Shifting Harley Into High Gear

The CFO of a motorcycle giant's financial arm negotiates the road to growth and profit.

Donna Zarcone speaks and acts quickly. When conversation turns to motorcycles—like her own Harley 1340cc Dyna Low Rider—or another one of her favorite topics, she smiles easily and words fly from her mouth at a staccato pace. As the CFO of Eaglemark Financial Services, the financial arm of legendary motorcycle manufacturer Harley-Davidson Inc., Zarcone dislikes bureaucracy—it stymies her energy and ideas.

And when too many reports and too much red tape threatened to detour her from her entrepreneurial track four years ago, she hatched a plan to land a new job that would allow her more freedom and creativity. At the time, Zarcone was CFO of Chrysler Systems Leasing. When she learned Harley-Davidson had launched a financial services division to make loans to customers and to Harley dealers to help them stock their dealerships, she contacted Steven Deli, who, as chairman and CEO of Eaglemark, was leading the effort.

Deli, who made his mark at Harley when he took the company public in 1986, had already hired a controller, and he told Zarcone he didn't need a CFO. But Zarcone wrote a rationale justifying the CFO position anyway and, in it, explained the skills she would bring to Eaglemark. When Deli told her he could not afford to hire her, she retorted that he couldn't afford not to. Four months later, the CFO position was hers.

In her office across the street from the Sears Tower, with a Harley 1340cc Super Glide parked in the lobby, Zarcone, 40, talks about the fast decisions and smart risk-taking that have changed the way the five-and-a-half-year-old Eaglemark operates. She figures Deli's decision to hire her has paid off many times over.

Financially, Zarcone's changes are helping to grow the company. She led the effort to launch a Harley-Davidson credit card in August 1997. Six months later, Harley counted over 117,000 new cardholders. She helped Harley dealers develop an array of services to offer consumers and orchestrated a technological effort widely applauded by dealers to consolidate all Harley's accounts receivable processing at Eaglemark's Plano, Texas, office. In 1997, Eaglemark's loan volume reached $1.6 billion, up from $1 billion in 1996. Operating income for 1997 surged 59% over 1996 to $12.4 million.

As a result of her achievements, the AICPA has chosen Zarcone as a pathfinder in the CPA Vision Project—a massive grassroots effort to help the profession redefine itself so it can better face the challenges of the future.

Characteristics of a Pathfinder

  • Develops and champions a successful new service for a firm, employer or profession.

  • Plays a key role in making a new service successful.

  • Has the ability to grow a practice or expand services to meet employer needs.

  • Makes extensive use of technology and has plans to increase use as innovations become available.

  • Exhibits creativity and entrepreneurial attributes.

  • Sensitive to others—shows understanding and empathy.

  • Has personal plan or vision for the future.

  • Is willing to take reasonable risks in order to grow professionally.
Source: CPA Vision Project Web site

Zarcone, who graduated from Illinois State University at Bloomington—Normal in 1979, has a history of helping to grow companies. In 1980, as a young accountant at then Peat Marwick Mitchell & Co., she was asked to conduct the first year audit of NF Computer Sales and Leasing Co., a start-up company run by two former IBM salesmen. The week-long task turned into a summer project for her when she realized she would need to redo the company's books. "The two entrepreneurs didn't want just to change their books; they wanted to understand lease accounting, so I held class for them," she remembers.

In 1982, NF offered Zarcone the controller position. "I always saw myself becoming a partner in a major accounting firm, but I could see what a great opportunity NF presented," she says. She heard about the customers' needs from the company's sales team, which often complained about the stringent terms she attached to leases. NF's owners decided first-hand customer experience would help Zarcone better understand not only clients' concerns but also those of the salespeople. "I had to call on a customer, make a presentation and negotiate a lease," she says. The experience helped Zarcone see where she had been inflexible and where she could safely negotiate and also showed her how different situations looked from the perspective of customers and sales staff.

One of NF's two owners, a gifted motivator, taught her the importance of persuading others to see her viewpoint in order to win their support to carry out tasks, rather than outlining steps and demanding that people follow them. He explained that her extra effort would make her colleagues feel better about their work. "He would say, 'You can present the same point in a different way and get buy-in,'" she remembers.

Meanwhile, at night, Zarcone pursued an MBA at the University of Chicago, earning one in finance in 1987. That same year, NF's owners sold the company to Chrysler Systems Leasing. Sitting on Chrysler System's board of directors, Zarcone found her negotiating skills and customer perspective critical. She learned not to overwhelm the board with protracted financial details but, rather, to analyze the data and help come up with a view of the big picture. "I was presenting to market-focused professionals, so I had to slant my presentations to them, to have them consider what kind of impact the deal would have on the company, not just quantitatively, but qualitatively," she explains.

Moving from an entrepreneurial venture at NF to the much larger, more hierarchical Chrysler organization, Zarcone was forced to make adjustments. "It was frustrating," she remembers. "I came from an environment where I could walk down to the corner office and say, 'This opportunity is open here and this is how we should act on it.' The answer was yes or no." At Chrysler, she found herself sending a preliminary package to the board, and then another package to back up her suggestion. Sometimes the board would take two months to make a decision, and by then Chrysler would have missed an opportunity. Zarcone found herself yearning for the more entrepreneurial environment lost when Chrysler bought NF.

Looking back, Zarcone doesn't regret the time she spent at Chrysler, but she realizes Eaglemark offers a better atmosphere for her skills and interests. Her first challenge there was transforming the way the financial department approached business issues. "I didn't want a team that would look at problems and tell me the reasons they couldn't be solved," she says. "I wanted people who would list the conflicts and pitfalls and tell me how to get around them." For six months, she tried to explain her outlook to the treasurer and controller. She urged them to study the details and then explain the trends they saw that could help Eaglemark better serve customers. When they failed to understand the attitude change she required, Zarcone brought in a new team.

Zarcone's persuasive skills came in handy later at Eaglemark when she launched a 21-month project aimed at allowing the company to take over Harley-Davidson's accounts receivable processing. Zarcone originally proposed the transfer—a large technological endeavor including the establishment of wide area networks between Harley's Milwaukee offices and Eaglemark's office in Plano, Texas—to eliminate redundancies. Dealers had always been frustrated because they had to contact both Harley and Eaglemark to figure out their accounts receivable status. "Their biggest concern was that we wouldn't be offering the dealers anything better—that we were just going through the motions," recalls Zarcone, who encouraged all the participants to collaborate by airing their fears about the transfer. "In the end, we satisfied everyone because we addressed all those concerns," she explains.

In May 1995, Zarcone learned of an opportunity calling for the "can do" perspective she expected her team to exhibit. It involved providing financing to Canada's Harley distributors to purchase motorcycles and accessories. Zarcone had less than three months to accomplish her task—not only to figure out how to set up the financing processes but also to meet with the Canadian dealers, resolve tax issues and complete the paperwork. Undaunted by a job that might have taken other leasing companies up to a year to complete, she jumped right in, making up a hit list of the risks presented by the opportunity—dealers who would default on loans within 90 days. "Normally a leasing company wouldn't be that cavalier about risks," Zarcone said. But as she and her team took a closer look at the dealers, "we felt, based on the past financial records—and moral character of the Canadian dealers—we could take some chances." By July they had rolled out the new financing package.

At a meeting of Eaglemark's advisory council, which convenes a few times a year so dealers can hear the company's financial plans, Zarcone learned that many were seeking the services of banks and other competitors because Eaglemark's offerings were too expensive. So Zarcone helped to pull together a pricing team made up of representatives from marketing, operations and the financial department to come up with a more attractive package. They developed an umbrella of services—retail installment lending for the consumer and casualty insurance so the new rider could immediately take his Harley on the road, as well as extended service contracts. "It means customers have one-stop shopping," Zarcone explains.

Zarcone also fulfilled her original promise to Deli to inspire and develop her staff of 40. Freedom and individuality—two values often associated with Harley-Davidson's leather-clad, tattoo-covered riders—came to her mind as she worked through a recent management quandary. The challenge Zarcone faced involved turning a bright young accountant into a self-assured financial analyst willing to make projections, assume risks and negotiate with senior executives without jeopardizing the junior staffer's self-esteem. The young employee had come in "with all the raw material—she was smart, had solid analytical skills and excellent ability on computers," recalls Zarcone, "but she lacked confidence and belief in her decisions." Recognizing aspects of herself in the woman, Zarcone offered her a subtle but persistent message: "You are smart and talented and I'll help you discover your ability."

The woman began assisting Zarcone with forecasting, then Zarcone gave her a project to call her own. For four years Eaglemark had offered a Harley private label card that could be used to buy merchandise at local dealerships, but Eaglemark executives speculated that a broad-based Harley-Davidson credit card to be used anywhere would perform well. Zarcone explained her vision for a card tailored to Harley-Davidson enthusiasts with special incentives just for them—and asked her protg to research its feasibility. The employee looked at features offered by competitors and talked to Visa about the various benefits they could extend to Harley owners. She met with Eaglemark's vice-presidents of marketing and operations to hear their thoughts. She developed models, using different capital requirements, marketing and rewards programs, to show what would cause the card to lose money, where it would break even and how it would turn a profit.

"I started bringing her into strategic planning meetings for the card so she could integrate ideas into her modeling process," says Zarcone. "Other managers began to see what a great job she was doing and approached her as the project expert, even deferring to her opinions." Thanks to Zarcone's guidance and her protg's research, last August Eaglemark launched its Harley Chrome Visa Card. Especially popular with its users is a year-long sweepstakes automatically giving them a chance, each week for a year, to win a Harley—appealing because demand for the bikes is so high that getting one can take as long as a year. Future plans call for each card to be released with a picture of the user on his or her Harley.

Zarcone wins accolades from dealers for the credit card, as well as her efforts in accounts receivable processing and the other technical innovations she has spearheaded. But just as important to her success as CFO are her ability to inspire other Harley employees with her entrepreneurial approach and her nontraditional way of looking at financial information and making it work for the company. "We accountants have the ability to look at data and glean the business intelligence, but I've tried to encourage the people who work for me to take the next step and not be afraid to follow their gut," observes Zarcone. "Sometimes they make mistakes. But mistakes aren't the end of the world—they're lessons," she says.

WELD ROYAL is a freelance writer based in New York City. Her articles have appeared in the New York Times, Europe magazine and on Christian Science Monitor Radio.


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