Marina Zosya

New CFO, Same Staff: Inheritance Problems

Ok, let's leave our bosses alone for the time being. Let's talk about us as bosses. In our multi-functional lives as CFOs and Controllers we frequently end up with more direct reports than CEOs/owners. There are accounting managers, finance directors, budget and analysis groups leaders, PR, AP, AR, IT, and so on.

Let's say you are making a career move and just accepted a position with XYZ, Inc., replacing a departing CFO. In a dreamy corporate fairy tale you should be able to do what our newly elected presidents do – form your own cabinet and move in with your faithful acolytes. In real life… you inherit somebody else's staff. Moreover, you have to quickly immerse and keep the business going.

The subsequent events can play themselves out in three possible scenarios:

1. Without giving the existing operations a real dissection under a microscope, you simply learn how everything functioned under your predecessor, decide not to change anything even if you find the old ways inadequate or wrong, and continue in the same fashion. The effect: good for the staff – no changes, no new things to learn, no old habits to break; bad for the company, your employers and ultimately yourself – inheriting diseases without attempting to treat them will assure your failure.

2. If you are a responsible and knowledgeable person with an impressive background and enthusiasm for your new job, you will study all aspects of functions under your control, diligently, but without prejudice; find errors, shortcomings and blind spots; apply your expertise, and develop improvements and innovations plan. And then you will face incredible resistance from your inherited staff. It is very natural: humans are resentful of changes. They will give you very hard time, no help and mountains of frustrations. Just because you are great at finance and accounting, it does not mean that you are good at managing and educating people. If you don't have patience and sufficient skills to overcome the resistance in a positive way, you will end up firing a third of the stuff and another third will leave on their own. The rest will stay, but you will never gain their trust and support. The worst part – by replacing former employees with new ones, you will loose the continuity of the departmental knowledge.

3. Under the best case scenario, your professional and managerial skills are equal. While you sifting through processes, functions, policies and procedures, you must study the people. What motivates them? Do they know their jobs well? Are their duties properly matched with their abilities? Psycho-profiling is one of the most important managerial skills. Try to discern the personality traits of your employees. The personnel strategy should be part of your improvement plan. Find people who are interested in positive progress, explain to them how the new developments will benefit them, show them the big picture (for more on this subject see my post Big Picture and Staff Training) and make them your agents of change. Then you can claim the successful transition.

Job Search: Prestige and Compensation

It happens very rarely, but this time I am in absolute agreement with yet another installment from "You Are Better Than Your Job Search" – previously referenced book from The Ladders' CEO Marc Cenedella: Title vs. Salary. And I strongly advise everyone to click on the link and read the excerpt very carefully.

It is true that a good title looks pretty on our resumes, but it cannot be at the center of your decision to accept a job offer. If the title comes as a part of a good deal completed with new professional challenges and attractive compensation package, then great, you are doing the right thing by taking the job. However, if its just a title and everything about the job makes you unhappy, depressed and economically strapped, there is no point in making such sacrifices.

And you cannot fool anybody with that line on your resume either. All experienced recruiters and the majority of hiring execs know that if you held the Controller position in a $10 million a year, known to nobody company, it means you had no staff, can claim no sophisticated accomplishments, nobody asked your strategic advice and your salary was around $80K. At best, you were a glorified full-charge bookkeeper.

As the matter of fact, I frequently say that I don't care about my title. As far as I am concerned, they can call me "hey you," or a "firefighter," or a "cleaning lady" on the organizational chart as long as I can continue impact the business in the most profound way, implement ideas of highest sophistication, keep all functions in full control and receive compensation that reflects my influence on the company.

Another very valuable point concerning inflated titles brought up in the article/excerpt is the artificial promotion. In the companies with flat management structure, people keep carrying out the same responsibilities year after year with minimal salary increases and title changes that reflect not a professional growth but rather simple seniority. After 10 or 15 years with the same company a person who started as a catch-all office girl becomes the Controller. And it is fine if she actually grew into the Controller's responsibilities together with the company's development (this is what I call an "in-the-chair" career ladder), but most of the time that is not the case. Hence, taking the Controller's job replacing that person would not be a great professional achievement.

Of course, when we are stuck in the rut of a long job search, we become desperate and dispirited. Then even an inflated title may seem like a sweetener of whatever position we are ready to grab to "put the food on the table." However, desperation is a poor adviser. Please, think long and hard before you take that step.

Anyone Can Be in Accounting?

There were times not long ago when in order to "work in Accounting" you had to have some formal knowledge of, at the very least, bookkeeping principles. When one dealt with manual cash receipts and disbursements journals, subsidiary and general ledgers, payroll transaction recording, at minimum she or he had to understand the principles of double-bookkeeping.

The technological advancements and computerization changed all that. Now, anyone who knows some Excel, quick enough to grasp menu-driven applications and doesn't suck at basic math is good enough to work in Accounting.

Don't get me wrong, I am a technology freak. Some people who know me long enough say that Technology is my middle name. Moreover, we, accountants, were some of the early beneficiaries of the computer coding: the first business data analysis compiler was written in 1957. Truth be told handling all those books manually was getting out of control.

However, hiding all the double entries behind the computer's screen, allowed for the situation we currently have, especially in small business environment: people without any accounting and/or finance foundation are allowed to mechanically perform important functions.

Here is a true story shared with me by one of my correspondent. Let's call her Lisa. When she took a CFO position in a law firm that employed over 500 people, the composition of her "Accounting & Finance" department was as follows: AP Manager (no accounting degree, 20 years of strictly AP experience), PR Manager (BS in General Business, prior experience in HR & Benefits), Staff Accountant 1 (BA in Psychology who was a daughter of a partner's friend), Staff Accountant 2 (BA in Child Psychology who started as a part-time office clerk when she was in HS and just stayed on), Financial Analyst (BS in Business Administration with above average Excel).

Is it surprising that the firm had a turnover of Controllers and CFOs at the rate of 4 per year in the past few years? They had great ideas what the company's record-keeping, analytical and reporting functions should be, but no one to whom to delegate the actual implementation. Is it surprising that the company never had audited financial statements?

At the first meeting with the Staff Accountant 2 (let's call her Sam), Lisa was told that Sam was "an accounting genius." Sam said, that she was so good at it, she got everything in a split second. A week later Lisa has discovered that all Bank Accounts in the Asset section of GL had reversed entries: receipts as credits and disbursements as debits. In other words, it replicated the bank statements instead of reflecting the company's transactions.

You think this law firm's accounting staff is unique? Nope, it happens everywhere. Look at the people responsible for financial functions in this young and hip company Quirky. I am sure these four women are bright and wonderful, but none of them have neither accounting nor serious financial background.

If this problem has affected you as well, please, do not hesitate to email me and share.

Big Picture and Staff Training

Closely-held entrepreneurial companies always have some flair of secrecy. The Owners' lives are intertwined with the businesses and because of that they apply personal privacy rights to everything, including the company's commercial and organizational matters. This frequently leads to "need-to-know-only" modus operandi when dealing with employees.

CFOs, Controllers, Directors of Finance are expected to act in the same secretive manner. And I am not talking about non-disclosure of commercial secrets, compensation details, or owners withholdings – these matters are confidential by definition. I am talking about organizational structure, commercial partnerships, new financial relationships, transactional details, new venture plans, etc.

The owners who insist on such covertness make a mistake of disregarding the natural human instinct of their employees to fill in the blanks. In the absence of actual information they will cook up their own assumptions about concealed matters.

You wouldn't believe what kind of wild baseless fantasies I sometimes uncover: non-existing silent partners, astronomical sales volumes, mythical lines of side business. In one of my previous employments people even assumed that I was a member of the owner's family on account of my loyalty and strict work ethics.

That's just laughable, but there are far more serious impacts of secretiveness: people don't understand the mission of the organization, the commercial scope, the structure, the value chain. Most importantly, they cannot grasp their own place and relevance in the system.

The unfortunate effect of this disconnect is mechanistic disinterested performance instead of meaningful work. On one hand, the bosses insist that their employees are kept in the dark, and on the other hand, they would like to see high efficiency and productivity – impossible to coexist.

I have managed to convince most of bosses that while keeping the actual confidential information secret, it is absolutely crucial to provide my subordinates with the Big Picture and their place in it. I consider this to be the most important step in staff training and development. You will be wasting your time trying to teach your employees how to apply their expertise and education to the tasks you need them to perform if they don't know why these tasks are important for the company's, and consequently, their own prosperity.

When explaining their role and place in the Big Picture, I frequently tell the employees that the company doesn't employ them to pay salaries. It is actually other way around: if the company could operate without the employees jobs done, we would gladly do so and save the money we pay as compensation . But it is crucial for the company that the jobs are done well and that is why the employees are retained and paid. You will be surprised: it is not as clear to most people as you could expect.

He Looks Like an Accountant…

I was on a train a few weeks ago next to a woman reading a mystery novel. Involuntarily I've glanced at the page and my trained eye spotted the word "accountant." I couldn't help myself and read a couple of sentences: "Detective Jones came out of his office. He looked like an accountant. He asked me…."

The "accountant look" has become a social and cultural cliche long time ago. So, what do people have in mind when they say that? They mean Charles Grodin in "Dave" and Barry Kivel in "Bound." They mean Will Ferrell in "Stranger than Fiction" and Gene Wilder in "The Producers," etc. The numbers of cinematic portrayals available as references is not that large, but the principle idea is clear: they mean, bland, boring, meek.

And yes, it is unlikely for an accountant to have a blue mohawk or to strut around in red patent leather boots with 4" heels. An accountant is not expected to stand out even if he is clad in a $3,000 Italian suit.

But, let me tell you, very-very frequently that nondescript appearance is just a cover. Like Superman under his Clark Kent persona, an accountant may be hiding a secret identity, an ambition far beyond his outer image.

Charles Grodin's character cracks Presidential budget's problems overnight. Shelly in "Bound" steals $2 million from Mafia in attempt to incite his boss's beautiful wife to run away with him. Harold Crick (Will Ferrell) abandons his regimented life as an IRS agent to become a singer. Both Gene Wilder in "The Producers" and Jack Lemmon in the "Apartment" get the Girl.

Let's push the movies aside for a second. In real life the accounting profession is responsible for some fascinating alumni: J.P. Morgan, John Grisham, Bob Newhart, Thomas Pickard, Kenny G. (well, maybe we should keep that one in secret).

The front page of this blog Raison d'etre expresses my firm believe that CFOs and Controllers regardless of their appearances are the cerebral force behind adventurous entrepreneurs. It's just that our daredevil streaks are tamed by critical reasoning.

Let's come back to the movie references. Standards for women are different: here we have Cher in "Moonstruck" and Kirstie Alley in "Look Who's Talking" series.

So, it is Ok for a female accountant to be attractive. Well, maybe the fact that it is more difficult to stick an accounting label on women is the reason why they don't rise to the positions of the perceived "highest level of success" as frequently as men do. According to CFO.com, Women CFOs Holding Steady: to be exact, steadily under 9% among both Fortune 500 companies and mid-cap 1500. You see, they don't "look like accountants."

All I can say is that every time I am in the General Admission pit at a rock concert, the young people around me don't believe that I am a CFO.

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