Last week I gave an overview of the Woodruff-Sawyer panel discussion that I attended, which focused on the process of Board of Directors seat selection and the considerations to pursuing such a position.  I had previously left off at the considerations and value of sitting on the Board for an external organization.  As Bruce Lachenauer had discussed during the panel, sitting on the Board for an outside organization brings great perspectives to the company you work for if you are functional executive. However, in consideration to this pursuit, there are a number of considerations.

Ø  If you are seriously looking at such an endeavor, it’s ideal to start front-loading that effort with your existing company, President, or legal counsel to ensure there won’t be any issues with such an engagement.

Ø  Typically, any external Board appointments need to be run through your internal Board, regardless if you are a sitting member or not.

Ø  Preliminary support from your President or CEO is crucial in such an effort. 

            Paul Folino, Chairman of Emulex Corporation, also discussed the merits of sitting on a Non-Profit Board. Folino felt that this was a great way to get the feet wet with Board participation, while also giving something back to the community. However, as Folino cautioned, “don’t expect that the work load of a Non-Profit will be less than that of a standard corporate Board”.  This was also endorsed by one of the members of the audience, who also had extensive Non-Profit Board participation.

            With regards to the selection process, Lachenauer did not feel that a separate resume was warranted for the process. In his view, he has to do as much, if not more, due diligence for Board selections than a standard executive search. If the resume is more an overview of candidate’s background then it will lack the details that are often the important selling points in presenting a candidate for consideration. The accomplishments are critical and will need to be shared, and therefore, should not be excluded from the resume. Further comments by Lachenauer included:

Ø  The selection process is intended to find a candidate that will be entering into a long-term relationship & participation on the Board. As difficult as the interview process can be, it’s just as difficult to leave the Board, which puts a heavier emphasis on the long-term views.

Ø  Board members are not going to find you…you need to find them. 

            As a response to a question regarding whether an individual should pursue a Board seat for a public or private company, Folino commented that “there should be no consideration to Public or Private, but that it should come down to your background and the experience that you will bring to the table”.  Tomorrow I’ll wrap up my notes on the panel discussion with an overview of the key areas to consider with respect to choosing a Board, the management of risk in such an appointment, and additional considerations before accepting an offer.

Thanks for reading . . . .

Jeffrey Ishmael

            The pace of job offers in Q3-2009 for Finance and Accounting Executive positions in Orange County picked up nicely!  Our data show that 2 times as many jobs were accepted in Q3-2009 versus Q2-2009, and more than 2.5 times Q3-2008.  The running average for the duration of the job search is 7.1 months, but for those who accepted during Q3-2009 the average was 8.13 months and the mode was 12 months.  The hiring process time for successful searches is very consistent at 1.4 – 1.7 months.  Top sources for these positions remain: executive search, coworkers, classmates, and CPA firms; however, in Q3-2009 several executive positions were found through online job boards and even one via Craigslist!  Referrals of one sort or another represent approximately 60% of the job offers accepted during the past two years.  While the pace of accepted job offers is increased, it should be noted that 25% of these jobs are located in the Los Angeles region rather than Orange County, and it may be that the job searchers are opening up to longer commutes and relocation. 

            My continued recommendation for job searchers  is to focus on specific job goals.  You must be memorable to the people with job opportunity referrals.  Job searchers think that “casting a wide net” will mitigate risk, but my research and experience show that it actually seems to have the exact opposite result.  If you are not “special” you are not remembered, and you may confuse those who can help you.  A more focused effort will undoubtedly bring you more success.

            And last but never least, having a good elevator speech is invaluable.  Be specific, be purposeful and be brief.  People want to hear specifically what expertise you bring and why, they don’t want your life story.  This is the best way for you to be noticed when there is a potential referral. 

Thanks for reading . . . .

Ken Tudhope

Project Pro Search

ktudhope@projectprosearch.com

            It’s pretty interesting the varied responses I get when a conversation turns to the topic of Twitter and my reference to someone I’m connected with.  Either there’s an affirmation of the value, or a complete disdain for the platform and the perception that it’s a complete waste of one’s time. I suppose, that just like any other online portal, or finance consideration for that matter, it’s all about how you utilize the resource. I know that for myself, while I might use Twitter on a moderate basis, I also know that I have virtually eliminated other sources of news and information. Whether that might be MSNBC.com, CFO.com, Cycling News, or VeloNews, I can get all the same updates through the folks I follow on Twitter. Now instead of multiple sources, I have a single source news feed.

            While it has taken some time to refine the group that I follow, I find a tremendous value in the information that I’ve plugged into.  There is also more consideration than just the standard news feeds I’m getting. There’s also the numerous blogs, primarily financial for me, that provide great additional insights over and above the news feeds. Specifically, some of the folks that I follow, include: @startupcfo , @CFOWise , @BenParamore , @CFOCoach , and @CFOServices . There’s also a great real-time networking element on the site that I believe is an extension to what you can accomplish via LinkedIn.

            Although additional effort might be needed to establish a quality network via Twitter, it’s a very real possibility. As examples, I’ve established a great group that includes:

Ø  Private Equity / VC players in Boston

Ø  CEO’s (multiple…) in Colorado

Ø  Numerous folks nationally who specialize in Interim CFO services.

Ø  CPA’s located nationally

Ø  Retail & Apparel industry news feeds

Ø  Experts on IFRS and other emerging accounting issues

Ø  Recruiters in multiple sectors

            These are also folks that I enjoy helping out as much as the value that they provide to me.  Although some of these same folks have also become connections on LinkedIn, I would not have established the regular dialogue or relationships were it not for the original contact through Twitter.

            It is a very interesting little beast, but Twitter is a fantastic resource for networking and I’ll continue to get a chuckle out of the folks that so quickly disregard it and the potential value it brings. Like everything, it takes time and effort to develop a new element to your networking strategy, but this is a very worthwhile tool to invest in.

Thanks for reading. . . .

Jeffrey Ishmael

                As mentioned yesterday,  I had the opportunity to attend a panel discussion on the considerations to accepting a Board of Directors position. The panel was sponsored by Woodruff-Sawyer and led by Paul Folino, who is the Chairman of Emulex Corporation. The panel was also rounded out by Priya Cheria Huskins, Esq. and Bruce Lachenaur. Priya is a Partner at WS and is considered a leading expert in D&O liability risk and corporate governance. Bruce is a Partner with Spencer Stuart, which is a leading executive search and consulting firm and leads their Board Services Practice. It’s worth noting that Spencer Stuart is active on a very high percentage of all Board related searches nationally.

            As an individual who has had extensive interaction with Boards and presentations to, I have not previously sat on a Board and have initiated this as a goal to achieve within the next year. To my benefit, one of the opening stats that Lachenauer touched on was the shift in Board compensation from being more internally focused to having a higher degree of outside influence. It was mentioned that the trend has almost reversed and the current ratio is approximately 3:1 with regards to external Board members. This bodes well for those looking to become involved with outside companies. However, as a result of the current climate, it has also become more difficult to secure that first time Board seat. Recent statistics show that only 16% of Board appointments were first-time appointees versus the historical figure of 40%. Consistent with the trend for outside influence, there is an increasing demand for a Chairman that is independent of the company and can bring unique perspectives.

            The panel also discussed the aspect of Committees, as well as the make-up of individuals that should sit on those committees, as well as the Board. Lachenauer commented that the most difficult committee spot to fill has been that of the compensation since this has become such a contentious area of the previous few years. With the contentious nature of the business environment in mind, in all areas, Paul Folino commented that he “can’t imagine having a Board make-up that does not include strong legal counsel”. Folino also commented, in response to a question, that age is really a non-issue with respect to the Board. That all considerations are based on the experience that one brings to the Board, and in some cases to the detriment of the Company, Board age limits can result in the loss of immense expertise and experience.

            There was an extensive amount of information that was shared during the panel and I look forward to summarizing my notes in future postings. The additional areas will include the considerations to sitting on an outside Board and strategizing that with your current company, the search & interview process, compensation levels, as well as what dynamics to consider in choosing what Board you will commit your time to.

Thanks for reading . . . .

Jeffrey Ishmael

            There’s always a certain accountability in publicizing your goals, although those goals can also be subject to change due to elements beyond your control. One of the goals that I have set for myself is to secure a Board of Directors seat within the next year. I’m fortunate enough that I have some great mentors and colleagues who currently, or previously, have participated at the Board of Directors level so I’ll have some good guidance. While I have the ability to constantly work with our corporate counsel, who is also well versed in these areas, it’s an entirely different beast actually participating at that level.

            Today I was invited to attend a panel discussion that was sponsored by Woodruff-Sawyer and led by Paul Folino, who is the Chairman of Emulex Corporation. During the course of the discussion the panel discussed the basic elements of Board governance, committee involvement, and the value that participating on an external Board brings to your current company. There was also a lengthy discussion about the different dynamics of Board participation to consider, as well as Boards in the private, public, and non-profit sectors.

            There was some great information shared and I had a number of individuals who openly expressed their willingness to help in the process.  Whether this is a 12- or 18-month effort, I think I would have a great time contributing to a Board and the company I would be serving. I also look forward to sharing more of the details about today’s panel over the coming days.

Thanks for reading. . . .

Jeffrey Ishmael

            On nearly a daily basis, most of us receive requests to connect on LinkedIn.  For those of you who may be unfamiliar with the concept, the LinkedIn website explains it as “an interconnected network of experienced professionals from around the world, representing 170 industries and 200 countries. You can find, be introduced to, and collaborate with qualified professionals that you need to work with to accomplish your goals.”  They claim to have over 36 million members and if that number is even close, that’s pretty mind-boggling.

            Being an avid networker I am often asked by people, “Ken, should I accept the LinkedIn requests?”  Before I answer that question I must first tell you that I LOVE LinkedIn!  There are so many reasons, but mostly it’s because LinkedIn brings technology to networking.  I know how much time and effort it takes to stay in touch with my network, but now some brilliant software developers have figured out how to do it “better, faster, stronger.”  With no effort at all you can find old friends and colleagues.  Business development people can find people within targeted companies.  To make introductions even easier there are groups within LinkedIn so you can find people with common interests and experiences.  With six degrees of separation, someday I may be able to meet Treasury Secretary Henry Paulsen, a key player in Finance and Accounting and according to all accounts my look-alike separated-at-birth twin! 

            Now we get to the question of accepting invitations to connect.  First let me explain what “accepting” means.  When you accept an invitation, you do two things:  first, you allow that person to see your connections and who you know; second, you are viewed as being closely associated with them, which assumes you know them well enough to provide an introduction.  My own policy, and my recommendation to you, is to only accept invitations to connect with people you know well.  If I meet someone at a networking event and get a business card, that would not usually mean I’d accept a LinkedIn invitation. 
           

            I recommend you register on LinkedIn and explore around on it.  It is a very useful and efficient technology when used responsibly and it’s one of the more powerful networking tools.  Just remember though, bigger is not necessarily better on LinkedIn, which just might answer the question.

Ken Tudhope

Project Pro Search

ktudhope@projectprosearch.com

            Over the last 18-months, I’ve been continuing to develop my blog and use it as a platform to provide wider insights to a primarily non-Finance population. The goal has been to improve financial awareness through all functional areas of an organization and allow those groups to better understand what “drives” the Finance department, which often, may not be the best communicator. Fortunately, I’ve been able to provide as much value for the corporate finance community as well.  Recently, I was contacted by John Kogan, the founder of Proformative.com , to provide guest blog commentary, along with some peers whom I have been fortunate enough to network with.

            After speaking with John, I immediately liked the direction he was going with Proformative.com, which is a “free, open, and independent community of corporate finance, accounting and related professionals interested in asking questions, sharing knowledge and resources, and getting work done”. The site “provides a common ground on which to meet, communicate, and help one another with day-to-day issues involved in the highly complex and technical worlds we work in”.  The other aspect of the site that I was immediately impressed with was the documented Community Conduct page.  While simple and obvious, there are rules to abide by on the site, and if not followed, will be enforced and users dropped or sanctioned.  Additionally, there is no self-promotion on the site…i.e. advertising. There are no press releases, spam, schemes, or other promotional materials allowed. Bottom line, it’s a finance-centric site that is operated by and for corporate finance professionals.

            On the site, there are a number of different areas that are of keen interest. Particularly, there is an offering of different groups, discussions, resources, jobs, blogs, and events. As an example, the offering within the Group section includes:

Ø  CFO’s

Ø  Corporate Controllers

Ø  Cost Accounting

Ø  Director / VP Finance

Ø  FEI members

Ø  Non-Profit finance

Ø  Risk Management

            John has put together a great platform with Proformative.com , and if you work in Finance, there’s definitely a value in helping to promote and build this platform. It’s worth taking a few minutes to review, sign-up, and be a part of this platform.

Thanks for reading . . . .

Jeffrey Ishmael

            Over the last 2-years, there’s not a single person in my network that has been immune to what has transpired with the economy, both domestically and globally.  Some have been fortunate, as we have, to experience growth, in a sector that has been heavily hit and seen many players eliminated or significantly downsized. The efforts to adjust to these changes have been to scrutinize every revenue and expense stream within the company and determine where changes can be made. One of these areas, Insurance Expense, can be a pretty significant area depending on the industry you find yourself working in. From the area of workers compensation, to product & general liability, to health, it can be significant. However, the focus should not lay solely on the quotes provided by your agent at the time of renewal and what a new agent might be able to save you.

            If you’ve either seen a significant decrease in the scope of your business, or lucky enough to grow, then what you should really be doing is diving into the different elements of your insurance coverage to determine if that coverage is appropriate for the company.

More specifically:

Ø  Was your policy initiated many years prior, in a period where coverage was provided to you as a new entity?

Ø  Have you seen a major change in your employee count and the scope of activities that they are involved with?

Ø  Has the company undergone a significant change or expansion in the supply chain or the amount of product moved?

Ø  Does the current liability umbrella provide enough coverage for where the company has progressed to?

Ø  Do you have coverage for your Directors & Officers? Is it sufficient for the scope of business?

Ø  Do you have the proper levels of Employee Practices Liability for the company & is it commensurate with the risks of your industry?

            Conversely, if you’ve been unfortunate enough to see a significant decrease in the size of the company, are you over-insuring the company and paying too much in insurance expenses?  How many vendors are you having to deal with and can you effectively manage your insurance portfolio? Do you know what your areas you might be lacking in your current coverage?  In such a litigious environment, the cost-benefit of proper insurance coverage cannot be over emphasized. Although this area can represent a large expense for the company, this risk of a lawsuit or other event that exposes the company will be multiples of what your actual expense is. 

            If you have a good insurance partner, then there are also ways that you can decrease your expense exposure with respect to internal education programs, safety programs, and other employee involvement. There are also opportunities to look at deductible amounts, although this will not have as drastic an effect as the increase or decrease in your overall coverage amounts. Do you know where you stand on your insurance portfolio and scope of coverage?

Thanks for reading . . . .

Jeffrey Ishmael

                I know I have touched on operational disciplines in past posts, but it’s time to revisit that topic again. What continues to surprise me is the lack of information that goes into making key strategic decisions, especially with respect to forecasting a corporate financial path. There are obviously so many things to take into consideration for this area, but simply, do you have timely & accurate data that will contribute to either the turnaround efforts for your company or the aggressive growth that you find yourself facing in the immediate future? Either way, if you lack the supporting data, you have nothing but an outlook of unsupported optimism.

                In consideration to a condition of aggressive growth, do you have the appropriate data to identify the specific growth drivers for your business, the margin performance of each one of the revenue drivers, and the recent trends of your operational expenses?  And I’m not necessarily referring to the data of last year or the first half of 2009, but also your most recent results. If you tell me that you’re still working on closing the books for the month before last then you’ve already got an embedded handicap in the decisions that you need to make. What if the most recent few months are at the height of your selling season? Since this is a common theme in the Retail and Apparel space, you better know what those results are since your entire year may hinge on those results.

                What if you’re in the midst of a turnaround and looking to reposition the company in all critical areas, which will likely include revenues, inventory, operating expenses, as well as vendor commitments?  If there is the need to work out plans with key vendors, make significant adjustments to the operating expenses, or other material decisions, do you have accurate & timely data support that decision making process?  It’s only through the timely collection of that data can you deliver a game plan that will be endorsed and supported by vendors, believed in by employees, as well as provide the foundation for executing the plan and moving the company back into a stronger position.

                You can only have this data if you have the processes and operational disciplines in place. You can’t risk putting yourself in a position where it takes month(s) to finalize your results, collect & analyze the data, and belatedly affirm any previous forecast you had in place. You need to know what the pulse is week-to-week, you need to have a handle on your period’s results within days, and finalized within a week(s). In this environment there is no room for complacency or the late delivery of information. There is too much riding on efficient execution. Any slips will affect the credibility you have with your employees, vendors, and ultimately may lead to the poor development or execution of your strategy. So what is it…are you actually executing or are you going through the motions of unsupported optimism?

Thanks for reading . . . .

Jeffrey Ishmael

            All of my CFO friends are thinking to themselves, “Well, finally that Ken Tudhope is making sense!”  As I write this Networking Note we are emerging from one of the worst recessions in decades.  Every morning I look in the newspaper and read about layoffs.  I turn on the radio and they are interviewing unfortunate people who have been laid off.  It looks like my brother is being laid off from the government in the state of Washington.  Many times, it’s the CFOs and other Finance executives who are behind it all.  We all know that layoffs reduce costs and enable companies to survive tough times.  Good business indeed.  But wait a minute.  My CFO friends are tough-minded business people, but I doubt they would say they “love” layoffs.  I bet if asked they would say that layoffs are an unfortunate part of their job.

            So why would I say that I love layoffs?  If you know me, you know I’m a nice guy.  In fact, while at Price Waterhouse I was given the “Nice Guy” award and I have a plaque on my wall to prove it.  Seriously, layoffs are tough and I wouldn’t wish them on anyone.  Early in my career I was unexpectedly laid off from my job and it was really upsetting. I don’t actually love layoffs of course, but I do genuinely appreciate the networking opportunities they create.  For good networkers, layoffs are the perfect storm of opportunity.  First, if you have a good network and you are laid off, you will secure your next career position with relative ease.  And if you have a good network, you might be able to help your friends who are in a job search.  Remember, most jobs are obtained through personal referrals.  Second, during times of downsizing there is a huge shift of people between organizations.  New jobs eventually open up and are filled which creates opportunities for new connections.  A new company full of future relationships. For example, there may be new people in your department.  For salespeople like me there are new buyers at client companies, and when established clients move to new companies they help open doors that were previously closed.  Finally, once all the transition settles it forces you to stay in touch with old friends and reach out to new co-workers.

So while layoffs are not necessarily something to love in the moment, you gotta love the opportunities & connections created in the process. 

Ken Tudhope

Project Pro Search Group

ken@projectprosearch.com