Interview with Brian Giambagno
Interviewer: Andrew Zezas, SIOR
Following is the transcript of a CFO Studio video between Andrew Zezas, CEO of New Jersey based Real Estate Strategies Corporation and Brian Giambagno, Chief Financial Officer.
Visit www.CFOstudio.com to read about this interview and to watch the entire video interview.
Role of the CFO
Zezas: Hi, this is Andrew Zezas, your host at CFO Studio. I have the pleasure of sitting here today with Brian Giambagno, CFO. Brian’s got some great insights for us, and it’s nice for him to be here with us today. Brian, thanks for being here on CFO Studio.
Giambagno: Andy, my pleasure.
Zezas: Brian, you’ve got a tremendous amount of experience as a finance executive in many companies, in many industries and I wanted to get your opinion about the role of the CFO. How has that [role] changed in the last 20 years?
Giambagno: Wow! That’s a great question. What I’ve seen is the role of CFO has become more of a strategic partner to the CEO as well as the board. More in just the accounting and finance, the business acumen has really become a more important aspect of the CFO’s role; dealing with sales, pricing, getting in front of customers, on the production side, working with operations on driving cost containment profit improvement. So, I see the role as really becoming more of the wingman or the right hand to that CEO.
Zezas: It’s interesting. CFOs not only [how they are] viewed internally in most companies, but also externally, have become probably the major linchpin in the corporate structure. And, many believe that CFOs almost play the role of COO. Would you agree with that assessment?
Giambagno: I don’t want to take anything away from the COO, but I think the importance of the CFO, in that executive suite, has become more and more prominent these days.
Zezas: As CFOs become broader in their focus, they play an even greater role in shareholder interaction and board interaction. What are your thoughts on that?
Giambagno: Even in today’s environment, communication is critical. Transparency is critical and there are different levels. Within the executive suite, working with the CEO, the COO, CIO, I’ve got to be brutally honest with them [in] really driving profit margins [and] what’s working. The next level is your investors, once again no surprises. You’ve got to keep them informed about what’s going on in the business, both good and bad. You know what’s working today and what are some of the challenges down the road. And, on the third level are bankers. In today’s regulatory environment, what used to be a relationship has now become much more difficult. They’re being scrutinized- someone’s looking over their shoulder. So, in the past when it was, “Issue my financials, pay my term loan, being compliance with covenants,” it doesn’t stop there anymore.
Zezas: Yeah, it’s gotten deeper and broader, and a lot more busy.
Zezas: Now, as the role of CFO becomes broader, and given that there are a number of finance executives who were in transition, and given that the role of CFO tends to require that finance executives are more often in transition, should those finance executives who are on the hunt looking for jobs be marketing themselves as specialists or be marketing themselves from a more broader perspective?
Giambagno: Wow, great question! I think the role of the specialist is very important when it comes to the industry. If you can come into an executive suite and demonstrate an expertise in that industry, you’re going to come up the learning curve much faster. You’ll gain more credibility with the CEO and COO that you can talk their talk and you know the critical business issues. On the flip side, being able to come in there and help them manage the day-to-day, bring that business experience [is essential]. I stepped outside of finance at one point in my career and ran operations. I’ve been trained with a sales organization. I know what it’s like running production. That also brings great value to that executive suite. So, to answer your question, it was a two pronged answer. But, I think the expertise in the industry combined with general business experience is a critical value that a CFO can bring.
Zezas: So, it’s actually a combination of both.
Giambagno: I believe it is.
Zezas: Being able to demonstrate a particular focus while also being more broad in your expertise.
Giambagno: And, being that businessman.
Zezas: You know what, that’s a critical statement, being a businessman. So, a CFO, from hearing everything you just said, is no longer merely a finance executive. But, he’s really an operations, sales, IT, HR, logistics [executive]- he’s a business manager for the company.
Giambagno: Especially in the environment that I’ve worked in. I spent most of my career in middle market. In mid-market, I don’t have the luxury of a large accounting staff. I don’t have a chief accounting officer. I don’t even have CPAs on my staff. So, my broad business experience is critical to the success of my role in that environment.
Zezas: And, I think that’s becoming more and more the case, especially with mid-market companies and their finance execs.
Let’s talk about growth. As the economy gets traction and continues on its slow and steady recovery, will growth for most companies in the mid-cap sector come from upsells to existing customers or new customer acquisition?
Giambagno: I believe it’s going to be more upsell. I think it’s more vertical integration, which is critical where we, as an organization, can demonstrate value-add to our customer base. Right now, what’s happening is everybody’s beating each other up over price. You’re not going to win that war. So, if you can demonstrate a value-add and help a customer solve their critical business issue, you will then get more deeply entrenched into that company’s organization. That’s where the value is and that value will pay back over time once the economy really starts to take off.
Zezas: So, it’s digging deeper into the relationship, finding more points of value and from that, sales will grow.
Giambagno: That’s correct.
Zezas: Very interesting. I like that approach. So, let’s stay on the issue of growth: gross-profit maximization. In the current economic recovery circumstance, as things continue, has cost cutting really resulted in gross-profit maximization for many companies?
Giambagno: I wouldn’t say maximization, but maintaining gross profit because what’s happening also, you’ve got customer attrition, you’ve got price pressure. So, on the revenue side you have an issue to deal with there: You’re maintaining your margins by just being vigilant on the cost side. No minimizing discretionary spending. Focus on operational efficiency to really keep the cost down while you’re rebuilding the sale side. So, I would say in today’s economy, you’re maintaining margins, and if you’re maintaining, today’s maintaining is today’s up.
Zezas: Yeah, that’s right. Today’s maintaining is today’s up. Well, we’re almost out of time Brian. In a word, in a sentence, in a nutshell, what would be your advice for most companies today, in terms of what’s coming and what’s happening on the horizon?
Giambagno: Stay steady. It’s going to be a slow recovery. Keep an eye on the cost side and take care of your customer.
Zezas: Take care of your customer. You know what I think, that’s great advice. Brian, thanks very much for being here with us today.
Giambagno: Andy, my pleasure. I enjoyed it.
Zezas: This is Andrew Zezas with Brian Giambagno for CFO Studio. Thanks for watching. We’ll see you next time.
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