Archive for the ‘.CorpFin Cafe White Papers’ Category

Do you know the cost of employee turnover?

August 4th, 2008 Comments off

Recently I’ve read a number of articles about employee turnover, the effect on morale, and the impacts to productivity. While it’s difficult to quantify the true cost and the effect on productivity within a Finance department, we can look to other areas in the company for a view of what that cost really is. Once you can quantify it, the number is pretty staggering.

With one previous company I was at, I partnered with our headquarters in France to develop a new reporting structure for the Services segment of the organization. For this segment, it comprised approximately 30% of our revenues but a much more significant portion of our EBIT. Even with this level of significance, we did not previously have the ability to measure our productivity levels, margin performance by segment, or identify areas for opportunity. We were simply working with a consolidated P&L to report our monthly performance.

The new information that we were able to use, as well as understand the costs to the organization, was both staggering and exciting since it was a huge opportunity for continued improvement.

Read the entire commentary – Do you know the cost of employee turnover?

Becoming a company’s first CFO…

July 31st, 2008 Comments off

Recently, I’ve been fortunate enough to be included on a discussion thread about the opportunities and experiences of becoming a company’s first CFO. Although I have not found myself in the situation of a first time CFO hire, I have been on the receiving end of a number of opportunities where I have been the hire for a newly created position.

The approach that I have always taken into the position has been that I could set the benchmark for the position, and hopefully in a way, that any successor would have a very hard time matching.

However, the recent forum that I participated in portrayed a very different light for the first time CFO, and most feedback, was slanted toward a negative outcome. The feedback that was posted was very informative and I’ve archived all the emails so that I could refer back to them if I ever find myself in this same position.

The premise of the forum was the discussion of 3 candidates who had accepted newly created CFO positions at their respective companies. These were not incumbent hires nor were these first time CFO’s in their career history. However, none of the three candidates who were hired were with the company a year later, and further, the positions were left vacant in the company. The forum was asking one question – What were the reasons for the failure and how could it have been avoided?

Read more of what was shared by the forum…..

First CFO

Are you an Expense or an Accretive Asset…?

July 25th, 2008 Comments off

     Over the years as I have looked to add members to my team, or more recently, navigating my way through the interview process, there has always been one question I have asked regarding a new hire – What will be the value you will create for the organization? 


     The view that I have always taken is that headcount needs to be increased in the same manner that you are making an investment in a new product line, additional inventory, or a new ERP system.  The investment needs to have a calculated ROI and the impact to the bottom line assessed.  If I’m being told that a number of new hires are not going to support an additional increase in sales or be associated with a specific project aimed at operating efficiencies, then I would need to question the true need.  This was the question that I would pose to all managers within the organization throughout the year.


     For any mid or senior level Finance position, the investment in a new hire is absolutely huge. Between the time spent recruiting, potential recruiter fees, salaries, additional benefits, and the short-term investment to bring that person up to speed, the investment is significant. The expectation for any position is not to just cover the expenses, but to realize a return that is a multiple of that investment. What will I do for the organization to help them achieve a multiple of their investment in me?


     As Finance professionals we have an obligation to not only generate timely and accurate reporting that will enable good decision making, but to identify areas within the operation that can be improved so as to increase revenues, margins, or result in a decreased expense structure. The same holds true of your staff, including cost accountants, A/P and Credit personnel, or your IT staff.  All have their specific expertise that should enable them to identify inefficiencies within their functional area.


Read the remainder of my commentary –   Expense or Accretive Asset? 


Thanks for reading . . . .

Developing relationships & not just transactions in M&A…

June 4th, 2008 Comments off

     I’ve had the opportunity to be involved in a number of M&A deals and there was no one deal that was alike. All involved extensive effort and detailed work with the incumbent management team. However, there was one deal that I had the pleasure, and I do mean pleasure, to work on.  I believe that the work I did on this one particular project will shape my approach to future deals and how I work with potential acquisition targets.

     One of the CFO’s I had worked with asked me to meet with one of the V.P.’s within our company who wanted to present a potential acquisition for the business unit he was responsible for.  The target in mind was a small service-based business in the Southeast who he had been using for some 3rd party installation services. It was simply being viewed as a “review of the financials, do the deal, and bolt it on….”  Ummm, right…..

 Read my full commentary at CorpFinCafe

When SOX is undermined by the actions of management…..

April 25th, 2008 Comments off

     With only the best intentions, the Sarbanes Oxley Act was enacted in 2002 as federal law in response to a number of high-profile accounting scandals that rocked the financial markets and individual investor trust.  The Act also established the formation of the PCAOB, or Public Company Accounting Oversight Board, which is entrusted to oversee, regulate, inspect, and discipline the work of accounting firms regarding public companies.  The Act also provides guidance on major other issues such as auditor independence, corporate governance, internal controls, as well as enhanced financial disclosures.

     With almost six years since the passing of SOX, the vast majority of public firms have moved well beyond the implementation, testing, and validation phase to now begin working on new major projects.  Further, I have been seeing a shift in the demand for new candidates softening in this area since most implementations are complete and internal audit departments are established.        So all of this must be fantastic for the individual investor and trust must certainly be building exponentially in the public markets?  Right?  Not necessarily……      Let’s take a look at one company, who’s management seems to have undermined the effectiveness of SOX through ineffective forecasting, poor communication, and inattention to key corporate performance indicators.  My company of choice for this analogy is Crocs, Inc. (CROX).


Read my full commentary in Undermining Sarbanes-Oxley .





“Base Hits”….an effective tool for achieving goals.

April 24th, 2008 Comments off

     It seems that the more that I work with Managers in the different functional areas of a company, I have seen a particular theme in the approach to planning annual revenue and profitability targets.  The majority of the “players” are looking to have a new product or sales initiative to be their “home run” for the year.  With this approach, there is a significant level of risk in relying on a single initiative to achieve the annual plan.  Once that “home run” becomes a single or double, or perhaps a strike-out, you’re left scrambling in the last few innings of the year to come up alternatives, which will usually be a poor band-aid to the original plan.


Read my full commentary in Base Hits ….

Are you a Master Educator or Dr. NO?

April 9th, 2008 Comments off

     I’ve worked in a variety of companies and the role of the Finance department, specifically the CFO, has been equally varied in their approach to dealing with the other functional areas and defining the flow of financial information. 

     All of these individuals have played a role in defining my approach on leading the Finance role within a company.   With this in mind I heard one of the better questions in a while at a recent FEI function from one of the guest speaker….”How would you characterize your role….are you a Master Educator or are you Dr. NO?”  What a great question to ask and one that prompts self reflection.


Read more of my comments in “Master Educator / Dr. NO”

Employee Compensation – the Sacred Cow….

March 27th, 2008 Comments off

     One of the most important lessons that I have learned over the years at the various companies I have been employeed with is to never, under any circumstances, incorporate error in any way into Employee related compensation.  I have had the opportunity to learn from others mistakes and have seen the effect that these types of errors invoke.  From decreased morale levels, to lost productivity, to a reluctance to act appropriately on behalf of the company.


Read more of my comments in Employee Compensation – Sacred Cow

When autonomy is implemented without standards.

March 25th, 2008 Comments off

How international distributor issues were addressed in the G.T. apparel program.
     As a newly appointed Business Analyst for the apparel program at G.T. Bicycles, I was tasked with developing a structure and increasing the strength of a previously unmanaged program.  For a company that was so heavily influenced by hardgoods and manufacturing, the creation of a “Soft Goods Subculture” would not be an easy one and would take an extended period.  Especially so since this was to extend to the company’s international distributor network.
Read more of my commentary in
Autonomy without standards .

Working Capital collaborations

March 25th, 2008 Comments off

Why Working Capital is not just a Finance-managed calculation…..
     There are many companies that have their hot buttons and what they focus on with respect to the ongoing financial operations and forecasting.  For most, unfortunately, this is only a simple focus placed on the income statement and whether or not the company is profitable. For those that are either focused on burn-rates as a new entity or are encountering extreme growth, there needs to be an absolute focus placed on the Working Capital levels and subsequent cash flows.

Read more of my commentary Working Capital collaboration ……