Leaps and Bounds


As Seen in CFO Studio Magazine Q2 2017 Issue



When you’re dealing with a company that’s moving so fast you can’t even gather enough data to make an informed decision, you need to get very comfortable with your gut, according to Anthony Conte, CFO of EPAM Systems, a global provider of product-development and software-engineering solutions. The Newtown, PA–based company has been in a state of “hypergrowth” for the past decade, having grown at an average rate of 35 percent per year over the last 10 years, said Mr. Conte. “And in some years we grew as much as 50 percent.”

Mr. Conte spoke on “Re-engineering the Finance Function while Managing Hypergrowth” at an invitation-only dinner discussion attended by CFOs from Philadelphia and New Jersey–area middle market companies. The event was held recently at Morton’s The Steakhouse in Philadelphia and is part of CFO Studio’s Executive Dinner Series.

Mr. Conte explained that the term “hypergrowth” can be applied when “a company expands at an industry-exceeding rate — roughly 20-30 percent per year for an extended period of time.” In the case of EPAM, “We were a $70 million firm with a presence in five countries when we were preparing to go public 10 years ago. Today, we’re in 25 countries and generate $1.2 billion in annual revenue.”

This kind of accelerated growth is “dizzying,” he admitted, “not to mention incredibly stressful.” And it creates a lot of extra work. “It basically forces us, on a regular basis, to rethink and redefine how we do things.”

On the upside, there are many ways to not only “survive” this type of environment, but to excel at it, according to Mr. Conte, who then discussed what it takes to lead the finance team at a company that is growing like a weed.

Handling Hypergrowth

First and foremost, advised Mr. Conte, be very, very flexible. “As a company grows in scale, routine goes out the window. You have to accept that, and get used to working without a set procedure in place.”

He said this calls for a comprehensive change in approach. “As an accountant, you’re controlled and orderly, but in reality, when everything around you is moving so fast, you may need to think about different directions in which you might go to get the same result.”

In addition, your decision-making skills need to become more clinical. “You have to learn to make decisions based on very little information, and without the transparency and normal financial reporting that most companies would have,” Mr. Conte said.

This is particularly tough for “us finance types,” he said with a laugh. “We prefer to make decisions with as much data as we can get our hands on,” yet Mr. Conte pointed out that many of his moves are “gut reactions.”

Finance executives at rapidly growing companies “need to get comfortable dealing with the repercussions” of those quick decisions. “You need to be prepared that you’re going to be wrong a high percentage of the time,” he cautioned, “because when things move too fast, things get broken.”

Fix It Fast

Knowing that many decisions will be a bit off the mark, Mr. Conte continued, CFOs need to acquire an ability to take risks — and clean up after themselves. “You’re making a decision, and you know there’s a good chance you’ll be wrong, but you need to go with your gut, and then scramble to fix whatever went wrong.”

When something does go awry, “Don’t focus too much on the wrong or the ‘why.’ Figure out how to fix it, and move on.”

Mr. Conte said the emphasis must always be on propelling the business forward. “You want to learn from the past, but you don’t want to harp on the past.” He went on, “You want to understand why you made the wrong decision, and discover what you were missing so that you don’t repeat history, but you need to look forward,” because, as he pointed out, “the company is going to keep moving, regardless, so you need to patch things up and look ahead.”

“To a certain extent, you need to be MacGyver,” Mr. Conte said, recalling the 1980s television series about a secret agent who solved complex problems with the use of everyday objects. “You have to be able to take a rubber band, some duct tape, and a few pencils and build a support structure. And then continue to reinforce that structure as the company gets bigger and bigger.”

Keeping It All Together

When it becomes clear that a wrong turn has been made, “It’s critical to remain calm, cool, rational, and focused. And very, very patient with those around you.

“Everyone looks to the CFO to set the tone,” noted Mr. Conte. “Others follow my lead and react the way I do.”

That resonated with Matt Pantera, Partner at CFGI, a finance and accounting consulting firm with offices in Boston, New York, and Philadelphia, and a CFO Studio Business Development Partner. “So much falls to the CFO in terms of managing the challenges that come with hyper-expansion from both organic and inorganic growth.” He went on: “In the case of inorganic growth from an acquisition, it makes sense that a company with little or no trial balance or financial information is preferable in this environment, since there is less structure and process to be amended during integration.”

Mr. Conte acknowledged that his biggest challenge is controlling the company’s global transactional liquidity. To which Elaine Cheong, Senior Vice President of Global Commercial Banking at Bank of America Merrill Lynch, and a CFO Studio Business Development Partner, pointed out: “The ability to manage global cash efficiently can substantially reduce working capital needs and funding costs. When you have global liquidity flows, centralizing FX [foreign exchange] management can further minimize foreign currency risk exposures.”

Mr. Conte said that there are pros and cons to working at a company that is growing at the speed of sound, but he wouldn’t trade it for anything—not even for MacGyver’s prized Swiss Army knife.

No More Fuzzy Numbers


As Seen in CFO Studio Magazine Q1 2017 Issue

Monetize talent-related growth strategies

-BY ALDONNA R. AMBLER, The Growth Strategist


Being able to attract, engage, and retain top talent is an important growth strategy of young or realigned companies. Yet most organizations still struggle when talent-related investments are involved because the discussions generally rest on vague information (fuzzy numbers).

Think about what happens when the CFO tries to get quantifiable answers to these HR questions:

  • How can we tell if a stay bonus was necessary?
  • Do career development programs pay off or are we just training people to leave and be productive at competing companies?
  • What degree of fit with our corporate culture does a job candidate need to be hired?
  • How can we tell if an employee is sufficiently engaged?
  • How much should our business invest if the typical millennial only stays with an employer a few years?
  • How much turnover is acceptable to us?
  • How do we know if we should be utilizing outside search firms or building our own recruitment department?
  • How much progress do we lose when key position vacancies linger?

Where You Can Start

The Society for Human Resource Management (SHRM), which provides professional certification for human resource professionals, leads the improvement of talent-related measurement, but there is a long way yet to go.

It pays to help your company’s HR professionals generate talent-related ratios to convey their proposed approaches to achieve your goal-related ratios. With such ratios in place, when your HR department wants to invest in a new engagement program, as CFO you can monitor its impact on retention, productivity, and capacity utilization.

Examples of Talent-related Ratios:

$___ cost for recruitment, screening, selection, onboarding/hire

$___ cost for engagement and retention/employee

$___ cost for incentives and bonuses (above base salary or wages)/ employee

#___ average months or years with our company/employee

%___ job vacancies OR %___ capacity

Examples of Company Growth-related Ratios:

% ___improved capacity utilization

$ ___ productivity increase

%___ reduction in people-related operating costs/gross revenue

Increasingly, HR directors must be involved in the process of monetizing desired outcomes. It makes sense to establish realistic baselines for talent-related ratios now, or your company’s decisions revert to fuzzy numbers, and your truly major investment decisions will be based on wishes, hopes, and guesses.



All Together Now


As Seen in CFO Studio Magazine Q1 2017 Issue



Keeping everyone in an organization on the same page with all eyes on a common prize can be quite an undertaking. But it’s an even heftier effort when running a business with two similar, but very distinct, high-end products that are directed toward separate consumer markets with similar characteristics, but varying demands. “This has been a challenge at every organization I’ve ever worked for,” says David Chambers, Vice President Finance and CFO of Jaguar Land Rover, North America.

Mr. Chambers, who appeared in the cover story of the Q3 2016 issue of CFO Studio magazine, spoke on “Driving Growth: Two Luxury Brands at a Time!” at a World-Class Companies CFO Dinner, part of CFO Studio’s Executive Dinner Series, held recently at Blue Morel in Morristown. CFOs from select New Jersey–area companies attended the invitation-only dinner.

Mr. Chambers began the discussion with a rhetorical question: “How do you manage growth vs. profitability with two luxury brands that could be somewhat divergent in terms of their targets and performance?” Interviewed later, Mr. Chambers said, “There was a pretty strong view in the room that margin comes first, and you should always manage to profitability instead of volume at any expense.”

Although this “refusal to sacrifice profitability” was the answer he expected from his fellow CFOs, Mr. Chambers noted that it often results in ongoing tensions within an operating organization. “The sales guys are going to have numbers they’re trying to hit, while the finance folks are attempting to keep some level of credibility in the system.”

In other words, he explained, “There are pressures in the system to hit sales, but at the end of the day, it’s your job as CFO to put the right data in front of people, and ensure that that data is discussed so that only the best sales decisions are made.”

And that’s why “things naturally get tense when you say, ‘Yeah, I know you want to do this, but it may not be the best thing for us to do,’ ” he acknowledged.

Along similar lines, the group then had a question for him: “They asked me about my process for evaluating the potential of a product, and how resources are allocated,” recalled Mr. Chambers. “I explained how we weigh the cost of what we’re willing to put into the product vs. the revenue we think we can get out of it. We then consider whether or not that generates an acceptable margin for us.”

Law and Order

The discussion then naturally morphed into an examination of how to keep discipline and control in an organization if there is rapid growth in one area, but not the other. “We have seen a tremendous amount of growth with Land Rover, and although we’re preparing for an uptick in Jaguar sales with two new models on the road, we’d been losing people out of that sales funnel,” said Mr. Chambers.

So about three years ago, Mr. Chambers and his CEO adopted what he referred to as “a new system to help us manage at the rate we’ve been growing.” He described it to the group as an organization within the organization. “We call it the executive review board, and it’s composed of the CEO, CFO, and the heads of marketing, sales, operations, HR, and customer service.” All major decisions go through that committee, he said, which “allows us to have an aligned view, and a fully vetted approach in terms of how we allocate our resources.”

In addition, Mr. Chambers noted, the system prevents a couple of things: “It avoids moves outside of the process, which tend to occur as you’re growing.” And, he added, it presents a very disciplined and unified approach within the organization. “It allows you to exert a level of control and discipline in the company without being too bureaucratic, because once something’s come through this organization, and it’s been reviewed and approved, it moves forward. There’s no further discussion.”

Mr. Chambers said the new process has been “highly successful” because it’s forced that “alignment” within the company.

This resonated with Jacob Buchanan, Senior Manager, Private Company Services at PwC, and a CFO Studio Business Development Partner, who noted that, “It can be very difficult to achieve organizational alignment to a goal across functional areas of management.” He continued, “For example, marketing and finance may have the same overall goal; however, aligning on the path to reach that goal requires strategic thinking.”

Mr. Chambers responded by noting that such “organizational alignment to a goal” can be accomplished in one of two ways: “You can either have a CEO that’s very strong in forcing that, or you can come up with your own process working with your CEO and heads of operations to put something in place that everyone will align upon.” This, he said, has been the key at Jaguar Land Rover, North America. “It’s the big difference in how we’ve tried to manage the brands because they sit in two different positions.”

Mr. Chambers added, “It’s all about having the right parties in the room and then having the discussions.” He pointed out that everyone gets a voice in the process, and then, once a decision is made, “it’s not about whether you like it or not, it’s about execution, plain and simple.” And an outcome reached by that method should go a long way, he said, toward keeping everyone in the company in the fast lane to success.

Copyright 2017