CFO Studio | Monthly Archives: April 2016 | Page 12April 2016 - Page 12 of 13

Teambuilding 2.0

As Seen in CFO Studio Magazine Q1/Q2 2016 Issue

Teambuilding 2.0

Back in the day, using exotic executive retreats was in vogue to encourage teambuilding. Such adventures often included rock-climbing, fire-walking and “trust falls” to build a collaborative team approach.

Today’s executives do not seem to have the time or financial inclination to spend an organization’s precious resources on week-long pep rallies. Instead, research reported by Harvard Business Review indicates that a much more mundane and time-saving activity can be just as effective: eating together.

The research, conducted by Kevin Kniffin of Cornell University, indicates that “Eating is such a primal behavior that it can be extraordinarily meaningful.”

Face-to-face interactions that involve eating have a particular kind of intimacy that cannot be duplicated by more adventurous teambuilding exercises. (This is the precise approach taken by CFO Studio in its Executive Dinner Series.)

So what does this research mean for collaboration and building a team-oriented company? When properly managed so as to discourage the formation of exclusive, insular cliques, setting aside the time, space, and resources for communal eating can be the best investment a company can make.

The Lure of Inversion

As Seen in CFO Studio Magazine Q1/Q2 2016 Issue

The Lure of Inversion

In November, Pfizer and Allergan agreed to a $160 billion merger — the largest pharmaceuticals merger (and the largest acquisition) in history. Bloomberg Businessweek reports that the transaction technically permits smaller Dublin-based Allergan to buy the much larger New York–based Pfizer. This technical legal maneuver will allow the newly formed drug behemoth called Pfizer Plc to relocate its tax address to Ireland. Ireland’s corporate income is taxed at a rate that is less than half that in the U.S. This controversial maneuvering is called inversion, and is becoming an increasingly popular option being considered by large pharmaceutical companies, and those in other industries, throughout America.

At 35 percent, the business tax rate in the U.S. is the highest in the world. Ireland’s tax rate is 12.5 percent. However, qualifying for an inversion is not that simple, and the scrutiny is fierce. A company must join with a foreign partner that is at least 25 percent of its size. The U.S. Department of the Treasury is targeting such deals by reducing tax benefits and limiting companies’ ability to transfer operations to new foreign parents without paying U.S. taxes.

Changes in the corporate tax laws may come on the heels of the 2016 elections. As such, companies considering inversion deals are scrambling to find willing foreign counterparts. Any reform Congress makes to discourage inversion could take effect as early as 2017.

Architects of Decision-making

As Seen in CFO Studio Magazine Q1/Q2 2016 Issue

Architects of Decision-making

Daniel Kahneman, winner of the Nobel Prize in Economics, coined two terms to describe decision-making methodology. System 1 is quick, instinctive, and often emotionally based. System 2 is slow, logical, and methodical. Although today’s C-suite executives are often pressured by workload and time constraints to adopt the System 1 approach, it is the deliberate, analytical System 2 method that prevents snap judgments and poor decision-making.

John Beshears and Francesca Gino of Harvard Business Review use the term Decision Architect to describe the C-suite executive’s role in decision-making. Using the System 2 approach requires cognitive effort, but the results are a strong foundation for sound decision-making. The three main steps to System 2 include:

(1) Define the Problem. Determine exactly what data is needed to get a clear understanding of the issue. Make no assumptions.

(2) Diagnose Underlying Causes. Have poor decisions been made by managers? If so, it is usually due to one of two underlying causes: insufficient motivation and/ or cognitive biases. Identify these.

(3) Design the Solution. Structure how information and options are presented to managers to encourage good decision-making.

The methodical approach to System 2 thinking helps C-suite executives to be the architects of sound, logical decision-making, which then filters down to the rest of an organization.