article I shared with him about the idea of companies hiring a Chief Analytics Officer. While I do not think that most companies are ready to create another seat at the executive table, I do think that Analytics can add tremendous value to the executive table. I am certain that the CFO of GWU thinks that the analytics that RK does bring tremendous value to the CFO, as well as adding significant value to the institution and its mission.

Anders Liu-Lindberg wrote recently about his take on Analytics within the finance function. Anders, from where he sits in his role as Regional Finance Business Partner at Maersk Line, sees corporate value ONLY IF the talent team is built properly within finance is able to partner with the generalist functions. Finance should act as a true business partner to the business, helping make decisions at all levels of the business.

CFOs who do not continue to improve, change and learn will, as mentioned earlier, wither. Resting on laurels is career limiting.

If, as CFO, your response to “Analytics” is “Analytics, Shmanalytics”, you’re not only missing the boat, you’re doing a disservice to your employer and your team.

To remain CFO, both today and tomorrow, both within your company and at your next employer, understand the power of Analytics. Then, ensure you develop and nurture a finance team that can give you the wisdom to help your company make great decisions.

2014: Top 5 of Samuel’s CFO Blogs

As we wind down 2014 and get set for the holidays we all take stock of the year past.

In 2014, my blog turned into a website, led to the publishing of a book for CFOs, and multiple speaking and training sessions during the year. For my CFO blog itself, these were the 5 most popular blog posts visited by my readers.

5) Road Map to Successful CFO Relationships

This original posting was the beginning of the thought process that led to my first book, Guide to CFO Success.

4) Negotiating your CFO Employment Contract

What is interesting about the popularity of this post is that the visits have been mostly from Google searches and other blog postings. Posted in 2011, this is still going strong. Ideas from this blog were further developed in Guide to CFO Success.

3) Introducing: The Strong CFO Program – 1st session FREE

My first blog on financial executive coaching continues to be a point of reference for senior finance executives looking for guidance and support to grow and succeed.

2) The First 90 Days of a New CFO

It seems that CFOs are looking for onboarding advice, because this continues to be a popular topic with search engines. The popularity of this topic ensured that it was addressed further in Guide to CFO Success.

1) Presentation Links: The Road to CFO

My presentation in Vancouver in 2012 continues to be a popular point of entry into my blog and website. Someone somewhere referred to it, and this person must be very influential.

With 2015 about to start, I am pleased to continue the development of content and programs that benefit the CFO and the organizations they are committed to. I am excited about the CFO Peer Groups I will be facilitating this coming year, as well as having the opportunity to help organizations hire and develop the best senior financial talent for their needs.

I am also looking forward to making a difference to you.

Best wishes for continued success in 2015!

Samuel

CFOs: Make 2015 the year you take your game to the next level

With 2015 approaching, many senior financial executives are thinking about what the new year will mean to their workload; deadlines, projects, bonuses (both to pay and to be received), staffing concerns and loads of other stresses. The thoughts are all about what needs to get done and what they are ultimately responsible for.

For the busy and stressed Chief Financial Officer with the weight of the world (or at least their company) on their shoulders, the approach of the holidays and the New Year should give you pause. Think about how to make things better.

There are 24 hours in a day, and, whether you plan for it or not, they will always be filled. As my CFOs told me when writing Guide to CFO Success, more than three-quarters of CFOs are putting in more than 110% of their effort into their role as senior financial executive in their organization.

CFOs are expected to accomplish more than just the day to day accounting and finance tasks. They are expected to be leaders. They need to lead their finance team, lead their colleagues at the executive table and lead the company as a whole. You need to remember that, as CFO, your input is needed to help the company make sound strategic and operational decisions.

As the noted in this 2014 study from American Express:

For eight out of ten respondents, the finance function is a strong, if not dominating, influence on strategic and operational decisions. (See Figure) The finance function is involved with strategic and operational decisions at nearly every company, and 80% of respondents say that the finance viewpoint is either an influential factor or the determining factor.

Amex 2014 study - Figure 7

The expectation is that, as leader of Finance, your opinion counts. What you have to say is influential within the company. Yet too many CFOs feel that they are getting stuck in the details.

How can a CFO get unstuck and take their game to the next level?

Formal training

As an experienced professional, you know you can benefit from continued education that makes a real difference to your career and your employer. Options that can benefit you while meeting your busy schedule can include:

  • An Executive MBA – This could be an excellent tool to move you beyond the technical you have relied upon to date. Many Executive MBA programs are tailored to the busy executive and should not impact your work schedule much.
  • CFO oriented Leadership Programs – An executive training program focused on taking a CFO to the next level might be ideal for the senior finance executive that either already has an MBA, or feels the need to build their career knowledge based with a group of similarly experienced individuals. Programs like the Queen’s CFO Leadership Beyond Finance Program, in partnership with FEI Canada, can be an ideal solution.
  • Online training – When you know what skills you need to improve on and which you need to learn for the first time, online courses can be an ideal solution. If your company has access to leadership and soft-skill courses, make sure that you take advantage of this opportunity. You could also look at service providers like Proformative Academy to give you a choice of options that will suit your training needs, as well as those of your finance team.

Peer Groups

Chief Financial Officers are positioned at the intersection of their finance team, their executive colleagues, and the CEO and the Board. Being at this junction in their organization can make it difficult for them to learn from and share with others. Many CFOs have told me that they feel lonely in their organization, and don’t have people to discuss their challenges with.

The solution to this loneliness can be being part of a group of CFO peers. I recently discussed C-Suite Peer Groups in a blog on BlueSteps. You can become part of an existing group, or create your own.

For 2015, I am creating CFO Peer Groups for a select group of CFOs across the USA and Canada. These selected Chief Financial Officers will commit to work together, learn, share and network with each other. I am excited to facilitate these groups in 2015. I expect that the participating CFOs will take their game up to the next level.

Executive Coaching

Each of the CFOs that I have worked with as their executive coach has been able to step up their game. Executive coaching for the CFO (or future CFO) can be very beneficial to the executive and the company they work for. It is my experience that, like athletes, CFOs perform better with a coach who is well suited for them.

As we approach 2015, it is time to take your game to the next level.

Whether you choose to take the formal approach to learning, get together with your peers to learn, share and network, or engage an executive coach, any step you take to improve yourself and your game is a good step.

What will you do to improve your game in 2015?