Respect – Page 11 – The Frustrated CFO

The Frustrated CFO Is Looking for a Litigator to Defend an Employee – Part I

Let me say right away that it is impossible to even come up with a short definition for an attorney who would act on behalf of an employee. That is why I had to devise such an expository title for this post. But I am trying to help my fellow financial professional and a good friend MJ who has a very unique and quite a complicated case against her former employer. What happened to her is strikingly unfair (there are details below) and I figured I would try to put a word out there through my blog in hopes of may be receiving some legal referrals from my readers.

It appears that 99% of the lawyers listed as "labor litigators" work for the other side (the one with the deeper pockets), defending corporations against employees in court and advising them on preventative measures to make sure that they don't get sued in the first place. Of course, there are plenty of injury specialists ready to jump on a work-related-accident case and civil rights defenders on a lookout for sexual harassment claims. But apparently it is difficult to find somebody to stand on the side of an employee with a less obvious case.

I am pretty confident that MJ's case is one of a kind combination of various legal matters and an intelligent attorney may find it to be an interesting challenge. It would possibly require ten posts to cover all details, and I don't find it necessary or productive. Instead, I will try to stick to main facts only and present them in two consecutive installments.

The employer in question was a consumer debt management entity, which consisted of multiple collection agencies with a national law firm at the head of the structure. Two business partners helmed the operations – an attorney (senior partner at the law firm) and a shrewed businessman who handled all operational and commercial activities. Remarkably they have managed to ride the wave of debt securitization and succeeded, in spite of themselves, without any executive support - growing into an organization that employed over 500 people in 10 states, while all their accounting and financial functions were "handled" by an outside service of a one-person CPA firm!!!

By the end of 2007, though, the company started experiencing difficulties. In the absence of budgets, cash flow projections, profitability analysis, and, more importantly, an insight of a seasoned expert, they couldn't even understand what was going wrong.

That was when MJ got hired as a Chief Financial Officer. Putting all the necessary functions and instruments in place, dissecting the business's performance and fixing incorrectly kept books, allowed her to discover the weakest links in their falling apart system. She suggested drastic restructuring, shut down the sectors that were bleeding money and got them out of disadvantageous financing relationships – in other words, saved their assess from going under several times over.

To be continued…

“The Social Network”: A Case of a Failed CFO

It's the Oscars week. You cannot escape the promotional hype unless you cut yourself off from all media.

The movie leading in the preliminary rounds (Golden Globes, various Guilds, etc.) is "The Social Network." It's not surprising – the popularity of this movie is rooted in public's preoccupation with sudden success and overnight rise to riches.

Well, the reason for me to write about this film is that I cannot miss the opportunity to discuss a character, who in 2004 thought of himself as a CFO of Facebook.

When Mark Zuckerberg appointed Eduardo Saverin to be his CFO, it was a logical step for the 20-year-old code-writing CEO. Saverin was a close friend; appeared to be versed in business matters; more importantly, he had personal funds, having just made $300K through savvy oil investments. Is this enough to make somebody an acting CFO? Of course, not. However, one could have learned how to be one. It was not the case here.

If nothing else, the movie provides vivid illustrations to what a real CFO should NEVER-EVER DO.

1. The first thing that Mr. Saverin did wrong was not taking his appointment seriously. He did not bother to define his role, his functions, his practical responsibilities. If you are not creating the product itself, you should be doing other things that make you irreplaceable.

2. When you accept CFO position, you become your CEO's partner. That means you develop common vision, you define company's mission. When it's finalized, you shove your disagreements aside and you do your best to facilitate the success on the chosen path.

3. You NEVER separate from the company. All experienced CFOs know that things can happen behind your back even if you seat in the next-door office. If you are on the opposite coast and out of touch, consider yourself out.

4. With startups, you should always try to utilize your company's growth potential to the fullest and then capitalize on it. If Mr. Saverin wasn't so arrogant and argumentative, he most likely would realize that online advertising brings real money only on a big scale. Hence the right strategy was to look for more investors for the company growing with an astronomical speed. Instead, he wasted his time setting up appointments with advertisers.

5. If you want to stay with the company, you shoud NEVER do anything to damage it out of spite: closing accounts, calling the cops – that's just wrong.

6. And you ALWAYS, not just read, but study every single legal document you sign.

Following the film's paradoxical leitmotif of an awkward kid creating the largest social network on this planet, the filmmakers suggest that Mark Zuckerberg pushed Mr. Saverin out of Facebook, because Eduardo got accepted into The Phoenix Club at Harvard.

"You may say that I'm a dreamer," but I want to believe that Mr. Zuckerberg and people around him realized they have no use for someone who couldn't contribute into the exploding enterprise's development. Just screaming all the time, "I'm the CFO," doesn't make you one.

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.

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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