CFO Studio Magazine, 3rd Quarter 2012
By Damian Finio, Chief Financial Officer of West-Ward Pharmaceuticals

WHAT TO BRING AND WHAT TO LEAVE BEHIND

My recent career moves have taken me backwards in terms of company size and revenue, yet provided me with fantastic opportunities for design and implementation of people, processes and systems. I initiated each of these career moves. However, with larger companies continuing to reduce the size of their finance departments, it’s a trend that some of you may be forced to encounter yourself or for the people you recruit.

I benefited from sophisticated operations at AstraZeneca ($34B in revenues), transitioned to Daiichi Sankyo ($12B in revenues), and now find myself at HIKMA ($1B in revenues), wondering what knowledge and experience I should bring with me and what is better left behind.

While knowledge and experience get you the job, it is oft en this same knowledge and experience that can leave you frustrated and disappointed if you don’t adjust your expectations to your new environment. Smaller companies simply do not have the means to invest in the people, processes, and systems that their larger competitors do, yet the complexity of their business models is arguably comparable.

All of the companies where I worked are multinational firms with headquarters outside of the U.S. competing in the regulated pharmaceutical industry. Each uses SAP, has manufacturing facilities around the world, sells in multiple countries, and employs thousands of people with varying cultural backgrounds and skill sets. Yet the quality and quantity of finance staff, maturity of financial processes, and success in exploiting systems varies. There are more than likely a host of reasons why this is the case, but surely some component of this dynamic must be attributable to the size of the organization.

So, what does a finance leader bring and what is better left behind?

Tracking Talent

Regardless of an organization’s size, you can attract and retain top talent. With the same budget, you could assemble a small staff of talented individuals or a large staff of not-so-talented individuals. It’s up to you to determine which model fits best with your new organization, but in my experience, quality is more important than quantity when it comes to staff.

Although talent management may appear as something to do when/if you find the time, it is absolutely critical to regularly step away from month ends, management meetings, and so on, to assess the talent of your team. Even if you lack the support of a strong HR organization, finance managers can easily gain access to tools used to conduct robust talent management reviews. Over time, if you clearly articulate your expectations, establish competencies, set clear objectives, and take action with your high performers and lowest performers, your finance organization will improve. Talent management is an area where you are well-served bringing with you the leadership skills you honed and talent processes you implemented while managing larger teams of people. Leave behind the idea that you will have clearly defined roles and responsibilities for each individual; your organization is smaller. However, if you attract and retain the right talent, you can allow the lines to be a bit blurry.

In terms of processes, the most difficult challenge is deciding where to start. The biggest mistake you can make is trying to improve all financial processes at once. Recognize they’ll never be as robust at a small organization as what

you experienced at a large organization. Identify and prioritize improvements to be made in budgeting, purchase-to pay, and order-to-cash processes. But, rather than going after the low-hanging fruit — automating the purchase order approval process, moving more vendors on to EDI — focus on holding non-finance managers accountable for their budgets. It’s your job to ensure the budget management reports that are necessary to support them exist.

Before doing this, gauge the level of awareness around the company’s financial targets. Then review how the organization allocates expense budgets. Dissect the company’s expenses, sort out who controls what, align the management reports you distribute accordingly, and then hold people accountable for their part of the budget. Once you have the entire organization looking after the expense base for you, you can spend time bringing the day-to-day financial processes into 2012. Pay as much as you can electronically, improve payment terms with vendors, and collect and apply your cash quickly. Bring your business acumen and project-management skills with you to get the organization headed in the right direction. Avoid trying to automate the day-to-day financial processes right away. They’ve been manual for a while, so a minor delay won’t hurt.

Strengthening the System

Upgrading systems is by far the biggest challenge. You are most likely up against a constrained capital budget and an under-resourced IT department, and these are not likely to be entirely in your power to fi x. Patience is the key. Systems don’t improve overnight, but once you commit to either a new system or to improving your existing system, don’t underestimate the time and effort it takes to do it right.

To ensure that the team has a vested interest in a successful implementation, you need to be willing to offer up some of your most talented permanent staffers to work full time on the system implementation team. And, to make sure you don’t burn them out in the process, backfill, role with a full-time, competent contractor. This will enable them to focus 100 percent of their attention on the project.

Bring with you the vision gained from having worked in an organization where the systems were integrated and fine-tuned to meet the needs of the business. Leave behind the notion that improving or implementing systems is someone else’s concern — it’s yours.

When making the decision to move to a smaller organization, do what you can during the interview process to assess where the “pain” resides in the current finance department. Once determined, this will help you decide whether or not your bigger-company skills will be of value to your new, smaller organization. And, when moving from a larger organization to a smaller organization, bring with you the knowledge and experience you’ve gained over the years. After all, that’s why you were hired.

Leave behind the expectation that when you arrive you’ll find a completely talented and motivated staff, using world class systems, overseeing mature financial processes. Your new, smaller organization simply doesn’t have the same level of resources. And, in reality, what you became accustomed to at the larger organization is probably more than they need at the smaller organization.

If you move to a small organization, keep in mind that trying to perfect everything will frustrate you and drain your company’s resources unnecessarily. There’s a word for perfection in business: inefficiency. Bring with you a “fit for purpose” outlook and leave the perfectionist behind.

– Download the Article in PDF | Author’s CFO Studio Page