Posts Taged cfo

CFO Book Review: Saving the Corporate Soul by David Batstone

823875The image of corporate America has been rapidly eroding over the past years as scandal, greed and layoffs are highlighted on the evening news. In this book the author explores what it takes for a corporation to act and engage in business in a way that aligns with the values of its workers. The author proposes eight principles for a corporation to incorporate into their operations that will create an environment that not only will help it operate in a values-based way, but in most cases help it excel financially over the long haul. The author also addresses the common challenge in how to measure the results of doing “good”. Most senior managers have a desire to operate corporations with integrity and fairness, but have a difficult time justifying fairness and integrity decisions based on a measurable outcome. The author holds forth that a principled company will maintain and enhance its reputation which creates an environment much more conducive to gaining new customers. In addition, a principled company will reduce its liability exposure when it comes to lawsuits, both from a product perspective as well as from an employment perspective. Lastly a principled company will better manage the networks that it is involved in.

Each of the principles that are mentioned, are followed with examples of companies that are following and implementing the principles mentioned. The first principle is for the executive leadership to align their personal interests with the interest of all the stakeholders. Leadership matters in setting the direction of a corporation, but it is also critical that the top leaders also set the example from an integrity and ethical perspective. The second principle is for a company to be transparent about its operations. Each decision that is made should be able to stand up to public scrutiny. There will always be detractors, but with adequate explanation a decision should be able to make sense to the average worker of the company. The third principle is for the company to consider itself an active part of the community. As a company looks at the community as more than just an economic market, as well as being an active citizen that is interested in the wellbeing of the community, good things happen. The fourth principle is for the company to represent their products honestly and be proactive in caring for their customer. This customer care goes beyond just delivering a product and collecting a check. The fifth principle is to value and treat employees as a partner and team member in the success of the business. The sixth principle is to treat the environment as a stakeholder. The seventh principle is to strive for a diverse and balanced employee, customer and vendor base. The eighth principle is for companies that pursue international trade to be aware and sensitive to worker’s rights and justice issues in other countries.

This book was written to encourage the corporate worker to consider how he/she can use the position, talents and influence that he/she has to create an environment that allows for a sense of significance. The author puts forth antidotal evidence that a worker doesn’t have to be the CEO to affect change in a company. The author wants the reader to consider how he/she doesn’t have to feel trapped in an environment that puts his/her integrity at risk. If a worker operates within his/her own sphere with integrity and encourages the leadership of the company to follow the eight principles that were laid out then change can happen. These principles also provide a measurement tool for the worker to determine if the company he/she is working for is making progress in implementing these principles into the operations of the company. Ultimately, if the company isn’t operating with integrity in these areas, and doesn’t appear to be working toward change, then this can provide cause for the worker to begin to search for the company that is operating under these principles.

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CFO Book Review: Leading Change

Leading Change
by John P. Kotter
Harvard Business School Press (1996)

Leading Change was written as a follow up to an article the author wrote for the Harvard Business Review entitled “Leading Change: Why Transformation Efforts Fail”. This article received such an overwhelmingly positive response that John Kotter wanted to provide greater detail and more examples of how companies have been successful in leading change.

Many business managers read about the common mistakes listed by the author for the reason companies fail in implementing change and realized they were mistakes they have seen and experienced. Ultimately, the book has resonated with many in the business world because of the way the author has provided a framework for breaking down a transformative change process into identifiable pieces that are realistic to follow.

The author first outlines eight common errors that leaders in organizations follow into when they try to implement change within their companies. The consequences of falling into these errors are that new strategies aren’t implemented and many of the hopes and plans for creating synergy and energy in a company fall flat. The author doesn’t spend much time talking about the errors that are made. It is likely that most readers can identify quite quickly with the errors and are looking instead for solutions. So the author takes the majority of the book to outline eight stages that he has identified as critical to success in implementing transformational change in an organization.

1. The first stage is to establish a sense of urgency. In many cases a crisis of some sort is happening that creates the urgency to implement change.

2. The second stage is to create a guiding coalition. Here the idea is that in order for change to happen, there needs to be more than just the CEO or one person to suggest and lead the change process.

3. The third process is to develop a vision and strategy. If people are unable to see how this change will create a better future there will be too much resistance.

4. The fourth stage is communicating the change. This needs to be a simple and clear message that is repeated often. The area of communication is such an important piece of leading change and yet it often times is the weakest link. The message is either too complicated or not repeated often enough.

5. The fifth process is to empower broad-based action by employees to remove obstacles to change. This may include taking risks and trying nontraditional ways of doing things. Here employees need to be willing to move out of their comfort zone and not do things just because that’s the way it has always been done.
6. The sixth process is generating short term wins. People can become tired and overwhelmed with change and lose their focus in accomplish long-term goals.

7. The seventh process is consolidating gains and producing more change. This is similar to generating short-term wins, but it goes beyond this by taking these wins and building on them to implement change in an even better more productive way. The final process is to anchor the new approaches into the existing corporate culture. This is a key process to achieve lasting change. If employees don’t see that the changes implemented match up with the current values and culture the new processes will slowly disappear and eventually the organization will do things the way it always has.

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Whatever Happened to Corporate Stewardship – Rick Wartzman

In November 1956, Time magazine explored a phenomenon that went by various names: “capitalism with a conscience,” “enlightened conservatism,” “people’s capitalism,” and, most popularly, “The New Conservatism.”
No matter which label one preferred, the basic concept was clear: Business leaders were demonstrating an ever increasing willingness, in the words of the story, to “shoulder a host of new responsibilities” and “judge their actions, not only from the standpoint of profit and loss” in their financial results “but of profit and loss to the community.”
I decided to dig out this piece and reread it after news broke this week that Burger King is buying the Canadian coffee-and-doughnut chain Tim Hortons for about $11 billion. Once the acquisition is complete, Burger King plans to move its headquarters north of the border, where the statutory tax rate is lower than in the United States, in a maneuver known as an inversion.
The company has denied that it would get much, if any, tax relief from the deal and insists that it is acquiring Tim Hortons for a legitimate strategic reason—namely, to accelerate expansion in a super-competitive industry.
In this case, the Home of the Whopper may well be telling the truth. Yet whatever Burger King’s actual motivation, it’s not surprising that some people have reacted strongly, condemning the company as a “traitor” and urging a boycott of its restaurants. What they’re really responding to, deep down, is a growing sense that most American corporations care (to use Time’s phrasing from 1956) only about the profit and loss on their income statement, but not about profit and loss to the community.
Back when Time published that essay, big companies prided themselves on taking care of a full range of constituents: their shareholders, yes, but also their customers, their suppliers and their workers. Indeed, most large employers, as well as many smaller ones, began in the 1950s to forge a social contract with their employees that would solidify over the next decade or two: rising wages, guaranteed pensions, good healthcare benefits and stable jobs.
Like their 21st century successors, top executives of the ’50s weren’t typically fans of Washington playing too large a role in the economy. Implicit in the corporate social contract, in fact, was the view that most working people would find the security they were looking for as participants in the private sector, not as wards of the public sector. Companies practicing what was once called “welfare capitalism”—not the welfare state—would meet the bulk of their needs.
Nevertheless, Time asserted, “the majority” of businessmen in the Eisenhower era had come to realize that government “welfare programs help store up purchasing power in the hands of the consumer.”
“Unemployment compensation is desirable,” the magazine quoted Gaylord A. Freeman Jr., vice president of the First National Bank of Chicago, as saying. “Social legislation can add to the totality of freedom, increase the dignity of the individual.”
Few if any businesses—then or now—would willingly shell out more to Uncle Sam. General Electric, for instance, crusaded 60 years ago against what its president, Ralph Cordiner, termed “excessively high taxes.” But the company, which famously touted trying to serve the “balanced best interests” of all its stakeholders, also made a point of paying what it owed “with no bargains asked,” as GE vice president Lemuel Boulware put it. This, he said, was part of being “a good corporate citizen.”
Make no mistake: GE, where Ronald Reagan shaped much of his Washington-is-the-problem ideology as a corporate pitchman for eight years beginning in 1954, wanted smaller government. Still, it wouldn’t have dreamed of not paying its share.
Today, by contrast, GE does all it can to escape taxation, in large part through “innovative accounting that enables it to concentrate its profits offshore,” as the New York Times characterized it. And it is hardly alone. The Senate Permanent Subcommittee on Investigations has exposed how Microsoft, Hewlett-Packard, Apple, and Caterpillar, among others, have all used various tax-avoidance strategies.
Of course, the social contract between employer and employee began to fray in the 1970s, and it has since been totally ripped apart. Myriad culprits are to blame, including rapidly advancing technology, heightened global competition, the weakening of unions and, perhaps more than anything, a horribly misplaced mindset that has elevated stockowners above all other groups.

“For some time now,” says David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, “the ‘shareholder uber alles’ mantra has been crowding out the old-fashioned stakeholder notion.”
What sometimes gets lost in the discussion, though, is that this shift hits employees and communities not only directly but indirectly. The very same forces that have shredded the corporate social contract—once a robust private safety net—have also driven companies to deploy every possible tax shelter, thereby cutting their contributions to the public safety net. In all, the Tax Policy Center cites estimates that “nearly $1 trillion is held by U.S. corporations abroad, accumulated over time from booking income in low-tax countries.”
It is easy to overly romanticize 1950s corporate America. People of color faced terrible workplace discrimination at that time, as did women. Late in the decade, many big companies hardened their stance against organized labor, hastening its steep decline. Business culture could be rigid and stifling—the world of The Organization Man. Fear of communism and socialism, as much as altruism, was often at the root of corporate generosity.
But for all the faults of that period, an ethos has been lost. The University of Michigan’s Mark Mizruchi, in his book The Fracturing of the American Corporate Elite, describes it as “concern for the well-being of the broader society.” Notably, Mizruchi points to the 1956 Time article as a good representative of the ideas that then “dominated in the corporate discourse.”
“The majority of Americans support private enterprise, not as a God-given right but as the best practical means of conducting business in a free society,” pulp and paper executive J. D. Zellerbach told the magazine. “They regard business management as a stewardship, and they expect it to operate the economy as a public trust for the benefit of all the people.”
I think Zellerbach’s observation about what the American people expect of business remains essentially true in 2014. What has changed is the way that so many companies have turned so far away from this philosophy. That change makes Time’s portrayal seem like it’s not just from another age but from another planet.
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Rick Wartzman is the executive director of the Drucker Institute at Claremont Graduate University and anonline columnist for Time

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Should A Business Owner Double As The CFO?

Business owners and CEO’s of small privately-held businesses are faced with multiple demands on their time. They are tasked with developing new markets, growing the existing market, keeping on top of changing technology, creating a healthy internal culture, communicating a consistent brand to the marketplace, developing and maintaining customer relations, making major financial decisions, developing business strategies, reporting financial results. The list goes on and on. A common role that a business owner will continue to play as the business grows is the role of Chief Financial Officer. One might think that this would be a natural role for the business owner to take on, and that it really is not as critical of a function to outsource or delegate.

So what really does a CFO do? And is it wise for the CEO to take on this role? Last year Mckinsey & Company published a report identifying four different profiles or strengths that a CFO brings to a business.
The Four Types of CFOs

1) The Numbers Person – This person loves crunching numbers and understands the internal workings of the company from a financial perspective.
2) The Strategist – This person typically has experience working in operations, marketing, and general management. They focus on tightly run operations and careful allocation of business resources.
3) The KPI Advocate – This type of CFO loves the scorecards. They look at performance metrics, cost reports and standardized data. To them, everything is measurable and there is often a strong focus on meeting or exceeding established goals.
4) The Growth and Development Wizard – This type of CFO generally have years of experience in mergers, acquisitions, private equity and venture capitalism. Their goal is to keep their eye on the prize of expanding the current business operations of the company.

It is challenging enough to find a trained CFO to bring all of these traits to a business, much less to expect the business owner or CEO to be able to effectively cover these all of these areas. Whether a company is big or small, there is generally great value in engaging a skilled CFO to come alongside the business owner to help guide, measure and monitor the company’s financial health.

http://www.mckinsey.com/insights/corporate_finance/todays_cfo_which_profile_best_suits_your_company

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Why CFO Business Partner

The tagline for CFO Business Partner is “Stewarding Profits, People, Partners, and Places.” Over the course of the next few months I will be expanding on this theme and providing you with insights into what this tag line means to me, and how I am using this passion to help businesses flourish. In the meantime, below is a one page overview of who CFO Business Partner is and why a business might engage with CFO Business Partner.

Why does CFO Business Partner exist?

Small business is the backbone of our country’s economic engine. When business flourishes, the community surrounding that business flourishes as well. It is my passion to do my part in helping your small business flourish, so that our communities flourish along with you.

Who is CFO Business Partner?

Art Zylstra is your principal trusted advisor for strategic financial oversight of your privately held business. Art has over 30 years of experience working with small businesses in a variety of industries as their Accountant, Controller, and CFO.

What makes CFO Business Partner unique?

CFO Business Partner fills a unique market need for your small privately held business. With CFO Business Partner you get the expertise of a strategic CFO, the disciplined oversight of an experienced Controller, and the “roll up your sleeves” work ethic of someone who does what it takes to get the work done, all rolled into one package at an affordable price.

Who is an ideal client for CFO Business Partner?

CFO Business Partner excels with businesses that are growing and have between $1 million and $5 million in annual revenue, or 5 to 50 employees.

How do I know if CFO Business Partner is right for me?

The first step is to have a no-pressure introductory meeting with Art. Art will ask you about your business and the various day to day challenges you face as an owner. If we both agree that a potential match exists, then Art will move forward with a complimentary, yet comprehensive, financial analysis of your business. This analysis will include recommendations on how CFO Business Partner might assist you in achieving your financial goals.

Who are some of the clients that CFO Business Partner is helping now?

Seattle area coffee roaster; Seattle area commercial balancing service; Eastside game manufacturer and distributor; Eastside insurance and financial planning firm; North King County estate guardian and trust company; East King County asphalt and concrete company; East King County software developer and reseller; Southern California non-profit.

How do I contact CFO Business Partner to see if this is the best option for my company?

Art can be contacted by phone, email, website, or LinkedIn – 425-931-3430; ArtZ@CFOBusinessPartner.com; www.CFOBusinessPartner.com; www.linkedin.com/in/artzylstra/

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