Performance Boosts


As Seen in CFO Studio Magazine Q2 2017 Issue



Morale is high, people work hard and seem content, and every employee knows what’s going on behind the scenes at Kepner-Tregoe in Princeton, NJ. The multinational management consulting and training services firm implemented an incentive program as the market started to rebound after the global financial crisis of 2008 – 2009, and, at the same time, took the opportunity to offer employees greater transparency into its financial performance. As a result, “People are motivated in their roles, responsibilities, and decision-making; they’re educated about the business, and all that adds up to a sense of empowerment among the staff,” said Bill Baldwin, CFO and a Kepner-Tregoe Principal.

Mr. Baldwin spoke on “Driving Employee Performance and Engagement – Sharing Financial Intelligence and Insight” at an invitation-only dinner discussion attended by CFOs from New Jersey– area middle market companies. The event was held recently at Agricola Eatery in Princeton and is part of CFO Studio’s Executive Dinner Series.

Mr. Baldwin said the company instituted the incentive plan as a way of rewarding employees for their loyalty and sacrifice during a difficult time that, as at many organizations, included belt-tightening and cost-containment measures. And that naturally led to greater financial transparency. “It just seemed right to let people know if they’re on track to making their goals.”

A Pat on the Back

When the incentive program kicked off about seven years ago, every employee received a 10 percent bonus at the end of each quarter if the operating profit plan within their region was met. “This really registered with people,” said Mr. Baldwin. “It was motivation for them, and it changed their behavior in the business.”

While some incentive plans are based on revenue, “ours is centered around operating profit, and that has significantly altered the way employees view their decision-making when it comes to expenses,” said Mr. Baldwin. “They may reconsider the type of hotel they stay at, or choose a different beverage while dining or meeting with a client.” It’s up to the employee, he noted, “and that’s been empowering.”

These quarterly incentives are now team-based, he noted, since an annual incentive program has been adopted as well, to reward employees according to their individual performance record at the end of the year. “It’s all paid off because people take more ownership and accountability in the overall success of the business.”

Crystal-clear Reporting

With all employees striving to achieve personal and team-based incentives, “we thought it only fair to provide them with greater financial transparency” in an effort to eliminate what Mr. Baldwin called the “surprise factor.” He explained: “We don’t want to reach the end of a quarter or the year and have people surprised that the company or the region has not done as well as they might’ve thought.”

So for the past several years, Mr. Baldwin has been issuing a weekly report to all employees detailing the bookings for the current and next quarter, and comparing that number to the quarterly plan and forecast by region for the entire company.

The report also highlights anyone who has sold a new piece of business over a certain dollar amount in the past week. “When people see their name in lights, so to speak, they love it,” said Mr. Baldwin, who also calls or sends an email congratulating those high achievers. “That’s been very motivational, and great for morale.”

In addition to this weekly report, Mr. Baldwin and the CEO hold quarterly WebEx events (open to all employees) to provide an update on how the company is doing — both regionally and as a whole —what the future looks like, and how the incentives are shaping up. “We try to be as forward-looking as possible to give people an idea of what we expect the results to be for the year,” all in an effort to keep everyone informed from a strategic, operational, and financial standpoint.

“We are as open and honest as we can be with our messaging, and we’ve learned that it has to be repetitive and in terms to which people can connect.” To that end, employees are routinely educated on how to interpret the data contained in the reports, what the trends mean to them, and how the numbers are used by management. “We know we’ve been successful when folks start asking questions, and it becomes more of a two-way conversation. We’ve engaged them, and nobody has been kept in the dark,” said Mr. Baldwin.

Joseph Tammaro, Sector President at TD Bank, North America, and a CFO Studio Business Development Partner, pointed out that one of the biggest challenges in any organization is an “us vs. them” mentality. “It’s encouraging to hear the ultimate outcome of such transparency. A strong cultural foundation has been established, along with buy-in from the employee base who, as a result, will do what needs to be done to secure the viability of the company to move forward.”

Too Much of a Good Thing?

Overall, dinner attendees responded positively to Kepner-Tregoe’s methods, but a few questioned whether it was possible to be too transparent. Mr. Baldwin responded by acknowledging that there are, indeed, risks to transparency. “If a region is having a quarter where they don’t think they’ll make their results, but the next quarter is looking strong, we have to be careful that people don’t manage earnings from a soft quarter into a good quarter, or from one year into the next year.”

In addition, he said, there’s a fine line between being open and honest, and not creating anxiety or panic when business is not as good as usual. “We have to be very careful about our delivery because the last thing we want is people worrying about possible cost-containment actions or that their jobs may be cut.”

Mr. Baldwin believes the frequency of the messaging helps to quell any real fears. “We’ve been doing this for several years now, and people have matured in their thinking and do understand that there are cycles to any business and sometimes there are soft quarters.” And it doesn’t hurt, he added, that “in good quarters, every employee is recognized with a reward for a job well done.”

Proposed New Rules


As Seen in CFO Studio Magazine Q2 2017 Issue

-Interview by Andrew Zezas-

William Craig, CEO and CFO, Tarantin Industries, is a financial executive who has been on both sides of the street, as a lender and an investor, with companies such as GE Capital and Fifth Street Finance. He also has considerable experience in operations in diverse manufacturing and distribution firms, in the medical device, consumer products, industrial gases, and other industries.

(ANDREW ZEZAS) You have a pretty interesting background.

CRAIG: Yes, I had a funny start in the finance business. I started as a field representative for what is now known as the Motors Acceptance Corporation. Field representative is a euphemism for a repo man. This was in central Texas where the law was that you could shoot the repo man after sundown.

As an adjunct professor at the Rothman Institute of Entrepreneurial Studies at Fairleigh Dickinson University, what are your thoughts on the state of accounting and finance education?

CRAIG: What frustrates me is this: In the good old days you could be just a CPA and understand the rules because your accounting system was sort of batch processing. Now it’s all ERP. So you have to understand the business dynamics of how this information is flowing through the whole system.

Is the educational system teaching that?

CRAIG: I think not. I think what accountants have started to do in order to get people to pass the exam is they compartmentalize and they sort of create a lot of rules. So if you want to pass the exam today, you really have to understand your FAS statements, which is useful, but there are a lot of people out there that don’t necessarily need to understand the nuances of lease accounting to be able to tell somebody are we making money on this or not. Everybody in the organization should understand are we making money here and if not, why not, or how? [But in the classroom, finance is] too rules based.

Talk to me about the SEC in that vein: rules and the SEC and insider trading.

CRAIG: I have a somewhat off-the-wall thought on the insider trading stuff. When [the SEC was] started in the 1930s… it was a noble premise that we want to have information and be sure it’s fairly and properly disseminated to the public. Well, it’s 80 years later and we now have Twitter, we have LinkedIn, we have Facebook….

Everybody has a video camera in their pocket.

CRAIG: So, now we have information everywhere. I would almost push that in the other direction, which is to say…get less concerned about trying to keep a lid on the information and let it flow. Let it flow and then evaluate the companies on the basis of how well they disseminate their information. So, you and I can have the same business and investors might think I am…not only better at [disseminating information] but also I am clearer. My stock would trade at a premium to yours because they don’t trust your numbers. The SEC can promulgate a “restaurant model,” and become like the public health office: They rate you an A or I’m a B, or you’re a B and I’m an A, and the investor can see that. And then you have the Yelp or the Zagat view, which is the public information that’s saying “Zezas does a really good job of communicating the information,” or “There is no information.” So, it changes the whole dynamic of it.

The world is all about communication. You know, I like the idea. But we are out of time. You have shared some great ideas with us.

Simplifying Planning


As Seen in CFO Studio Magazine Q2 2017 Issue

-By Dan Crumb, CFO, Kansas City Chiefs



Business planning is at the foundation of executing our corporate strategy. Each department in our organization prepares an annual business plan outlining their objectives and what resources will be needed to accomplish these objectives. Traditionally, the business planning process has been very manual, paper-intensive, and lacked a consistent format across departments. Each department produced a report and delivered it in a three-ring binder. The review process, of approximately 25 binders, was inefficient and time-consuming. To remedy this, we started investigating ways we could improve the process and developed a vision for what our business planning process should become. At the heart of our vision was a conversion to a completely electronic process that utilized a standard platform, eliminating the need to merge information from multiple programs into one document, and then assemble and print copies.

As opposed to most companies’ budgeting and forecasting process, a key difference here is that we have no control over “results,” that is, what happens on the field and how it will impact our actual financial results versus budget. Moreover, we have 25 departments with approximately 200 employees responsible for executing our business strategy. Therefore, we have to have a quick, efficient way to review and gain visibility into each business plan and how we are tracking against accomplishing objectives — something our previous system for business planning made difficult to do.

Executing on the Vision

Equipped with a vision for our new business planning system, we began to evaluate business planning software systems that were available on the market. Within 30 days, we found out that there were not as many options as we’d initially envisioned, and of the options available, none could deliver what we needed without significant modifications.

If an off-the-shelf business planning system wasn’t available, we decided to look within and discuss the problems we were encountering externally with our Information Technology department. We had a programmer in our IT department who was proficient in SharePoint and had experience working with our financial systems. After a few brainstorming sessions and a thorough scoping of the project, we were on our way to developing and implementing a business planning system that would be built on the SharePoint platform, which was already utilized in our organization, and would be customizable to our specifications. We held two group training sessions and a number of individual training sessions with each department head to ensure that everyone involved in the business planning process was comfortable with how the system operates and how to use it most effectively.

We unveiled the business planning system prototype to all department representatives at our annual Business Planning Colloquium. It was well received and seen as a tool that would increase efficiency and consistency across the organization as well as replace a paper-intensive process with a fully automated electronic process. The leaders of the business planning process now had a fully electronic system, complete with dashboards showing progress toward completion of business plans, which strategic goals were being supported by departmental objectives, and ultimate progress toward accomplishing business plan objectives.

The new system increased accountability and provided instant feedback in a consistent and uniform manner across the organization.

It took approximately four months to design and develop the system, and it has been in place for a year. We have benefited from the ease and efficiency of viewing information from each department’s plan to ensure that our strategic goals are being supported by departmental objectives and that there is no duplication of objectives. So, the key takeaway here is not to be afraid of developing your own system internally if you can’t find one that satisfies your needs.

Copyright 2017