CFO Folklore – Page 9 – The Frustrated CFO

The Clueless Boss of a Frustrated Downshifter

The economy and the resulting miserable state of the job market forced many financial executives to downshift, i.e. take jobs way below their levels of expertise, authority, and adequate compensation. It's been almost a year since I wrote about the heartbreaking reality of first finding such a position and then accepting it for the sake of having food on the table and keeping the roof over your family's head. Yet, the painful topic is still relevant.

But let's look a little further. We have an opportunity to examine an interesting situation brought to my attention by an actual downshifter – a former CFO of a, now defunct, $500-million-dollar firm. After a year of a futile job-hunting he accepted, at 50% of his former compensation, a Controller's position in a young and small ($30 million) company, ran by two owners – a female CEO and her partner with a COO title.

How many times did I write about accidental bosses? And here we go again: this business has started because the two partners got lucky. They were in the right place at the right time with extensive connections and sufficient funding at hand. Neither of them actually needed it to survive, but the opportunity were too exciting to pass up.

Guess what? The CEO never led a company before. She never even worked in a commercial enterprise. Her partner has an MBA from an Ivy League school, but he only worked overseas. Neither have the chops to make good executives, yet both have undeniable talents and a lot of enthusiasm. She is a sales ace and the toughest negotiator you can find. He is incredibly detailed-oriented.

Not only that they managed to get the company off the ground eight years ago, they kept it growing with minimal labor resources, including a single bookkeeper. Hiring a senior financial person was definitely not among their priorities. Until… Some people are just born lucky. An even bigger opportunity presented itself. To implement it they needed more capital. The dogged COO wore down one of the major banks into providing them with a substantial trade finance line. Among bank's mandates was hiring a proper Controller.

Enter our former CFO.

Because both execs are not very clear on the leadership functions, the division of responsibilities is blurred. The COO was in charge of the Controller's hiring. The CEO never even saw the candidate's resume or salary history. When COO decided that this is their guy, the CEO was called in for a minute to shake the future Controller's hand.

Yet, once our downshifter started working there, he realized that the woman's word was the final authority on pretty much all other issues. Now, because she lacks corporate experience, she is not capable of assessing the Controller's performance. In her mind, any other accountant would provide the same input as this guy, who managed in the first three months to correct more procedural, systematic, recording, and administrative errors than he did in 25 years before this job. Moreover, he contributes into the company's strategic decisions. All that for a price of a low-brow peripheral Controller. The CEO has no clue that what she's got was a gift; that she got very lucky again and obtained an Hermes bag for the price of a Coach.

This is a big problem. If your boss doesn't understand your value, she cannot appreciate your contribution. The fact that someone with lower qualifications and less experience would not be able to attend to the sophisticated tasks you accomplish remains unnoticed. As a result, you are helping to better the company without a chance for a fair reward.

What to do in this situation? You are not the type to brag every time you do something extraordinary. The first thought comes to mind is to re-introduce yourself. The guy who hired you didn't share your resume with his partner, so give her one together with your salary history. You can say, "I understand you've never had a chance to look at it before and I think it's not fair for either of us." I know some people will say it's tasteless, but the options here are limited.

Secondly, you must propose a proper evaluation system for all staff members. Because these people have no idea how to go about it, they will turn to you. This is your chance! Provide them with the format that allows employees to list their own accomplishments. Then, make sure that reviews are actually conducted.

Finally, if you don't get satisfactory acknowledgement anyway, start looking for another job. Maybe you will be luckier this time around. It's like I always say, employment at will works both ways: they can separate from you at any time, but so can you.

Joke of the Week: The Linguistic Pitfalls of International Trade

Believe it or not, but a few of my readers actually complain that sometimes my posts are "too technical." I guess, they forget that, even though I manage to squeeze a ton of cultural references here, this is primarily a business blog and some of the topics will be amusing and/or relevant only to financial professionals, executive managers, and business owners.

Well, even though this may further aggravate the merriment seekers, I cannot pass on the opportunity to share the following 100% true episode that has occurred in one import/export company early last week. It's just so hilarious (at least to me)!

Here is the premise. English has become a common language of international business many years ago. Of course, there are other linguistic possibilities: if transacting parties are both Latin American, they will use Spanish; employees of a company in Shanghai will speak Mandarin to their counterparts in Guangdong region. But I guarantee that communications between, let's say, a Turkish manufacturer and a Dutch banker, or a Latvian banker and a Swiss financial broker, will be conducted in English.

Of course, a Korean supplier has no choice but to employ English to communicate her concerns about a Letter of Credit (LC) provided as a form of payment by an American importer. The document itself is prepared in English for crying out loud. Still, it's a foreign language – some linguistic pitfalls are unavoidable.

Those who work in international trade or read my book CFO Techniques know that LCs are very strict documents treated in a very literal manner by the banks responsible for making sure that a supplier gets paid only if and when it complies with conditions stipulated in the buyer's LC. For example, the shipping documents (most frequently these are Bills of Lading (BLs)) must be prepared in accordance with the importer's requirements.

Now, enter a young and anxious clerk at the Seoul office of the said Korean supplier. She is responsible for putting together all documents to be presented at the bank so that her employer can get paid $2,745,000 for 1500 mt of the product that just sailed away. She knows very well that the papers must be in full compliance with the LC. She is a novice and feels a lot of pressure to do it right. On top of that, it's all in English, and, even though she is pretty good with it, the stress makes her paranoid. Basically, she is a nervous wreck.

One thing in particular bothers her the most. So, she writes the following email to the customer's CFO:

"LC request is 'FREIGHT PAYABLE WITHING 7 DAYS OF SHIPMENT DATE' but the shipping line put on Bill of Lading 'FREIGHT PAYABLE WITHIN 7 DAYS OF SHIPPING DATE'. Please urgently ask the shipping agent to revise the BL."[sic]

The American CFO, who has dealt with the international trade issues for many years, had a good laugh reading it, thought that the girl needs some Xanax, and replied:

"Relax. The difference between the words 'SHIPMENT DATE' and 'SHIPPING DATE' will not be construed as discrepancy by ANY bank as these phrases mean EXACTLY THE SAME."

Hey, it's all good. At least she didn't have to gesture and guess.

The Second Quarter Financial Results, or They Always Kill the Messengers

Believe it or not, but we've already passed the mid-point of 2012. While the foretold Armageddon is not upon us just yet (most likely due to the inaccuracy of our calendar), the immediate future of many CFOs can be predicted with a confident certainty: the second quarter financial results will be due in a couple of weeks.

Let's face it, this was not an easy fiscal period. Whether large or small, businesses were affected by the volatility of the international markets, the slowdown of commercial demand, plunges in both commodities' prices and consumer confidence. Even the bigwigs at Goldman Sachs and JP Morgan, the conjurors of "facts" that prevent trading markets from falling apart, had to admit today that "the recovery slowed in the second quarter" and downgrade their projections.

What recovery, you clowns? Anyway, those of us running actual businesses know: the quarter was mostly downsloping, choppy, and unhealthy. This will translate into smaller revenues, narrower profit margins, and, for many, losses.

The Frustrated CFO always feels doubly agitated about subpar performance results (obviously, antsy enough to talk about herself in the third person). On a big-scale, as a small-business crusader, I am worried that with every difficult fiscal quarter the possibility of our economy getting back on the right track, with entrepreneurship reclaiming its rightful status as a backbone of capitalism, becomes less and less real.

And then there is an apprehension of inevitable consequences for all financial chiefs of privately-held companies (myself including), who cannot avoid playing the part of the bad-news heralds.

Regardless of the nature and the size of a company, the main recipients of its performance results are owners/investors. For public companies these are millions of faceless institutional and individual stock-market gamblers. The publication of financial information by these companies is mandated by law and governed by SEC.

When the picture is bleak, the Boards of Directors, terrified by the possibility of a sell-off and devalue of the stock (first and foremost, their own holdings), frequently spring into action to show the world that they are "doing something about it." This usually amounts to moving the pawns on the corporate chessboard: we regularly hear about dismissals of CEOs and COOs perceived to be responsible for the failures. At the same time, unless they are caught together with their auditors cooking the books, the big-time CFOs are rarely publicly flogged.

Private businesses operate in an entirely different universe. Here, people responsible for financial reporting, CFOs and Controllers, daily face their owners/investors. The entire chain of delivering the message is reduced to a single step. Here you are with your perfectly accurate, yet unpleasant, reports and there, on the other side of the table, or on the other end of an email link, are the owners/executives.

And, even though everyone in the room understands that you cannot possibly be singly responsible for the business's poor performance; that it is a result of many contributing factors; that the CEO herself disregarded your loud warnings and fucked up several crucial deals – the bosses invariably follow their first impulse to lash out against somebody. At that initial moment of disappointment, there is no better a scapegoat than you, the news-bearer. As if on cue, the bosses turn into cranky babies and throw pointless tantrums. The funniest thing that ever happened to me was when the President wanted to see the general ledger details and "check the numbers."

Eventually, of course, they come down, and become reasonable. If you've earned their respect and got their ear, they would listen to your analysis and accept your improvements proposals. The thing is, though, we are human too and no matter how well we hold it together, the hurt of that initial heraldic punishments stays with us.

The Queen's Herald

Lessons from the Author of “CFO Techniques”

Or Ten Things Your Publisher Will Forget to Tell You.

Disclaimer: The following conclusions are based on a specific experience of one first-time author with one particular publisher. Marina Guzik does not infer that any other writer of professional books, working on her first or n-th opus for any other, or even the very same, publisher would encounter the same disappointments.

1. There will be no color inside your book. Color printing is expensive and the publisher's intent is to keep the production cost to a bare minimum. So, all your colorful charts and graphs will be in fifty shades of gray (pun is always intended). The good news is that many people read eBooks now and those are full of color.

2. As I found out after the signing of the contract, publishers of professional literature utilize a practice of technical reviewing. Regardless of your credentials, depth of knowledge, experience and professional stature, the publishers will need to hire someone for 2 cent per page to serve as a technical reviewer for your book. This person's job is to verify that you did not make any errors in definitions, calculations, etc.

3. Amazingly, this technical reviewer will get his bio printed prominently in the Front Matter right after your own, the author's. Moreover, the publisher's production department will not have enough common sense to at least make it shorter than the one provided by the humble author, who thought it was unnecessary to list all her accomplishments.

4. Speaking of production. Somehow their compiler squashes words together, cuts out letters in the illustrations, and does other weird things to the final book layout. So, after everything is done, you will still need to reread your book in its entirety, fishing out this stupid shit, before giving your final-draft approval.

5. As you get closer to the finish line, the publisher will randomly move the book's release date back and forth, due to some internal considerations (like printing arrangements), without letting you know. So, don't book that wrap party for yourself (did you think for a second that the publishers will do it?) until the book is actually out.

6. If the publisher includes a Promotion clause in your contract, which states: "We’ll promote the Work, using Our reasonable judgment about the methods and amount of promotion," you should understand that it means they will not spend a penny on promoting your book – there will be no advertising, no sales tables at the professional conferences, and stuff like that. There will be nothing, except their "wonderful PR team's" campaign.

7. There are Publishers and there are publishers. If your book is with Wiley, for example, it will be handled by a stronger public relation team. On the other hand, smaller, less known publishers are staffed with people who didn't make it into the world of the big-time PR influence. They don't have connections and their rolodexes are skimpy. They don't have a pull to call on, let's say, a reviewer at Financial Times and recommend your book. So, their entire "promotional campaign" amounts to posting a public release on PRWeb.com and, allegedly, mass-emailing it to their undisclosed distribution list.

8. That single promotional tool, the public release, will be written in a wooden, cumbersome language. Moreover, it will misrepresent some crucial aspects of your book. And when you rewrite it yourself to make it snappier and smarter, they will completely ignore your version and post their own anyway. They will add insult to injury by misspelling your name under your quote.

9. If you dare to express your frustration with all this bullshit on the pages of your blog, which is specifically designed as a venting outlet, they will lash out at you and then shut you out: they will not even list your book among their featured titles.

10. Last, but not least, the various eBook versions (Nook, Kindle, ePub, PDF, MOBI) will not be protected by any resellers. They will be ripped off every legitimate site, including that of your publishers', and offered for free on the Internet. Thus, your copyrights will be brutally infringed and your meager ability to earn any royalty off of your own work will be drastically diminished. The publishers will not do anything about it. They will not even reply to your emails on the subject.

You have to appreciate, though, what they do tell you in advance:

1. Even though there are 6 million companies with less than 100 employees in this country and you wrote a book that can help them to survive, you can consider yourself lucky if a few thousand copies will be sold in several years. How many small-business owners and their downtrodden senior financial managers have you seen improving their organizations by the book?

2. Hence, there is no fame or fortune in writing professional books;

3. It's not the book itself, but what you do with it.

Knowing this keeps you real. If you are not going to promote the book at your own expense, or utilize it to enhance your professional exposure, accept the fact that seeing it published simply massages your ego. Nothing more.

Do Yourself a Favor and Buy Your Boss Some Ginkgo

I am currently reading Jennifer Egan's A Visit from the Goon Squad. Excellent book. It's categorized by booksellers as a novel, but it is essentially a collection of stories stringed together by each character's connection to the book's most realized protagonist – the music-industry executive, Bennie Salazar. I love that kind of staff. Yet, it's not the author's writing skills that make this book important to me, it's the vivid emotional familiarity of people and situations. Good writers manage to reach their audience in that way: you read a dialogue or an internal monologue and your heart aches with the painful recognition.

Let's leave the introspective explorations for some other discussion, though. In light of this post's title I want to describe one particular scene in the book that seems to be taken straight out of my own experience with many a boss.

Bennie Salazar, the President of the record label he founded some years ago, is in his car with his right-hand and catch-all Sasha. They just listened to the new material of one of the company's signed acts. Sasha rules the two punk sisters unlistenable. Bennie woefully wonders, what happened in the two years since he'd signed them on. Sasha reminds him that it has been five, not two years. She even gives him a precise time reference: she went to the contract signing straight from Windows on the World, i.e. when the Twin Towers were still intact.

Oh my God! Did that ring a huge bell in my head? Situations like this occurred with uncanny regularity throughout my entire career, no matter who the boss was. We could be in the meeting with some bankers, for example, pitching the expansion of credit lines, and I would show a chart explaining how the company has been adding $40 million to its volume annually for the past five years. Afterwards, the boss would ask me, if those numbers were true. Are you fucking kidding me? You've only seen the chart like a million times.

And then there are endlessly repetitive requests: Could you send me that report for May (just sent it two days ago, but he doesn't recall)? What was the bottom line in that forecast you compiled (what did you do with your copy of it)? Let's finalize that new venture prospectus, okay ("we" did day before yesterday – it's on your desk)? And so on and so forth.

Sometimes it seems that the stress of running their own businesses causes these people to experience some form of amnesia or the early onset of Alzheimer's. But that's not it, because their brains appear to be functioning just fine otherwise. The fact that this memory issue is such a frequent occurrence among the entrepreneurs of various cultural and social backgrounds, operating in different industries, seems to indicate a psychological rather than physiological phenomenon.

It's my opinion that, when it comes to the retention of any type of information, these people have a luxury of allowing their brains to be extremely selective. It's not like they make a deliberately verbalized decision, "I choose not to remember this." But somewhere, deep in their subconsciousness, the opportunity to rely on various subordinates as human data-banks renders the memorization of routine data redundant. It doesn't matter to them that this makes them look somewhat slow. The value of your time wasted on verbally repeating and emailing the same things over and over again matters even less.

It's possible that the general improvement of memory functions attributed to Ginkgo can lower this mental resistance to absorbing information. It may force certain tidbits to stick inside automatically. Hey, if you are desperate enough, why not try it? Just put it on his desk when nobody is looking and see what happens.

Share this:

Share this:

Share this:

Share this:

Share this: