CFO Studio Magazine, 3rd Quarter 2012
by Howard Reba, CFO of Fidelus Technologies

To even a casual reader of today’s business news, it is clear that CFO turnover remains high at many small and middle market organizations. Whether attributed to new CEOs bringing in their choice, private equity investors electing to put their own people in place, acquisition activity, increased regulatory scrutiny, or the more initiative-oriented and short-term focus of the role, it is remarkable how companies go about selecting a new financial leader for their organization.

We are all familiar with the three questions companies ask when evaluating new employees: Can they do the job? Will they do the job? And will they fi t in?

A good interviewer and solid human resources team should have little difficulty answering the first question.

The second one is a little tougher, but still quite manageable. It is how companies handle the third question when selecting a new CFO that I find most fascinating.

In general, a CFO fulfills a leadership and stewardship role for the entire company by delivering a strong financial function and collaborating across other departments. Accordingly, job requirements include certain experiences, technical capabilities, and achievements. Why then do so many companies automatically screen out candidates based on industry experience?

The most common must-have requirement in CFO job descriptions is industry experience, and in many cases that makes sense: a manufacturing CFO is unlikely to be a top candidate for a hedge fund CFO role.

However, this approach is applied way too broadly. A CFO joining a new organization is simply a new piece of the puzzle that provides leadership. How well that piece fits depends on what gaps need to be filled. Often the missing piece is not industry experience, but more likely it is financial leadership.

Let’s look again at what a CFO does. First, he contributes individually. A unique set of talents and experiences allows him to bring fresh perspectives and ideas to the table. In this case, newness to an industry can be an advantage, as the new CFO can bring to light new ways to do things. It is incumbent upon the CFO to challenge approaches and decisions; one with a similar background would be more likely to promulgate the status quo.

Second, a CFO leads the finance team and maybe other groups as well. Here, he is basically minding the store, and the skills required do not vary tremendously from store to store. They involve strong management abilities, solid communications, and team-building skills. None of this is industry dependent.

Lastly, I believe the most important role a CFO fills is serving on the organization’s leadership team. Here he is a member and needs to provide what the other members do not. And that is most likely financial insight. A questioning demeanor will be more important than supplementing the industry knowledge most likely already present around the table.

So why do companies continue to focus on industry? Maybe it is because it is an easy way to whittle down the large pool of applicants. Maybe it is because there are many experienced candidates. But I must ask, are they the best fit?

Sometimes yes, sometimes no. so why limit introducing potentially better CFOs based on this one criteria that is not the most important one?

The most important factors are how well the candidate complements the competencies already in place and personifies the ethos of the organization. The broad ability to do the job, the personal drive to add value, and the cultural match clearly trump the singular and narrow focus on industry experience, especially in the most senior positions. It is rarely industry tenure that determines success or failure as CFO, so why is it the gatekeeper to the candidate pool?

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

CFO Studio Magazine, 3rd Quarter 2012
By Cindy Kraft, the CFO-Coach

You made it! You’ve landed in the CFO role of a plum company. You’ve got the corner office with a magnificent view. Now, you can finally kick back and rest on your laurels, right?

Not if you want to: a) stay in the position awhile; or b) keep your career on an upward progression. Matt Bud, chairman of the financial executives networking group (FENG), often quips, “you’re only ever between searches.” That is sage advice. The moment you adopt the mindset that your search is just some future event, you might find that you are actually only one short step away from being completely caught off guard.

Take for example the CFO at the movie producer/distributor new regency. He was terminated after three months in that role but had 13 years with the company; and he is the fourth CFO the company has had in four months. Can you do anything to ensure that you don’t meet the same fate as the new regency CFO? Not really. But there are certainly things you can do to be effective in your new role and still be prepared for a shorter-than-expected stint.

Let’s look at five proactive steps you can take to enhance your career after landing:

1 | Build trust with ALL the players. Trust is established over time, by saying what you’ll do and then actually doing it, constantly acting in a manner that is consistent with your spoken words.

So build trust with all the players, from your team, to the board, to the shareholders and/or investors, to the third parties with whom you interact, and with your customers or clients. Every person within each of those groups might hold that next great opportunity in the palm of his or her hand, so being authentically branded as a trustworthy CFO will only solidify, and add credibility to, your reputation. You are who you say you are.

2 | Make a difference. It isn’t what you do in this new role that will matter. It is how you impact and how that impact leaves the company better than when you stepped into the role.

A new credential, greater responsibility, and a bigger team are all the “what,” things you do or you have. Identifying problems and eradicating them; eliminating or mitigating risk; fixing broken processes; and slashing costs set up the “how.” Those are the tangible impacts. Value!

Being a difference-maker, a problem-solver, is key to your salary and bonus conversations in your current position, but it is oft en also key to your being hunted for that next — dream — opportunity.

3 | Be known. An old cliche reminds us that if you don’t stand for something you’ll fall for anything. There is a lot of truth in that statement, particularly when it comes to your positioning as a CFO who is “different and unique” from his or her peers.

A CFO recently asked the question: “how do I move forward now that I’ve been fired for being ethical?” Well, his first step might be to turn his strong stand for something — his high value around ethical behavior — into the foundation of his personal brand. There might be other CEOs and companies out there that don’t want his strong stand on ethics, but I would venture a guess there are also many that do.

Since strong brand positioning precedes you, whether you are walking into the office of the CEO, the boardroom, or the office of a potential new client, your visible reputation matters. So …

4 | Stay visible. The new definition of networking is: Who knows about you? It really doesn’t matter in today’s economy who you know or if you have 500+ connections on LinkedIn, unless they know about you.

Spend a few minutes deciding, in light of your three- to five-year goals, who you need to know and who needs to know about you in order to make those goals a reality. And then, work toward raising your visibility among those internal and external prospects on a regular and consistent basis.

5 | Don’t burn bridges, no matter how much you might want to. The CFO who was fired for being ethical probably can’t do much to prevent the burning of bridges. Others took care of that for him. However, when you choose to sit in the driver’s seat of your career, you have a much better opportunity to choose how best to structure your exit strategies so that you aren’t leaving burned-out bridges everywhere you’ve been.

Swallowing pride, anger, hurt, and injustice doesn’t come easily to any of us. Carrying it around is dangerous to our careers and our health. At a recent networking event, a gentleman approached me and immediately launched into his sob story about how he was a victim at his last company. Not only did he point fingers at everyone else, but his diatribe went on for 20 minutes before I tried to escape — only to be followed and subjected to another 10 minutes of his story.

Whether his feelings are justified or not, he not only burned bridges, he continues to set fire to himself and his career every single day. Do the opposite of human nature: Work through the anger, forgive, forget, and move on — because that befuddles and intrigues other people.

Congratulations on landing! Now, get busy doing the things you need to do to position yourself for that next great opportunity!

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

CFO Studio Magazine, 3rd Quarter 2012

By Aldonna Ambler, The Growth Strategist

Are you tempted to skip a round of strategic planning to save cash and avoid disruption during this extended period of uncertainty? If so, maybe you need to demand more from your company’s strategic planning process.

The irony is that businesses need clear strategy more during periods of uncertainty, not less. All it takes is a negative story on the evening news or a customer complaint or a whiney spouse to shake the confidence of employees, customers, or vendors. Folks around the company need to be reassured that the leaders are looking for opportunities, analyzing resources, updating the strategy, making adjustments, and are confident about the future of the company based on current information. How much momentum is your company losing when employees doubt, wonder, worry, pause, hold back, or start polishing their resumes? How about when customers decide to try a competitor? Or vendors change their terms?

If the folks all around your company are enthusiastic about your future, then convene to go straight into growth strategy mode. If there is still doubt or worry, build problem-solving processes into the strategic planning.

Often the CFO is the member of the executive team who can see the tangible evidence of unresolved problems, because it shows up so clearly in things like gross profit, capacity utilization, revenue/head, repeat business, average sale, employee turnover/recruitment costs, etc. but just hoarding cash and continuing to avoid problem solving won’t turn the situation around.

Sadly Out of Touch

A company recently brought us in because they were very excited about a new product they had launched earlier in the year. Their best customers had been extremely loyal for a long time. They were convinced that it was time to dive right into growth planning. But when we conducted our interviews with those same loyal, long-term customers, we learned that the overwhelming majority were actually annoyed, didn’t like the new product, felt taken for granted, and were quietly shopping the competition. The leaders of the company had absolutely no idea.

We offered to conduct more interviews and used control groups to make sure we hadn’t been misled. The customers didn’t want to hurt the feelings of the leaders of the company. They had become friends over the years. The customers were choosing sustained friendship over continued purchases. Wow! It sure was helpful that we insisted on some market research. The client had come close to refusing to let us do that step.

They are not alone! Perhaps your company is also making important decisions based on outdated information. If it’s a few years old, the data is pretty worthless in most industries. There have been dramatic changes in customer buying patterns due to financing, advances in technology, generational differences, and so many other factors.

Strategic Planning Solves Problems

We’ve noticed that many of the baby boomer CEOs and presidents of privately held midsized companies (particularly the family-owned ones) are still basing their strategies on the way things were when their best customers were first acquired. They’re hoarding cash, and hoarding cash is not the answer.

Other companies have a chronic recurring problem that has little to do with the economy. It is oft en referred to as the “elephant in the room.” You know, a revolving door in sales management, an outdated it department, too little repeat business, or few referrals. If one of those “elephants” defines your situation, maybe you, the CFO, would be more likely to embrace strategic planning if the process included more focused problem-solving. That way, strategic planning could actually make the business some money in the short run as well as guide the generation of improved results over the longer run.

Or your company could be experiencing telltale behavioral symptoms that would sabotage the success of just about any strategic plan. If you have a blaming culture, indecision, silos, low accountability, and room for excuses, the strategic process should address those issues to have a positive impact.

The point is, strategic planning can be done in a way that features parallel processes for updated information to guide important decisions, resolve chronic recurring problems, and/or replace self-sabotaging behavior. It’s more important to expect more from strategic planning now. This is not the time to avoid it. A real CEO seeks the input and involvement of the CFO during strategic planning…and so do real strategic consultants.

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