CFOs Need Time
Management Skills
It can be easier to balance
a budget than balance a
schedule. Time management is
the greatest challenge facing
executives today, according to
36% of CFOs, followed by
keeping up with technology
(27%). Source: Survey
of CFOs from companies with
more than 20 employees, RHI
Management Resources, Menlo
Park, California, www.rhimr.com
, 2001.
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All this means today’s finance professionals
must be more than technically sophisticated. They
also must be big-picture thinkers, strong
communicators and skilled managers and motivators.
“No one wants someone just sitting around passing
judgment,” remarks Fess’s boss, Johnsson Group
chief executive officer Margaret Johnsson. “The
CFO has to inject a focus on revenue generation
and profit enhancement. If that person is always
relying on the line staff to do that, then what is
it he or she has helped the company to do?”
CREATING A NEW PROFIT CENTER
CPA Ginny Fess began
her career as a public accountant, joining
(Arthur) Andersen in 1984 after earning an
accounting degree from the University of Illinois.
Two years later she moved into a series of
corporate jobs, first at Baxter International and
later at Caterpillar Inc. She became a consultant
with the Johnsson Group in 1994, winning the CFO
post in 1997. In a company filled with
accountants, where everybody on the management
team shares a bottom-line mentality, it didn’t
take Fess long to start thinking about more than
numbers. When she noticed that Johnsson Group
consultants were often disappointed in the
temporary workers they had hired for routine
accounting chores—reconciling a new client’s
books, for example—she didn’t just pass the
observation on to her boss but instead proposed a
solution. Why not use some of the office staffers
in her internal accounting department rather than
temps, Fess suggested, and bill their time to the
client? After all, her employees were a known
quantity—better skilled and more reliable than the
temporary workers—and in many cases were eager for
opportunities to broaden their professional
horizons. Four now split their time between doing
work for Johnsson Group itself and for Johnsson
Group clients. “It’s become a huge career
development path for our people and a profit
center for us,” says Margaret Johnsson. “Fess’s
group now makes more money than it costs us to do
our own internal recordkeeping. And our clients
can’t get enough of them.”
LEADING THE CHARGE
The CFO is not just
the scorekeeper who runs the numbers for the rest
of the management team. CPA Rich Schalter, chief
financial officer for Michigan-based Spartan
Motors Inc. and also its executive vice president,
secretary and treasurer, knows his role requires
much more. “Now the CFO has become a business
adviser—someone with a good grasp of how the
business runs and makes money, who also has a full
understanding of accounting, risk management,
taxation and all of the financial tools a company
needs to run and monitor its businesses.”
Schalter’s path to a CFO post began with an
accounting degree from Michigan Technological
University in 1977. A year later he was a senior
auditor in the Lansing, Michigan, office of Peat
Marwick International, now part of KPMG. Eager to
help run a company, he then took a series of
finance positions with various entrepreneurial
enterprises before landing with Great Lakes
Hybrids, the U.S. subsidiary of the German seed
and sugar beet company, KWS AG. In 1996 he moved
to Spartan, a maker of heavy-duty chassis for fire
trucks, ambulances, motor homes and other
specialty vehicles. In all his jobs,
Schalter strove to stretch boundaries. For
example, he injected himself into IT decisions,
often, he says, “leading the charge” for change.
At Great Lakes Hybrids, he attended leadership
courses sponsored by the American Management
Association and also took German lessons because,
he says, “I thought it was important to know and
understand our parent company’s culture.” At
Spartan he spent a week on the chassis assembly
line and toured the facilities of the company’s
major customers, where he met with their
presidents, CFOs and purchasing managers. More
recently, he took and passed a commercial driver’s
licensing test so he could operate all of
Spartan’s products. “You have to do those kinds of
things,” Schalter says, “to understand how your
product is put together and what your customers’
expectations are for your company.” As
Schalter’s experience demonstrates, time
management is an increasingly important skill for
contemporary CFOs. In addition to juggling
financial and operational assignments, most are
forced to split their time serving a growing array
of internal and external customers. Schalter
devotes about a quarter of his time to talking
with bankers, investors, Wall Street analysts and
customers and a comparable amount with insurance
brokers, auditors, legal counsel and tax advisers.
He also oversees the information technology
function at Spartan and serves as the MIS director
for its principal business unit. To get it all
done, he says, he tries to act more as a leader
than a hands-on manager, empowering the employees
below him to take on significant functional
responsibilities. For example, he involves the
controllers of each of the company’s four
subsidiaries in strategic financial planning, not
just historical accounting activities, and
Spartan’s financial reporting manager takes the
lead for all the SEC filings. Nonetheless,
Schalter quips, “you have to be able to do things
quickly and stay on your toes.”
SCHOOL DAYS
Another new-breed financial officer is CPA
Donella Rapier. She juggles multiple roles at the
Harvard Business School, where she has served as
CFO since 1996 and also associate dean for
external relations since early 2001. Now Rapier
has responsibility not only for helping to spend
the school’s money—it has a $1.4 billion endowment
and an annual operating budget of about $300
million—but also for helping to raise it.
Rapier began her career with
PricewaterhouseCoopers (then Price Waterhouse)
after earning a degree in accounting and
management information systems from California
State University, Northridge in 1984. Obtaining an
MBA from the Harvard Business School in 1992 on a
full scholarship from Price Waterhouse, she
rejoined the company as a senior audit manager in
Boston. In that position, Rapier developed
materials and conducted courses on a variety of
accounting and auditing topics. This led to a
part-time faculty appointment teaching accounting
at Harvard’s Kennedy School of Government in 1995
and then to a similar post at the Harvard Business
School. Rapier credits her success to all
four major components of her background: public
accounting, training at a Big Five firm, her MBA
and her teaching assignments. She can juggle her
multiple responsibilities, she says, in part by
letting her controller handle day-to-day finance
operations and by giving department heads
flexibility in how they spend their budgets. She
also relies on sophisticated information systems
the business school installed a couple of years
ago, such as Oracle’s financial suite and
budgeting software from Hyperion. As a result she
can spend time on resource allocation, financial
reporting, long-range planning and the school’s
ongoing initiative to open offices in other
regions of the world. And, of course, fund
raising. “I’ve seen a lot of accountants
who stay very narrowly focused on accounting
issues,” Rapier says. “To be a CFO today you need
to be constantly learning about the business of
your clients. You need to read the broader
business publications, not just the accounting
journals. You have to do it all.”
ASSUMING RISKS
After 25 years in
public practice and managing his own firm,
financial consultant Dennis B. Kremer, CPA, and
head of Dennis B. Kremer Associates in Purchase,
New York, grasped an opportunity in 1999 to become
the CFO of an Internet start-up. The company had
built a prototype of a roaming digital library for
storing consumer purchases of music, videos and
books. Kremer’s decision to become a corporate CFO
was partially due to his frustration with the
risks of running a practice where employee
retention and training had become a constant and
costly concern. As a CPA who had counseled
businesses for a long time, Kremer believes he was
extremely well-prepared to take on the role of CFO
of a small company. He had experience in strategic
planning, problem solving and contract
negotiations and was familiar with every
operational aspect of running a company. Kremer
also had certifications as a valuation analyst and
a fraud examiner. “A career as a CPA teaches an
individual to look at a situation, figure out what
the issues are and then come up with creative
solutions to problems,” he says. He had absolutely
no apprehensions about making a significant career
change.
YET ANOTHER ROUTE
Some of the
executives who are broadening the CFO position
came to it by unusual routes. In 1998 Teri
Spencer, chief executive officer of Arizona-based
software engineering firm Ephibian, was looking
for a top-level executive who could assist her on
special projects. She chose to hire Henry Guy, a
U.S. Naval Academy graduate with a bachelor’s
degree in economics, an MBA from Vanderbilt
University with an emphasis on supply chain
management and a can-do attitude of the sort the
military can produce. As a Navy lieutenant, Guy
learned to think quickly and make tough decisions.
On one mission, he led a United Nations
weapons-inspection team that boarded more than 100
ships in the Red and Adriatic seas during
Operation Desert Storm to prevent weapons from
being smuggled into Iraq. “No two ship searches
were ever the same, and you had to be quick on
your feet to avoid a potentially dangerous
situation,” Guy recalls. When he joined
Ephibian, the company was staffed almost
exclusively by engineers. Guy warned Spencer the
two areas he probably shouldn’t tackle were
finance and sales because he lacked experience in
them, but in the perverse way that business
sometimes works, those were the very units he
wound up running. “It turns out that the
company’s greatest need was in finance, so even
though I didn’t have a great finance background I
immersed myself in the job and learned everything
I could about the position,” Guy notes. He wasn’t
operating completely in the dark, of course—he’d
taken corporate finance, accounting and
entrepreneurial finance courses at Vanderbilt—but
it still was quite an undertaking. “More than
anything else, I learned by pulling together
financial plans and helping to set up the
company’s accounting system,” he says. He
was a quick study. Roughly eight months after
joining the company, Guy became CFO. Late last
year, he was promoted to chief operations officer
for XSource Corp., the New York-based holding
company that owns Ephibian. Guy sees
ongoing education as one of the keys to success.
He has been studying Swedish since being named to
the boards of several sister companies. Guy
advises CPAs who aspire to become CFOs not to
think of themselves as “only an accountant” or
“only a controller.” “If you just think inside
that box, people will be glad to let you stay
there,” he says. “If you take an interest in the
rest of the company, in sales and marketing and
operations, people are going to be happy and
receptive to it.”
ALWAYS LEARNING
Like CPAs, who are
committed to continuous instruction, Lawrence
Davenport pursues lifelong learning opportunities.
Although he holds both a bachelor’s and a master
of arts degree from Michigan State University and
a doctorate in higher education management from
Fairleigh Dickinson University, he currently is
pursuing another master’s degree in training and
performance management from Leicester University
in England via a distance-learning program.
Now the deputy chief administrative officer for
the U.S. House of Representatives, Davenport
served as CFO of the Milton Hershey School in
Hershey, Pennsylvania, a private school for
at-risk children, from 1994 through 2000, and for
two years prior to that was CFO of the Seattle
school district. His route to top jobs in finance
came about from a variety of posts in education
and public service. From 1981 to 1982 he was
associate director for domestic and antipoverty
operations for the federal volunteer agency,
ACTION. For the next five years he was assistant
secretary for elementary education and secondary
education for the U.S. Department of Education.
He’s also been an associate vice chancellor at the
University of California, president of the San
Diego community college district, and assistant
secretary for management and administration at the
U.S. Department of Energy. To learn what he needed
to know about finance, Davenport plunged into
training programs and seminars along the way,
including courses at San Diego State University,
the Stanford School of Business, the Harvard
University Graduate School of Business
Administration and the Wharton School of Business.
All of Davenport’s study and experience came
to full blossom at the Milton Hershey School.
Founded by chocolate magnate Milton S. Hershey and
his wife, Catherine, the school is among the five
largest of all American educational institutions
and has an endowment of about $5 billion, allowing
the school to be managed with an operating budget
of about $100 million and a capital budget of
comparable size. During his tenure as CFO,
Davenport implemented a balanced scorecard
performance-measurement system and convinced his
colleagues that the school needed to benchmark
itself not just against other schools but against
the best organizations in the country, including
Fortune 500 standouts such as Walt
Disney Co., Intel Corp. and General Electric Co.
He also created a one-stop customer service center
to handle all custodial, security, grounds and
vehicle maintenance and structural and mechanical
trade matters at the 3,200-acre campus—all, of
course, while shepherding the school’s finances.
“Today’s CFO is no longer sitting there just
saying, ‘We have enough money’ or ‘We don’t have
enough money,’” says Davenport. “They’re
asking—and answering—the really tough question,
‘Is this where we ought to be putting our money.’”
While Davenport credits his job in San Diego
for giving him the broad business perspective CFOs
need, he also cites his ongoing education as a
contributor to his success. Like Rapier, he enjoys
sitting on both sides of the classroom; over the
course of his career, he has taught at five
colleges and universities as well as various
public school systems. “Getting challenged by
graduate students is a good way to hone your
thinking,” he says. Are these kinds of
experiences an easy package to put together? Of
course not. But the rewards can be many, and
Davenport and others suggest those rewards may not
end with the CFO title. As CPAs increasingly
demonstrate a broadening set of technical skills,
management experience and leadership ability, they
can expect to win positions on corporate boards
and jobs as presidents and chief executives of
organizations. For men and women once viewed as
number crunchers, the future looks promising
indeed.
Getting There
For CPAs who have designs on
becoming chief financial officers,
here’s some advice beyond mastering the
technical aspects of the job:
Hone your communications
skills. Be capable of explaining
financial terms and analysis in ways
that help people make better decisions.
Seek out diverse work
experiences, including operational
assignments where possible. A great
place to get that experience is in a
turnaround situation.
Learn the employer’s
business and be able to give strategic
advice in a meeting. If you don’t
understand all aspects of the company,
you won’t be seen as a business partner
to the president—and if that’s the case,
you probably won’t become the CFO.
Broaden your people and
management skills. When the detailed
number crunching goes away, you need the
right people in place. Give your staff
appropriate signals to keep them
motivated, growing and learning. | |