Category: CFO Folklore

A CFO’s Democratism Gets Tested


Worker Bee In most smaller companies, CFOs and controllers include general HR functions into their scopes of responsibilities – that's a given. The flat organizational structures, though, with their spatial and psychological proximity of top executives to the staff, play peculiar tricks on those in charge of the company's human relations.

Very frequently a CFO takes a role of a buffer between the owner/CEO and the rest of the company's employees. She feels obligated to soften the impact of the direct dealing with frequently harsh and hard attitudes of the boss.

I've said it before and I'll say it again: more frequently than not entrepreneurs don't have an experience of ever being in a position of an employee and, therefore, they have very little understanding of the staff's mentality. On the other hand, a CFO maybe a right-hand person now, but she is still just a salaried employee, most likely grown into her current status by climbing through the ranks. If she is a decent human with a conscience, she is sensitive to the needs of valuable employees and cares about their well-being (if they are useless, let someone else care about them).

It's likely that an excellent CFO would enjoy a comparatively preferential treatment by a CEO: more disciplinary leniency, nicer attitude, better perks, general amiability, etc. When it comes to other employees, their efforts and achievements may be remarkable, but they are not as evident to the boss, and that reduces their value in his eyes. I've had one CEO openly tell me that if I want a certain benefit (let's say flexible spending account) for myself, he would be fine with obtaining it, but he did not care about the rest of the "worker-bees."

So, the CFO takes it upon herself to protect other employees from undue tyranny and act as their speaker when it comes to betterment of the employment conditions, whatever they are: raises, bonuses, vacations, benefits, etc. Sort of like a representative of the XYZ Company's employees union. And when she discusses this situation with her friends and family, she expresses her disdain for the undemocratic ways of her boss, taking pride in her efforts to right the wrongs.

Now imagine such a CFO taking a position with a new company – small, young, still pretty much in development stage. The owners are very liberal and treat everyone like equals. Moreover, the CFO is the last person being hired. Those few other employees have been there from the start. Nobody needs protection. Furthermore, there is one person who has been there the longest, starting as a CEO's assistant. Not that she gets any special perks or something like that, but she definitely feels very secure.

This should make the democratic CFO very happy. After all, wasn't she fighting for equality of other employees all the time before? Yes, it's nice; wonderful, really; exactly what she hoped to find… Except that… Being "the chosen one" was kind of a guilty pleasure too, an enjoyable self-esteem booster. And the gratitude of others for all that blow-cushioning effort was very rewarding as well. As important as the democratic principles were to this CFO, the old tyranny is somewhat missed.

That's how we, humans, are. For various reasons and purposes, mostly subconsciously and without any malice, we create these little lies that alter our self-image and other people's perception of us in one way or another.

It reminds me of my UK friend of many years, Gerald Hamer's, revelation concerning his constant bitching and moaning about endless international traveling he had to endure throughout many years of his impressive career as financial broker and adviser. "In truth," he said, "deep inside I love the goddamn airports; the sub-par plane food; the inevitable delays; god-forsaken Yakutsk, the coldest city on Earth, with its diamond mines one week, and unbearable humidity of Bahrain another. I wouldn't want it any other way."

So, all you, democratic CFOs out there, work as hard as you can and fight for your employees' well-being with all you've got, but be honest with yourself: you enjoy being special, the Most Valuable Player in the field.

Scenes from a Business Lunch, or the Obnoxious Rudeness of Business Owners


Restaurant-TableSpeaking of lunches (and I swear this is my last holiday post of the year)…

Because there are so many corporate holiday events in December, many business people from all over the country and overseas come to New York City during the month.  Customers, suppliers, vendors, associates, partners, and other relations visit their customers, clients, etc.  So, on top of the parties, you've got lunches with out-of-towners. This is a perfect opportunity to observe the business-owners' behavior in a "casual" group setting (as opposed to conference rooms and other natural habitats).

For many visitors this is also a good occasion for combining business and pleasure (after all, NYC is still #6 most favored tourist city in the world and #1 nation-wide) and quite a few bring their spouses along.  Some are actually in business with their spouses.

At the most recent lunch outing of this kind my guests were a manufacturing business owner by himself, another business owner with a wife, an alpha-female head of a consulting group, and a husband and wife attorneys sharing a corporate legal practice. Fun bunch!  Don't worry kids, it's only going to get worse!

The manufacturer asked for a coke and downed it really fast; then had it refilled several times throughout the meal.  This, naturally, resulted in a fast accumulation of a lot of gas in his stomach, which he unceremoniously belched out every 10 minutes, or so.  It was obviously a habitual occurrence, because he did not even bother to apologize.  It's amazing, how we learned to hide our emotions in "business" situations – everyone pretended not to notice it, even though once in a while one could catch a hint of a smirk or disgust (depending on the personality) playing on the lips of other guests.

[Side note: This reminds me of another experience in my arsenal of wonderful memories.  Early in my career I worked for a company, whose owner, in my mind, will forever carry a title of The Farting Boss.  He was middle-aged, but had a younger second wife and wanted to loose weight by drinking glass after glass of Slim Fast.  This made him very gassy.  The man mastered the skill of silent farting, but the smell was literally unbearable.  Imagine my situation – we sat in the same room.  Good times!]

The lady consultant first tried her sales pitch on every guest around the table, but quickly lost her enthusiasm, when she realized that nobody is interested in her services, except for me.  Since my company already had a contract with her, she did not see a reason to waste anymore time on us and turned her attention to the Blackberry, answering emails between bites and white-wine sips.

The married businessman first attacked his wife in a very loud whisper (it could be heard even at the neighboring tables) for wearing shoes with heels.  This apparently slowed down his purposefully brisk gait that went well, I am sure, with his aggressive mannerisms.  After the woman's eyes welled up with tears he abandoned her to fight it back on her own and observed the rest of the battlefield in front of him.  Dismissing the burping guy and all females as inferior creatures, he concentrated his self-affirmation efforts on the attorney sitting across the table from him.

They went at each other like two roosters in a Filipino cockpit.  "Have you read this?"  "Do you know that guy?"  "I bought Apple at $25 and just sold it at $375." "I am keeping mine – it will be $500 a share in a year."  "I closed that famous private equity deal this year." "I brought this much venture capital to my business."  "I am opening new factory in China."  "We have a law office in Hong Kong!"

God!  I contemplated the scene thinking, "The things we must tolerate to earn a living!"    

CFO Folklore: An Insult of the Month


-1After a long period of solicitation, due diligence, term sheet amendments, and credit agreement negotiations, a company finally closed a new multi-million dollar credit line with a major national bank. Now, it's time to build working relationships with different departments: the CFO is busy establishing communication channels with the treasury services, trade finance, foreign exchange, collateral control, and so on, and so forth. There are conference calls, meetings, lunches.

This is an introductory period for both sides – a short lull between the stormy deal-making and the times of daily grind that lie ahead. There is not much business yet to discuss, so the conversations, especially during lunches, turn to probing each other's backgrounds and chatting about general topics.

During one such first-meet lunch with yet another banker, the CFO, a person of broad interests, talks about this and that, displaying familiarity with various subjects.

Banker (in a very friendly, non-offensive, even appreciative tone): You know a little about everything, don't you?

CFO (waiting for the second part of the expression, but none is coming; so she takes offence): Well, that would make me very superficial, even shallow. I assure you that there are a few areas of knowledge within and outside my professional scope, in which I can claim in-depth expertise.

They look at each other silently for a moment than move onto a discussion of the bank's operational features, both hiding their own grudges.

The Frustrated CFO's situational analysis:

My personal experience of dealing with American bankers throughout my entire career is that the majority of them are not overly bright. I assure you that I am not saying this out of disrespect – it's just a fact of life. The European banking is altogether a different matter. Overseas, the banks are smaller and the profession itself is still considered to be a prestigious occupation, even if you don't deal with investments and make million-dollar bonuses. Some of the European bankers I know graduated at the top of their classes and were recruited right out of the business schools. Ours – they are mostly average.

That's why I think that at the crucial moment of a split-second decision, the CFO went the wrong way. These mental "forks in the road" present themselves in our minds all day long. Sometimes we make right decisions, and sometimes (most of the times, for some) we don't. Looking at the situation from the outside, I gather that the banker did not mean to be brash. She was just limited. Most likely she only remembered the first part of the frequently paraphrased and transformed saying – know a little about everything and a lot about something, and used it, inappropriately, to complement the CFO's erudition. You know, it's like one of those bushisms, "Fool me once – shame on you, fool me – you can't get fooled again." You cannot take that kind of stuff seriously.

Joke of the Day


Based on an actual conversation.

New CFO: "Half of your in-transit inventory is not recorded on the books, because you have not followed the cost-recognition rules since you started this company six years ago."

CEO: "The books? Which books? Do you mean the Excel spreadsheet we call Order Book?"

New CFO (doesn't know whether to cry or to laugh): "Your books – your financial records! They are not in accordance with GAAP."

CEO: "GAP? What that cheap store has to do with our inventory?"

Insecure Business Owner/CEO


130px-Pointy-Haired_BossPeople write about insecure bosses all the time. There are blog posts, articles, book chapters, cartoons, movies, and TV shows devoted to the subject of dealing with a superior who feels threatened by his subordinates.  Hey, bosses are people and a vast majority of humanity is plagued by insecurities of various forms and degrees. The authors usually predict two possible outcomes of having such a boss: you will either find a way to overcome the problem and turn this person into your ally, or you get fired.  Curiously, in these writings "the boss" in question is usually another hired employee perched on a higher step of the hierarchy ladder.  (It has always surprised me, why these advisers never consider a possibility of you finding the way of getting the insecure boss fired.)

However, when your insecure boss owns the company that employs you, it's a completely different situation altogether.  Here he (or she, or they) was, the big boss with a business that he's built, thinking that he is the shit, the sharpest tool not just in some lousy shed, but in a suburban Home Depot… Until you came along, with your diverse expertise, broad fundamental knowledge, etc.

Now, you start discovering all kind of stupid stuff.  If you are indeed an experienced person, you are not running around like an idiotic show-off screaming that everything is wrong.  No, you tread lightly.  At the same time you must do your job and, therefore, correct the stupid stuff.  So, you say careful things like, "Excuse me, I mean no disrespect, but this and that is not done properly and will result in long-term losses; and, by the way, your accounting doesn't comply with prescribed rules."  You have no choice but to reveal painful observations such as, "You know, that operating system you bought just before your hired me (couldn't you wait?) on recommendation of someone you know, sucks!  You were misled – it's not an ERP, it's a retarded cousin of a real ERP twice removed."

Moreover, from time to time, things come out of your boss's mouth that are not just silly, they are embarrassingly incorrect.  Of course, you can ignore it, and yet you cannot, because if you don't clarify his confusions and educate him, he may say something stupid in front of your bankers, or investors, or auditors.  So, you have no choice but to find an appropriate way to straighten him out, raise his sophistication.

And even though you openly express due respect for his entrepreneurial abilities and acute commercial intuition, he cannot avoid feeling inadequate, insecure.  It's unpleasant and he doesn't like it at all.  Yet, unless you become rude and inappropriate, your job is secure.  The idea of firing you wouldn't even come to his logical conscious mind.  First of all, he knows that the company (i.e. his wallet) needs you and your improvements.  Secondly, you took over quite few tasks, freeing him for business development.   Finally, he doesn't have time or desire to go through the search process again.

Still, from time to time the subconsciousness feels pangs of wounded ego.  When that happens, he'll do anything to make himself feel better.  He will find one or another way to get back at you.  If you have an accent (Irish, Italian, Slavic, French), he will interrupt you in the middle of a meeting and ask the outsiders if they understand at least 30% of what you were saying, even though your English is fluent.  Your writing skills are likely to be far more superior than his, but he will make you run drafts of emails to important people by him, claiming their "political importance."  He may get into habit of reminding you that, considering your compensation, he expects a lot from you, even though you have exceeded all his expectations already.  And so on, and so forth…  

This behavior is childish.  The mere knowledge that it's rooted in his insecurity should help you to brush it off.  Don't let yourself to be hurt by it.  Don't think, "This is not fair, I am helping his business."  Don't take it as an insult.   Accept it as a testimony to your superiority.