Strategically-oriented CFOs now in vogue
20 April 2015
Human Capital Alliance Senior Advisor K I Woo looks at a recent strategic CFO phenomenon.
More and more CEOs today are searching for CFOs who are strategically-oriented business partners that can help senior management teams make better use of the finance function’s resources.
In a recent McKinsey interview, Jan Siegmund, APD LLCs CFO said today’s CFO’s need a balanced set of skills that combine a focus on long-term success with the ability to be an organization change agent.
These broader expectations are leading to some unconventional CFOs – executives with deep experienced outside the traditional finance, comptroller and accounting career paths.
Siegmund was a 15 year veteran of the $US12 billion data-processing company and served as the company’s Chief Strategic Officer (CSO) before being named CFO.
“….ADP, as a company has had a very strong foundation in finance, but …. it became clear that it was seeking to interject a more strategic view into the finance organization.
Shaping, refining strategic plans
Many companies now rely on CFOs to shape, refine, and implement their strategic plans.
The best candidates, McKinsey said are able to balance a company’s strategy, the CEO and other senior managers’ skills and abilities with their own ability to drive change.
Part of ADP’s strategy to transition Siegmund from CSO to CFO was to drive change more aggressively—not only for the finance organization itself but also leveraging the CFO’s role to accelerate the company’s performance over time.
Preparation for CFO role
As CSO, Siegmund said he had the unique opportunity to think about the enterprise in its completeness—to focus on the big-growth drivers and performance drivers for a company.
”That kind of prioritization is also crucial to being effective in the CFO role, where it’s easy to lose the big picture of what’s needed to drive the company’s success in myriad daily transactions.”
Another major strategy background benefit, Siegmund said was his ability to take apart complex problems, isolate and focus on core performance factors – setting aside smaller issues that can eat into your day.
As an unconventional CFO, Siegmund said he had to undertake a huge amount of technical learning in the initial years to perform well.
“During my first 100 days, I invested a significant amount of time in learning and understanding—in particular the areas that had not been natural areas of focus for me, namely external reporting, compliance, audit, tax, and treasury functions.”
As a career strategist, Siegmund said he liked to think of himself as a lifelong learner that wants to understand and dig deep into problems.
“Being open-minded and being an avid learner clearly helps a CFO with a nontraditional background.
Strategic CFOs role
Siegmund and his senior team began identifying opportunities wherein changing the finance function could contribute to ADO.
“We launched, basically, a finance-transformation process that covered outsourcing our external-reporting function, optimizing our order-to-cash processes, as well as a real rethinking of our global financial-planning and analysis organization.”
The company established centers of excellence that measured how revenue and planning forecasting are conducted.
It also built much better offshoring location data and analytics capabilities and began rethinking field support roles with new definitions, new career paths for associates and different skill requirements.
“A side effect of this is that we will also save considerable amount of money.”
Change programs complex
Siegmund said finance change programs are complex.
“The functions we perform are often interlinked with a variety of workstreams, and unwinding them to implement change while still maintaining a strong control environment and full compliance with the law can be challenging.”
The whole process, he said required a lot of communications, team building and alignment with the finance team’s vision.
At an early CFO shareholders and analysts meeting, Siegmund said his strategy background greatly helped him tell the company’s story.
“Most professional investors have a fairly good insight into the actual financials, but what they’re missing is the context, understanding and drivers of certain business decision.”