Culture Shift

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As Seen in CFO Studio Magazine Q2 2017 Issue

 

UP-TO-DATE TOOLS AND WORK/LIFE BALANCE CAN RESULT IN A HIGH-PERFORMANCE TEAM

There are many ways to define and measure what constitutes a team that is lauded as “high performing,” but when you get right down to it, “it’s all about the people and the culture.” That’s according to Scott Settersten, CFO of Ulta Beauty, the largest beauty specialty retailer in the U.S., based in Bolingbrook, IL. “It’s not just about hitting your financial targets. If you have a team that is unhappy, or doesn’t interact well with business partners, simply making your numbers is not enough. It spans way beyond that.”

Mr. Settersten spoke on “Building and Sustaining a High-performance Finance Team” at an invitation-only dinner discussion attended by CFOs from Chicago-area world-class companies. The event was held recently at Morton’s The Steakhouse in Chicago, and is part of CFO Studio’s Executive Dinner Series.

“People need a good environment to work in,” said Mr. Settersten. “They need to feel empowered so that they develop good working relationships across the enterprise and can work effectively to help move the business forward.

“You are the leader,” he said to his fellow CFOs in the room. “You own the culture. If you want a high-performance team, it’s up to you to set the pace.”

What Each One Values

The first pace-setting step in building a top-notch financial team is never forgetting that your employees have a life outside of the office. “Work/life balance is one of the hottest employment issues today,” Mr. Settersten acknowledged. “It’s very important to be open and adaptive to new and different circumstances, and provide your group with a decent chance to achieve the balance they crave and deserve.”

He suggested “role-modeling” examples of work/life balance to demonstrate how “it can be achieved without sacrificing on-the-job duties and responsibilities.” This could come in the form of flexible hours or telecommuting options, he noted.

In addition, be aware of the generational gaps in the workforce, and be sure to adapt your style when appropriate. “Different folks or groups value different things.”

Invest in the tools that can help your team members blossom into high performers. “You owe it to them to provide best-in-class software tools” to help them become more efficient and effective. “Maybe it’s the latest tax software that makes the process easier, giving folks more time to think about the outcome rather than compiling all the data,” he offered. “This will go a long way toward making people feel like you’re investing in them, that you’re concerned about their happiness and job satisfaction, and that you’re providing an environment where they can make progress and excel in their roles.”

Continue to show you care about the human side of your team by encouraging opportunities for career development. “Invest in training for your people to improve their skill set, whether it’s a specific subject matter expertise, or just general communication or leadership skills,” Mr. Settersten advised.

In some cases, however, you may need to reassess your talent. “If you have four high performers and one weak one, the high performers are going to look to you to address the situation.” Mr. Settersten acknowledged these are tough calls and difficult discussions, but sometimes they’re necessary to allow the team to move ahead.

The creation of a “road map” can help. “Talk with your team, acknowledge what the gaps are, and develop a plan on how you’re going to ultimately reach your goal.” But don’t stop there. “Engage with them, be accessible, and become an active feedback loop for them.”

The notion of a “road map” resonated with CFO Studio Business Development Partner Marilyn Bird, District President at Robert Half, which provides specialized staffing services for temporary and permanent accounting, finance, and bookkeeping professionals. “Having a definition of what a high-performance team means to you can help determine your action items, as well as how you measure where you’re trying to take the team.”

Keep It Going

Once you’ve witnessed your team transformed into a well-oiled machine of high performers, “It’s up to you, as the leader, to stay committed to sustaining the positive momentum.” Mr. Settersten said it’s a constant cycle of measuring and revisiting; and no news is not necessarily good news. “Go out there and proactively seek feedback to determine if you’re still making progress and achieving success.”

And don’t be afraid to ask for help. “Financial leaders resist seeking assistance because we’re the ones that are supposed to have all the answers,” Mr. Settersten explained with a laugh. “We may just try working harder, but working harder at the same thing isn’t going to solve the issue. You have to think about doing it a different way.” He suggested looking into benchmarking avenues and peer-to-peer networking groups to generate ideas, see what others are doing, and to borrow any best-in-class practices that make sense for you. After all, “More brainpower naturally leads to better outcomes.”

In addition, continue to invest in your team’s success. “The finance function always tries to do more with less, striving to be the role model for fiscal prudence in the organization,” Mr. Settersten pointed out. “We’ll feed the rest of the business, but in our area of oversight, we’ll just make it work somehow, because there’s not enough to go around, and it’s better to invest in sectors that are going to drive the top line and result in the biggest payoff.” That mind-set will suck the life out of your high-performance team, he said. “Resist the inherent urge to pass over your department when it comes to investing in new tools, training, and career-development activities.”

Worth the Effort

Mr. Settersten admitted there’s a lot to consider when building and sustaining a high-performance team. “With so many areas of finance in the CFO’s purview, and with tax laws and the like in flux, it’s quite a challenge. You’re always trying to get better while attacking a moving target.” That said, “It keeps it very interesting!”

But at the end of the day, Mr. Settersten said that we are all looking for the same kinds of things: “We want good people who are motivated and care about the quality of their work. We want to be able to foster a positive working environment for our teams so that, together, we can focus on delivering great business outcomes.”

Leaps and Bounds

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As Seen in CFO Studio Magazine Q2 2017 Issue

 

INSTINCT, FLEXIBILITY, AND PATIENCE ARE THE KEYS TO MANAGING HEAD-SPINNING GROWTH

When you’re dealing with a company that’s moving so fast you can’t even gather enough data to make an informed decision, you need to get very comfortable with your gut, according to Anthony Conte, CFO of EPAM Systems, a global provider of product-development and software-engineering solutions. The Newtown, PA–based company has been in a state of “hypergrowth” for the past decade, having grown at an average rate of 35 percent per year over the last 10 years, said Mr. Conte. “And in some years we grew as much as 50 percent.”

Mr. Conte spoke on “Re-engineering the Finance Function while Managing Hypergrowth” at an invitation-only dinner discussion attended by CFOs from Philadelphia and New Jersey–area middle market companies. The event was held recently at Morton’s The Steakhouse in Philadelphia and is part of CFO Studio’s Executive Dinner Series.

Mr. Conte explained that the term “hypergrowth” can be applied when “a company expands at an industry-exceeding rate — roughly 20-30 percent per year for an extended period of time.” In the case of EPAM, “We were a $70 million firm with a presence in five countries when we were preparing to go public 10 years ago. Today, we’re in 25 countries and generate $1.2 billion in annual revenue.”

This kind of accelerated growth is “dizzying,” he admitted, “not to mention incredibly stressful.” And it creates a lot of extra work. “It basically forces us, on a regular basis, to rethink and redefine how we do things.”

On the upside, there are many ways to not only “survive” this type of environment, but to excel at it, according to Mr. Conte, who then discussed what it takes to lead the finance team at a company that is growing like a weed.

Handling Hypergrowth

First and foremost, advised Mr. Conte, be very, very flexible. “As a company grows in scale, routine goes out the window. You have to accept that, and get used to working without a set procedure in place.”

He said this calls for a comprehensive change in approach. “As an accountant, you’re controlled and orderly, but in reality, when everything around you is moving so fast, you may need to think about different directions in which you might go to get the same result.”

In addition, your decision-making skills need to become more clinical. “You have to learn to make decisions based on very little information, and without the transparency and normal financial reporting that most companies would have,” Mr. Conte said.

This is particularly tough for “us finance types,” he said with a laugh. “We prefer to make decisions with as much data as we can get our hands on,” yet Mr. Conte pointed out that many of his moves are “gut reactions.”

Finance executives at rapidly growing companies “need to get comfortable dealing with the repercussions” of those quick decisions. “You need to be prepared that you’re going to be wrong a high percentage of the time,” he cautioned, “because when things move too fast, things get broken.”

Fix It Fast

Knowing that many decisions will be a bit off the mark, Mr. Conte continued, CFOs need to acquire an ability to take risks — and clean up after themselves. “You’re making a decision, and you know there’s a good chance you’ll be wrong, but you need to go with your gut, and then scramble to fix whatever went wrong.”

When something does go awry, “Don’t focus too much on the wrong or the ‘why.’ Figure out how to fix it, and move on.”

Mr. Conte said the emphasis must always be on propelling the business forward. “You want to learn from the past, but you don’t want to harp on the past.” He went on, “You want to understand why you made the wrong decision, and discover what you were missing so that you don’t repeat history, but you need to look forward,” because, as he pointed out, “the company is going to keep moving, regardless, so you need to patch things up and look ahead.”

“To a certain extent, you need to be MacGyver,” Mr. Conte said, recalling the 1980s television series about a secret agent who solved complex problems with the use of everyday objects. “You have to be able to take a rubber band, some duct tape, and a few pencils and build a support structure. And then continue to reinforce that structure as the company gets bigger and bigger.”

Keeping It All Together

When it becomes clear that a wrong turn has been made, “It’s critical to remain calm, cool, rational, and focused. And very, very patient with those around you.

“Everyone looks to the CFO to set the tone,” noted Mr. Conte. “Others follow my lead and react the way I do.”

That resonated with Matt Pantera, Partner at CFGI, a finance and accounting consulting firm with offices in Boston, New York, and Philadelphia, and a CFO Studio Business Development Partner. “So much falls to the CFO in terms of managing the challenges that come with hyper-expansion from both organic and inorganic growth.” He went on: “In the case of inorganic growth from an acquisition, it makes sense that a company with little or no trial balance or financial information is preferable in this environment, since there is less structure and process to be amended during integration.”

Mr. Conte acknowledged that his biggest challenge is controlling the company’s global transactional liquidity. To which Elaine Cheong, Senior Vice President of Global Commercial Banking at Bank of America Merrill Lynch, and a CFO Studio Business Development Partner, pointed out: “The ability to manage global cash efficiently can substantially reduce working capital needs and funding costs. When you have global liquidity flows, centralizing FX [foreign exchange] management can further minimize foreign currency risk exposures.”

Mr. Conte said that there are pros and cons to working at a company that is growing at the speed of sound, but he wouldn’t trade it for anything—not even for MacGyver’s prized Swiss Army knife.

The Strategic CFO

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As Seen in CFO Studio Magazine Q2 2017 Issue

CONNECTING THE CFO’S FOCUS ON STRATEGY AND RISK

As keeper of the numbers and the data, the CFO is the voice of reason and realism, but is often the challenger when it comes to a company’s strategic planning. However, Ron Kasner, CFO of iCIMS, a provider of cloud-based talent acquisition solutions in Matawan, NJ, envisions an additional line in the job description: “It’s the CFO’s responsibility to help identify opportunities for growing the business.”

Mr. Kasner spoke on “Strategy and Risk: The CFO’s Role in Driving Opportunity and Protecting the Enterprise” at an invitation-only dinner discussion attended by CFOs from New Jersey–area middle market companies. The event was held recently at Community FoodBank of NJ in Hillsdale, and is part of CFO Studio’s Executive Dinner Series.

“Because CFOs are indeed so data driven,” he said, “we should be delivering information about not just our business, but about the market and whether or not it is ripe for realizing the company’s goals and vision.” He continued, “CFOs should have an understanding of the marketing opportunity and whether the projected results of the business are realistic.”

Mr. Kasner shared his strategic focus on “Presence, Portfolio, Positioning, Pricing, and People” with dinner attendees. “For example, if the current opportunity isn’t large enough, CFOs need to guide the organization to expand its presence —whether geographic, segment, or vertical.” The company will then need to “assess the existing portfolio of products and services to ensure it can serve that newly defined presence.”

Without question, Mr. Kasner added, it’s the CFO’s duty to challenge and “push back” on some parts of even the best strategic plans, “mainly because of our keen attention to risk.” But this is where, he pointed out, strategy and risk go hand-in-hand, and “certain risk factors can and should be used by the CFO to create and help drive company strategy,” thereby opening the doors to new and expanded business.

Use Risk Strategically

There are countless types of risk troubling organizations today, and any CFO worth his or her salt has set up myriad controls to guard against or mitigate these dangers. Whether the risk is in the area of finance, personnel, compliance, or data security (to name a few), “once you’ve assessed the likelihood of the risk occurring and the impact that the risk would have on your business, as well as the ongoing value of the business, you can then determine your risk tolerance,” said Mr. Kasner.

He noted that while some business leaders are born risk-takers and others aren’t, risk tolerance is often based on the size or value of the company: “A start-up with little or no revenue may take on a lot of risk because it has nothing to lose, while a larger, more established firm might err on the side of caution and play things safe.” Alternatively, “larger organizations with a more established infrastructure may be better equipped to mitigate risks, thus lowering the likelihood of occurrence or impact, and thereby enabling the organization to take on what other organizations would otherwise deem a higher risk.”

In either case, “it’s now up to the CFO to ‘manage’ that risk,” said Mr. Kasner. Assuming all the necessary mitigating safeguards are in place, “the CFO should look to use that risk strategically to the company’s advantage.”

Mr. Kasner explained: “If it’s been decided that my company is going to have a greater risk tolerance, we may be willing to bring in certain types of customers that the competition might shy away from because they are viewed as too risky. On the flip side, if I have excellent controls around my risk, a customer might consider my company more secure, and decide to do business with me instead of my competitors.”

CFO Studio Business Development Partner Steve Peckman, a Vice President at Yorktel, an Eatontown, NJ–based provider of unified communications & collaboration, cloud, and video managed services, found Mr. Kasner’s take on the CFO as strategist enlightening. “As the only professional in the room who wasn’t a CFO, I was inspired to hear that the strategy and risk- management tactics laid out over the course of the evening correlated with the ways my team and I manage our business unit — as a microcosm of the larger company.”

Ultimately, it’s the CEO who has the vision for the direction of the company, “but the CFO should be contributing data about both the business and the market to help make accurate and strategic decisions,” Mr. Kasner pointed out.

“It’s our job,” he added, “to establish the framework for strategy and risk, and then use and contribute to that framework to help guide company strategy.”

Copyright 2017