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How CAs can tackle the challenges they face when shifting to industry
Story by Esther Ewing, for CA Magazine, April, 1998
Finance leaders who move from publice practice to industry say it's a major transition; while they feel well prepared technically, industry demands much more. In my 11 years of working with finance professionals, both as manager for program development at the Institute of Chartered Accountants of Ontario and as a consultant for strategy and learning for various organizations, I have seen first-hand that the role of the CFO has itself changed. The focus has shifted from traditional control and compliance to business advocacy and providing value-added services. Today's finance leader must be fully involved in the business, have a keen understanding of its cost and strategic drivers and an obsession with serving the rest of the organization. Rather than being the enforcers of uncertain and complex rules, they now share financial data and must help their internal customers understand procedure and financial processes.
xxAccording to the CICA, there are now more CAs in industry alone than in public practice. This increase is likely due to a combination of factors. One is the downsizing of accounting firms in the early '90s, resulting in a decrease in partnership opportunities. Then there's the declining
need for the audit, the area that traditionally employed most CAs. And with soaring liability insurance costs — they've increased tenfold since 1989 to about $35,000 per partner per year — and the possibility of loss of personal assets due to the joint and several liability structure, working in industry seems more attractive than a public practice partnership.
xxLennox E. Joseph, a former CEO of NTL, an American company that has pioneered training methods in personal transformation, has commented that people who don't embrace change do not move ahead in an organization. 'But there is no encyclopedia on change,' he says.'It is a skill you must develop. 'Finance leaders have been discovering that just as their organizations have changed over the last decade, so too must they.
xxWhat can today's CFO expect? In a recent survey and practice analysis of management the next few years. The list included items that didn't even exist just a decade ago, such as educating the organization and internal consulting.
xxSome examples I've heard are that in public accounting, it was unlikely CAs would have prepared the payroll or workers' compensation return. They would likely not have been involved in hiring or terminating staff. And their performance reviews would focus mostly on technical rather than management skills.
xxOne of the biggest challenges facing CAs making the move to industry is managing people who are not all professionals. 'For me, getting things done through others was the biggest learning,' says CA Bob Sartor, CFO of Calgary-based The Forzani Group, a sporting goods chain. He recalls working late one night in one of his first industry jobs for Kraft Foods. 'My boss stopped by my desk and asked why I couldn't get my job done in regular working hours,' he says. 'He told me either my staff was not supporting me effectively, since they weren't there, or I wasn't as good as he thought I was.' That got Sartor thinking, and after that, he 22 camagazine / April 1998 F of working with finance professionals, both as manager for program development at the Institute of Chartered Accountants of Ontario and as a consultant for strategy and learning for various organizations, I have seen first-hand that the role of the worked harder at delegating more.
xxTo do that, you need to develop your staff. After all, the success of finance rests on having enthusiastic, competent people. Part of that process is assisting staff to set development goals. David Hui, CA, who moved from public practice some years ago and is now director of finance and business for the transmission network at Ontario Hydro, has found a way to do this. He has his staff write a target 'résumé' for the coming year which would include the kind of experience they would like to have had and the skills they want to acquire. He uses the résumé when negotiating assignments, aligning the work with his staff 's interests while trying to give them enough stretch in their roles. 'I've found it allows them to broaden their thinking and potential,' Hui says. 'And I gain a better understanding of their needs.'
xxBob Sartor also found that developing staff is an important part of working in industry. 'To do it, you have to let them learn from their mistakes,' he says. When he was CFO for a food distributing company, a bright young manager of financial reporting came to him one day with a proposal for reporting retail results which he'd developed in his free time. Sartor could see a couple of serious flaws in it, but knew his manager would learn more if he found this out for himself. Sartor suggested the manager run his proposal past a couple of high-quality operations people for feedback. Then he called them. 'This is a young guy trying his best,' Sartor said. 'I want you to walk him through it so he learns something and is still enthusiastic.' The manager came back a few days later, his eyes shining. 'They told me that I had great ideas,' he said. 'I'm going to make a couple of improvements and rework the plan.' Soon after, the company successfully implemented the plan. Sartor commented to me that if he had pointed out the flaws himself, his manager wouldn't have learned as much. So investing time in staff to enable them to develop themselves is a must; it builds loyalty and ensures they'll go that extra mile when you need them to.
xxBalancing work and home life is another challenge in industry. While many finance leaders report working 70 to 80 hours a week, many say they are uncomfortable about not spending enough time with their spouses or children. One of the best defences is to spend more time on proactive planning and less time on firefighting. When he first started with Avenor Inc. in Montreal, Bob Sartor had to finish an analysis by Thursday. So he worked on it at home the weekend before and handed it to his boss on Monday. 'How did your wife feel about you working on this all weekend?' his boss asked.'Bob, family is forever, jobs are not.' Ever since then, Sartor has been very careful to balance his work for his family's sake, and is sensitive to how demands on his staff might affect their family lives.
xxAnother challenge when making the move to industry is knowing you must keep in tune with your constituencies both inside and outside your organization. Says Bill Cowan, a CA who until recently was CFO of a software development company and is now in private consulting: 'You need to be thinking ahead of what their hot buttons or main needs are that you are going to have to support.' The many demands on the finance leader include the CEO, investors, boards of directors, internal and external customers and regulatory authorities, both in industry and government. It takes a high-performance finance team led by the right CFO to meet all those needs. William J. Raduchel, former CFO of Sun Microsystems, puts it like this: 'To be a great CFO, you've got to understand chemistry. You have to be able to go generate that chemistry and to understand that you're part of the mix. If you don't generate it, nobody else is going to.'
xxWhen she was vice president of finance and information systems at Baxter Corporation, a medical technology company in Mississauga,Mary Parniak, CA, wanted her finance staff to become more customer- focused in everything they did. So she led a 'culture change,' transforming the way people saw themselves and their role within the organization. 'Now,' she says, 'it's a far more open environment where people can say what's on their mind and it's okay for others to disagree and challenge. It wasn't like that five years ago. I had to model the behaviour we needed.'
xxOngoing personal development is another key challenge to succeeding in industry. As Parniak learned in her 'culture change' experience, you can't ask others to change if you yourself aren't prepared to do so. And sometimes you need someone to hold up a mirror to learn what changes are necessary. In the courses I teach, many participants have cited the technical sessions such as corporate tax or business process re-engineering as the primary reason for attending. However, the group sessions that concentrate on personal change are among the highest rated. In those sessions, they hold up the mirror for each other and often comment that they get far more value from this than they had anticipated.
xxFinance leaders must strike a balance between relying on technical analysis and trusting their instincts. For David Hui of Ontario Hydro, a critical advantage early on was having a mentor who encouraged him. 'When I say he encouraged me, I mean that quite literally. He gave me the courage to go for something that I wasn't 100 percent certain of, to trust my instincts and not rely only on analysis.'Hui also attended both the human interaction lab program at NTL and the Ontario Institute's CFO program. 'I learned to not rely just on analysis but to take in and understand body language and track human dynamics. For example, I learned that when someone is silent they haven't just run out of things to say.'
xxThose moving into industry would also do well to develop their interpersonal skills. The CA training leads to highly 24 camagazine / April 1998 Investing time in developing your staff builds loyalty and ensures they'll go that extra mile when you need them to camagazine / April 1998 25 polished analytical skills, but learning to go beyond that can be difficult. Hui admits that it isn't easy, that when the working culture is changing and uncertain, he still tends to take refuge in his analytical skills. 'Ideas come more spontaneously when things are more certain around me,' he says. 'That's my ongoing challenge: to contribute the broadest range of my skills for the company even in uncertain times.' Hui says if he had to single out one key interpersonal skill that would provide leverage for a finance career, it's assertiveness in communication. In one of the courses he took, he discovered that it's something that can be learned. 'And it leads to more confidence in speaking up in meetings and demonstrating value,' he says.
xxBob Sartor was lucky to have someone to give him honest feedback and teach him to evaluate his own weaknesses. 'My first boss would sit me down over a cup of coffee in the cafeteria and say, 'Here's what we did right and here's what we did wrong over the last few weeks, and here's how we can improve.' I learned a ton from that.' In the absence of an insightful boss, or as a complement, taking a course which gives you that kind of feedback or getting some ongoing coaching from a professional is another way to resource yourself. There is also a wide variety of literature available on this and related topics (see 'Taking action,'page 26). While taking professional development courses is no replacement for 'stretch' work experience, it could provide an important catalyst to becoming more effective in how you create value for your organization.
xxDavid Hui finds that keeping a learning journal helps him reflect on some of the things that he wants to put into practice. 'When I read something good, I put it in my journal under the appropriate topic heading.' Current headings include 'business processes,' 'activity-based costing' and 'assertiveness.'
xxA challenge in becoming a business partner is in educating your internal customers on the value that you, as a finance professional, bring to the organization — especially when those customers have been used to the policing approach. While a corporate controller at the Campbell's Soup Company, Mary Parniak led a team that included finance, sales and marketing people whose task it was to review the invoicing process. Initially, some members were sceptical about the value a controller would bring to the exercise. But a few months later, when Parniak was speaking particularly passionately about the importance of quality financial data, her team began to realize her value. 'Mary, you should be called 'Director of Financial Quality!'' Just as getting honest feedback is important to the finance leader, so, too, is giving feedback. One of my coaching clients once asked me, 'When you talk about coaching my staff, isn't that really just holding their hands? Shouldn't they be professional enough not to need that?' I told him that no, clearly communicating expectations is only half of a leader's responsibility; the other half is holding them accountable for those expectations. That way, everyone wins.
xxSeeking out non-financial roles is another way to develop your skills and understanding of the business in which you are working. Taking a line function in merchandising, marketing, even sales, or an operational but non-financial role for two or three years early on in your career will increase your credibility in selling the value of finance. It will also give you important insight into how the rest of the organization sees finance, something for which the articling experience doesn't adequately prepare CAs. Bill Cowan took that opportunity early on. He worked in operational audit, and that role gave him a chance to experience the effectiveness of different aspects of the operations.
xx'There is no straight-line development to the role of the CFO,' comments Bob Sartor. 'A career path should often zigzag to give you exposure to other areas and ways of thinking.'
xxThe new finance leaders are customerfocused and obsessed with creating value for their organization, constantly building an open finance culture. They work to develop themselves and to contribute the full range of their abilities to their organizations. And they are not afraid to try new experiences, either in work assignments or in development courses, that give them the chance to learn different ways of thinking and leading.
If you have any questions about this article, please contact Esther Ewing.
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