Chief Financial Officer - CFO Brings Logic & Order to what would otherwise be Chaos.
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Transcript of Chief Financial Officer - CFO Brings Logic & Order to what would otherwise be Chaos.
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Chief Financial Officer - CFO
Brings Logic & Order
to what would otherwise be Chaos
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Functional Evolution of Finance
Cash
Language of Finance
Business Analysis
Business Planning
Business Partner
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The Role of Finance Company Variables
• Type and Size of Business
• Financial Health of Business
• Personalities and Backgrounds of Senior
Management and Directors
• Speed of Change
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The Minimal Roles of Finance Demanded & Unavoidable
1st – Administration of Money for Company
2nd – Provide the Language of Finance as a Common Denominator
(Minimal Role of CFO)
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The Larger Role of Finance
• Applying Financial Skills to the Broader Context of the Total Business…
Current & Future
as a
Business Partner to General Management
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Mission of Finance
1. To Provide:
a. Value to Customers
b. Appropriate Return to Investors
c. Responsible Environment for Employees and
Communities
Bakane, CFO
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Mission of Finance
2. Operate in Partnership across All Units and
Functions to Further Corporate Goals
3. Add Perspective and Match the
Organization’s Needs with Capital Sources
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Evolution in CFO Requirements
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Evolution in CFO Requirements
Accounting Details Specialists
Translator CFO of (not necessarily CPA’s)
Specialists (accounting)
for MBA’s(Senior Management)
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Student
Start-Up
Multi-Billion $ Business
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CFO Mgt. Principles are the Same!
• Old or New Economy
• Small or Large
• Domestic or Multinational
• Good or Bad Company
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External Demands
Growing Amount of Required
Financial Reporting (Auditing)
By Government Agencies (IRS,
SEC)
and Investing Public (Analysts)
Strong Technical Knowledge
Need to Directly Control the Information Released
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CEO’s Increasingly Turning to CFO’s to:
• Influence Decision Making
• Craft Internal and External Strategies
• Communicate to and Help Manage the Board
• Manage other Functions
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CEO’s Increasingly Turning to CFO’s to:
• Help Manage Operating Companies
• Help Corporate Financial Literacy
• Add Economic Value
• Help Manage the CEO
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CFO Company Variables
• Health of Company
• Personalities and Backgrounds
of Senior Executives & Directors
• Type and Complexity of Company
• Speed of Change
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CFO’s Intimate Interactions
• Board of Directors
• Audit Committee
• Compensation Committee
• Executive Committee
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Base Organization
C o rp o rateA u d it
C o rp o rateA cco u n tin g
M an agem en tR ep o rtin g
&B u sin ess A n alys is
In ves to rR elatio n s
Treasu rer
C F O
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Expanded Organization
C o rp o rateA u d it
C o rp o rateA cco u n tin g
M an agem en tR ep o rtin g
&B u sin ess A n alys is
In ves to rR elatio n s
Treasu rer
C F O
SharedServices
ProcurementSCM
InformationTechnology
StrategicBusiness
Unit,CFO’s
StrategicPlanning
MergersAcquisitionsDivestitures
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CEO
Audit Committee
CFO
COO
Board of Directors
OPCP - Presidents
Consultants
Corp. Staff
Analysts
Share Holders
Major Suppliers
Business Partners
Employees
Finance Employees
Civic Leaders
Admin.
CFO
Immense Time Consumption
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Setting Strategies
• Corporate
• Financial
• Personnel
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Tricon – CFO Strategies: Prioritize
1. Reduce Debt/Re-franchise
– Get to Investment Grade
2. Staff the H.Q.
3. G&A Reductions Shared Services
4. Standardize & Integrate Systems for Y2K
5. Create a System Wide Co-Op
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Setting Financial Policies
• Internal Control
• Accounting Policies
• Measurement Standards/Benefits
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Setting Financial Policies
• Financial Administration of Business
– Annual and Long Range Plans
– Evaluation of Major Expenditures
– Evaluation of Economic Trends
– Capital Structure
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Setting Personnel Policies
• Hiring, Training, and Development of the
Finance Function
• Structure and Staffing
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CFO’s People Focus
• Structure
• the “Best” Key Personnel
• Working Relationships
• Communications
• Operating Procedures
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Corporate Skill Curve
Technical
Mgmt.
Leadership/PoliticalMgmt.
Small/Low
Size/Complexity of Firm
Large/High
Ski
ll R
equi
rem
ents
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Functional Skill Curve
Entry
Middle
Sr. Mgmt.
TechnicalSkills
ManagerialSkills
Multiple Tasks
Political &Leadership
Skills
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CFO Career Grid
Corporate
CostAcct.
Planning,Reporting,Investor
Relations
BusinessAnalysis,Treasury
StrategicPlanning
Acct.AuditTax
Entry
Manager
New Co.’sInternationalCrossfunctional
New Areas
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CFO as a Business Partner
- Assistant General Manager
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Ethics Leadership
• Honesty• Promise Keeping• Fairness• Respect for Others• Comparison
(Social Commitment)• Integrity
• Teamwork & Trust• Diversity• Recognition• Ethical Management
Practice• Communications• Empowerment
The CFO
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CFO Dilemma(s)
• Conflict of Interests
• Credibility
• Integrity
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Becoming the CFO
The Last Hurdle
To
CFO
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Lessons Learned – C.F.O.
• Importance of Your Team
• Functional Confidant – OM, Kennedy; YUM, Knopf
• The Bigger the Ego, the More Time you Need
to Manage it
• Succession makes everyone Crazy
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L.L. – C.F.O. II
• Corporate Culture is Important to Understand
and Manage
– Almost all are Different
• Do a Couple of Changes Well.
vs.
Lots of Change with little accomplishment.