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6 Steps to Becoming a Star CFO

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Oct 14th 2014
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A CFO was presented with a retirement gift from the company he'd worked at for 20 years: a bronzed keyboard with all the keys missing—except N and O. "That's all we heard from you", fellow workers teased. Your job is to control costs, of course, and the way you divvy out precious cash resources is bound to ruffle feathers sometimes, but are you helping corporate goals?

The single largest expense in most organizations is payroll. How much is too much or too little to spend on employees? Is compensation well-thought-out? Are you paying competitively to get the best caliber employee or setting the bar well below the industry average on purpose? Are you paying people the same pay for the same position? Is it because of fear of discrimination lawsuits or just lack of attention?

Tim McConnell, managing partner of McConnell Consulting Inc. of New York, sees all these questions as distillations of the paramount concern: is your company where you want it to be?

Suppose you were trying to cut salary costs and so capped raises at 2 percent increases. Think of the repercussions, says McConnell. "Some folks will leave to make more money somewhere else, so instead of capping raises across the board, why not think it through strategically and, in your effort to limit expenses, look at the population: identify people who are not performing well and don't offer them raises at all—but pay top performers 20 percent more."

McConnell knows of what he speaks—three-quarters of his clients are either CFOs or CEOs who came up the ranks through finance. He himself worked for PricewaterhouseCoopers before striking out for himself.

Maybe to cut costs, you decide to cut training, but you need to see the big picture—what if the lack of training affects how employees stay current on their jobs? You may be thinking, what if we train them and then they leave, but McConnell counters",What if we don't train them and they stay? How will this affect how they interact with customers?" How much money the company should apportion to recruiting, to staunching employees running for the exits? Do you have the right number of positions? Is this being actively managed? "Realize that this number is continually evolving and maybe isn't an exact science but needs to be constantly stirred", he says.

You want to help run the business by coinciding with corporate, organizational, and quarterly goals. You want to be sure that employees are properly trained and motivated. You fine-tune this, McConnell points out, because",You need to spend money to make money."

Here's some free advice from this organizational architect:

  1. Keep the business structure from being obsolete. "What's going on in your industry? Is your staff over-busy? Under-busy? Your role is not to impede your company's workings."
  2. See the forest and the trees. Layoffs aren't always a consequence of current economic woes. Cisco, which in the 1990s was a hardware communications company, is switching gears to reflect changes and focusing on software. Hardware mavens are making room for software experts. "By removing hardware skills—even in the face of severance, hiring and training costs—Cisco is readying itself for the future. Keep your eye on the horizon, not just the day-to-day."
  3. Focus on costs as long as you invest in proper organization design: "You'll reap rewards in ROI. Spend money wisely, naturally, but don't freeze all salaries; target salary dollars—who are the best performers?" You may incur costs in the short-term, but if you keep your ear to the ground, recognizing new corporate realities, and realign corporate structure, you'll reap benefits in the long-term by knowing where your firm is going.
  4. Adapt to focus on what works best. Stay flexible. Some staff may work best at the office, while others, using their laptops from home or the field, contribute more. "Rules and regulations are nice, but what do staffers need? In a Volkswagen ad, an exec excuses himself from a meeting to use his mobile phone to listen to his son's performance at a school concert." Remember Kodak—if you don't adapt, you die.
  5. Apply logic to job descriptions. Do your job titles make sense? "Taking the short-term view, you may think, go ahead and call yourself whatever you want, it doesn't cost any money. But are you confusing customers? They need to understand the overall ranking of relative jobs."
  6. Collaborate and be part of the business flow. Someone else's input is your output. It may mean a redesign of your entire building, as was the case for another McConnell client: accounting needed expense reports, but field workers didn't get them in on time. It turned out that by seating all the accountants together and apart from the field staff—and the field staff together and apart from the accountants—there was no communication among them. The right functional design solved the problem—seating them right next to one another opened opportunities for discussion.

Think of a crew team, rowing at the direction of a coxswain. Without the proper overall strategy, the oars crash into each other—and the boat goes nowhere.

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