Tag: controller

CFO Folklore: Frustrating and Demeaning Mistrust


The “Hands-Off Micromanagement” style  so prominent in many business owners— and defined in my September 21, 2010 post —has a lot of implications in daily lives of CFO’s and Controllers.  One of the most frustrating facets has to do with petty mistrust. 

I’ve got volumes of stories illustrating this particular trait of a CFO vs Owner relationship.  Here is a compiled rendition of a rather frequently recurring Tale of Mistrust from the CFO Folklore.

AlphaOmega Inc. is a treasury-intense company and its CFO devotes big chunk of his time managing it.  He personally decides on daily basis whether the company needs to borrow to cover operational deficit or invest the excess of available funds.  He is singly responsible for signing financial instruments, including multimillion-dollar letters of credits and commercial loans paid directly to suppliers.  He electronically hedges foreign currencies, sometimes  as much as $1 million per transaction.  His discounting customers’ trade documents  on London Forfeiting Market frequently reaches $20 million per tranche.

Carrying all these monetary responsibilities makes him especially meticulous about the separation of duties and internal controls.  None of the transactions he personally conducts are recorded by him.  He deliberately never cuts any checks.  He has a designated treasury operator setting up all the wire transfers.  The companies books and records are regularly audited by lenders.  And his quarterly and annual accounting audits are always clean and produce unqualified opinions.

And yet…  he has no authority to sign a $1 check or execute a $10 wire transfer release.  Only the Boss can do that. 

And this Boss is not available for you whenever you need him: the business frequently takes him abroad; May through September he is in his summer house; he has to spend holidays with his kids; and he has a girlfriend (you know, afternoon delight and all that). 

Moreover, he hates signing checks and keeps ignoring that thick folder the AP manager put into his in-box two days ago.  And every time the CFO sends a “pleeeease-release-wires” email, the Boss acts like he is asked to grant a personal favor.  And it is the CFO who has to deal with the frustration of vendors and suppliers waiting for their payments. 

The situation drives him crazy and causes perpetual frustration and anxiety.  Swallowing his pride and ignoring the insulting pettiness of such mistrust, the CFO addressed the issue many times, sticking strictly to the damage the situation causes the business.  He explained on numerous occasions that the way his internal controls are set up, it would require his entire stuff to be part of a scheme to steal even a dollar from the company.  He also explained that their treasury systems allow to set up limits of execution authority and that the Boss shouldn’t be bothered with $2,000 wire transfers.  

All falls on deaf ears.   So, the poor CFO still chases his boss somewhere in Hong Kong, begging him to release today’s wires before the banks’ cutoff time of 5 pm EST, which is 6 AM tomorrow over there.


You Are Responsible for Your Own Emotional Control


There are two main reasons for my putting so much emphasis on the management of frustration and stress.  First of all, I consider this skill to be one of CFOs and Controllers' prerequisites for efficient functionality: if you don't get a grip on your own emotions you cannot manage the multitude of your tasks at the level that will satisfy your own high standards.  Secondly, this may be the only responsibility that you cannot delegate.  Whatever method of self-control and frustration release you use, you are the only one who can recognize the symptoms and initiate the process.

And in that respect I am in agreement with the recent article on AOL Health by Stephanie Twelto Jacob with a terribly corny title Happiness Roadblocks and a lot of new-age-y formulas that a sensible reader will be able to weed out easily.  I mean, even if you take Aristotle's thought about path to happiness as your initial thesis, it doesn't mean that you should tailor your entire article to fit the narrow interpretation of its language.

Shortcomings aside, I found four sensible points in this article that match my own concept of psychological self-management and fit perfectly into this blog's discussions of work-related frustration and anxiety.  Here are my interpretations:

1.  Choosing to expect the worst at all times in order to avoid disappointments (the policy I've been employing for years myself – guilty as charged) creates not only psychological, but also, through stress-related chemical reactions, physical effects on us.  Plainly speaking, it keeps our bodies in a constant adrenaline overdrive.

2.  I hear my colleagues talking all the time about someone else working at half the effort for twice as much money, having expense accounts, better insurances, larger bonuses, etc, etc.  Comparing your difficult life to somebody's supposed perfect existence creates unnecessary additional frustration.  Don't contrast and compare.  Most likely these people's lives are not as rosy as you perceive it.  Trust me – life is a difficult exercise for everybody.  More importantly, spending your emotional energy on this imaginary competition is a waste of your own valuable resources.

3.  Accepting the unfairness of life is the best defensive mechanism available to us. When things are not based on equality and justice it does not necessarily mean that you always loose.  My intended audience is supposed to consist of educated people in senior management and executive positions.  In comparison to people with the same intellectual capacity who were not able to go to college and graduate schools and be eligible to work in free-market society, we are not doing that bad even if we didn't have connections or luck to become multi-millionaires.

4.  Stop looking for substitution of contentment.  It is not your boss's, your subordinates', your spouse's, your kid's or your new purchase's job to make you feel better about yourselves.  Nobody but yourself truly knows who you are and what your value is.  It is you who possess that intelligence, that expertise, that volume of knowledge and you know your worthiness.  Be proud of your own achievements.      

Valuable Advice by HR Capitalist


I highly recommend this yesterday's post from HR Capitalist.  His behavioral insights are applicable to everyone in a senior management position, including all CFOs, Controllers and other financial professionals.

Leadership Means You Cut Out the Negative Body Language… 

The Importance of Prioritization for CFOs & Controllers


My very first post CFO's and Controllers' Many Hats  addressed (in two parts, as the matter of fact) the inescapable issue of overwhelming span of functional control tackled by all financial execs.  The issue has been described as a major source of both frustration and pride.

Well, whether you are proud or not of being a natural choice for a million of high-level responsibilities, keeping all balls in the air is a managerial skill mandatory not only for your professional success, but for taming the frustration as well. 

Both mathematical rules of optimization and circus performances teach us that there is a limit to the number of items you can juggle at the same time without dropping them.  This is why Prioritization and Delegation are two most important organizational tools for a Controller or CFO. 

Let me share with you my own Top Three Rules for each of these tools.

Prioritization:

Rule #1.  Assign priority scores to each task.  Let's say, 1 to 10 with one being the lowest.  The highest priority on your list should always be given to the task that in a long run will benefit the bottom line the most.  For example, writing an angry answer to your boss's email asking whether you are busy right now has lower priority (I would say, 2) than looking at your cash position and deciding whether you need to use your credit line or cash availability to finance today's operational expenses (definitely a 10).

Rule #2.  As much as you can, try to block certain time periods with periodic tasks of high priority in advance.  There are such things as SEC reports, monthly budgets, weekly cash flow projections, etc. etc. that occur periodically.  Prevent yourself from cramming at the last moment by assigning priority scores and scheduling these tasks ahead of time.

Rule #3.  If you work in a privately held business (and most small and mid-size companies are) and report directly to the Owner/President/CEO, be ready to push his/hers priority higher up on your list.  I know it sounds almost psychotic, but being flexible when it comes to your boss's requests sometimes can save you the boatload of frustration.  However,  it does not mean that you have to drop everything and attend to his needs.  Many people make that mistake.  Instead, you need to provide him with reasonable time frame and explain why the task at hand is more important for HIS BUSINESS.  I will get back to the issue of flexibility in scheduling discussion.

Delegation:

 Rule #1.  Don't be afraid to delegate important functions to capable subordinates because you are afraid that they will undercut you.  First of all, if you are a good match for your position and do your job to the best of your abilities,  you should be confident.  Secondly, by overwhelming yourself with extra tasks you diminish your own efficiency and undermine yourself.

Rule #2.  NEVER do your subordinate's job because you believe that you can do it faster and better.  This is a bad mistake many of us make.  When we do that, we damage ourselves in two ways: by wasting our own valuable time and by not letting our subordinates to improve and develop.

Rule #3.  Always make time for training and advancement of your subordinates.  By building strong and reliable accounting/finance staff you better your own chances for success .  

Honestly, it took me a while to develop and even longer to start implementing these rules, but I can vouch for their effectiveness. 




Further Scientific Evidence of the Entrepreneurial Bug


Over a month ago, in my post Your Boss: Value & Madness of an Entrepreneur I wrote about quirkiness and impatience of people who have brilliance to come up with original start-up ideas and guts to build a company from scratch – people who provide us, CFO's and Controllers, with new job opportunities beyond "Big Business." 

I also discussed how their peculiar and difficult qualities are the main source of our frustrations.  I called the sum of these character traits the Entrepreneurial Bug.

As if to support my point of view, September 18th issue of New York Times featured this article in their Business Day section – Just Manic Enough: Seeking Perfect Entrepreneurs by David Segal.  I highly recommend that everyone interested in the subject of entrepreneurship, start-ups and venture capital investment should read it. 

Of course, my own primary interest was the excursion into psychology of the indicators so characteristic of our bosses difficult behavior.  Needless to say, the article confirms that not every subject is afflicted with the entire spectrum of symptoms and displays them with the same intensity.  Nevertheless, the author clearly states that only "a thin line separates" an entrepreneur from a psychiatric candidate with a hypomanic syndrome.

One of the article's subjects, Seth Priebatsch, echoes my post from 08/19/2010, when he "describes anything that distracts him… even for minutes, as 'evil.'"  No surprise here – I've heard this before many-many times from various CEO's.  The difficulties of working with people like that on daily basis, especially for CFO's and Controllers, whose job is to keep businesses in order and under control, is basically one of the main themes of this blog.

Mr. Segal goes out of his way explaining that the degree of craziness is what matters: some Venture Capital firms give personality tests to their prospects in order to determine if they are not completely bonkers.  But I couldn't help myself thinking that these tests may be also designed to weed out people who are not crazy enough to be satisfactory material for future transition from idea generators into screw tighteners.

Strangely enough, the New York Times' confirmation that my extrapolation of personal experience dealing with business owners to the rest of the entrepreneurial world is completely justified, did not bring any intellectual satisfaction.  It's kind of discouraging that if you choose to build your career in dynamic growing businesses, you will always have to deal with bosses who cannot help themselves not to be assholes.