As Seen in CFO Studio Magazine Q4 2016 Issue
After 15 years in public accounting, Robert Friedman joined BAMCO, Inc. 10 years ago as CFO. Despite having little experience in the building industry, he strategized a new future for BAMCO as an industry leader in the green-building space, designing, fabricating, and installing metal panel systems for commercial building exteriors. Andrew Zezas, Publisher of CFO Studio magazine and host of CFO Studio On-Camera, spoke with Mr. Friedman about making over an old-line company to be a profit machine.
(ANDREW ZEZAS) You arrived at the company and encountered some challenges, but it was a rock-solid company. What were the first objectives you set for the company?
ROBERT FRIEDMAN: To become financially best in class. The first thing I did when I came in was I sought to be a sponge, to learn anything I could about the company and everything I could about the industry.
You were brand-new to the industry?
FRIEDMAN: For the most part, yes. I had some exposure to the industry through public accounting, but I was not an expert by any means. So I interviewed everyone inside the company. I spent time in all the different aspects of the company to see how everything worked, the processes, the people, the capabilities, things like that. And externally what I did, which was one of the most helpful things, was I joined the Construction Financial Management Association. Each year they do an annual survey of their membership, and you’re getting high-quality, very deep data on financial ratios, balance sheets, P&Ls, and the structure of those.
And do they produce that report themselves or through an outside firm?
FRIEDMAN: It’s produced with the help of Mercer Consulting. What I did was basically model our financials in our accounting system after this benchmark information.
I’ve got to believe as you were starting to set the foundation to restructure things, you’ve encountered sacred cows and “you know, we’ve always done it this way and this is forged in concrete.” How did you deal with these issues?
FRIEDMAN: Oh, there’s no question. But as a result of setting up these systems, we got a lot of great information. We are in a business of running jobs, and what we found out was that 80 percent of our profits were really being generated by only 20 percent of our jobs. And the jobs that were generating the most profit were the jobs where we were using our proprietary product that we had developed, and we weren’t really promoting this product.
So, you were able to affect how they were thinking about their business?
FRIEDMAN: Yes, and over time, Andrew, what happened was that we flipped it: 80 percent of our business became working in this proprietary product, and we sought to become experts and the best in the business in this particular niche.
And where does the company stand today?
FRIEDMAN: Well business is competitive, but we’ve become, I think, a regional industry leader, and it’s a great company for which to work.