controller – Page 2 – The Frustrated CFO

Priorities and Attitudes

I’ve been predominantly focusing on specific issues and situations lately, thus ignoring the general topics of behavioral patterns in work environment. So, today I would like to discuss how people’s priorities affect their attitudes and how important it is to recognize that connection not only in yourself, but in people around you as well.

Depending on circumstances, we switch from one mode of operation to another and focus on different priorities. This affects our behavioral patterns, our attitudes towards the tasks at hand and people around us. For most of us, it is difficult to dissect and analyze our own motivations and actions. However, to succeed in business and in life we need not only understand ourselves, but go further and develop an ability to recognize the behavioral patterns in others as well.

The good news is that we can apply a certain level of standardization to the seemingly limitless array of human demeanor. Let’s look at some of the most common priority/attitude correlations.

Remember my post about Economic Triangles? What happens if the highest priority is speed – to get a task accomplished in the shortest possible time? Frequently that pushes the quality of the result to much lower level on the priority ladder. At the same time, for someone like me, for example, it is highly important that no half-baked crap leaves my desk. It is most likely that while trying to balance speed and quality I will display signs of agitation and frustration. And so will anybody else in this position.

Here is another one. Sometime ago you gave one of your employees a complicated assignment. It’s not just complex, but it’s a crucial piece in your decision-making process concerning viability of a new line of business. Now, he stands at your door shining like a well-kept copper kettle. You are busy (when we are not busy?) – you raise your head and snap, “If you have something, send me an email.” What was the guy’s priority? Economy of time? No, it was the desire to show you his accomplishment and be rewarded by your recognition of his success. Next time you pass him you see him slacked back in his chair sourly moving his mouse. Whose fault is that?

So, next time a perfectionist under your supervision starts acting like an irritable child, ask yourself whether there is a conflict between the quality requirements and the deadline imposed on him. And if an enthusiastic and talented person starts displaying passive-aggressive symptoms, see if you can give him a mid-term performance evaluation and express your appreciation.

Over the years of self-training and experience, I have become an expert in prioritization and optimization of my personal standards against requirements of the moment. It takes years of conscious efforts to develop these abilities. People around us, including our subordinates, peers and bosses don’t necessarily possess them. Understanding the conflict of priorities that dictates their attitudes gives us an undeniable professional edge.

2013 Audit Season: Joke #4

I remember a few years ago, during a business lunch, somebody was recapping an episode from one of the numerous crime series all networks are running to compete against each other. My head was preoccupied with the business purpose of the meeting, nevertheless I do recall that the murder plot turned on a discovery that one of the characters, a compulsive gambler, bet his classy wife's sexual favors in poker and lost. FBI questioned if the payoff actually took place. Of course, it did: the real gamblers are "men of honor." When asked how the pimped out wife handled it, the winner said, "She was willing, but not happy." I bet this is the best line the screenwriter who churns out this pedestrian crap has ever written!

Willing, but not happy… The state of mind applicable to so many situations. This is exactly how all corporate accountants feel about financial audits, lenders' exams, investors' due diligence, etc. Commercial and fiscal needs of our employers throw us at mercy of the outsiders: we are forced to carve out time from our main responsibilities and open ourselves up to various poking, probing, and testing. Oh, we totally understand the importance and the unavoidable necessity of it. Frequently, it's our own search for new financing resources that culminates in these proceedings. Yes, we are totally willing, but we are not happy to go through with it.

I devoted two whole chapters (29 and 30) of CFO Techniques to advising readers on how to deal with auditors, keep yourself focused on the ultimate benefits for the company, and minimize the pains of distraction and intrusion. It helps to remind yourself that your company needs it more than the one that sends people to conduct the examinations.

And I have to say, most of these specialists of prodding are well aware of the invasive nature of their jobs. They understand that a financial executive abides by their standards and accommodates all their requirements, because he wants good results, and that this puts a CFO or a Controller into a subservient position. Many auditors are very apologetic for the endless interruptions, inquiries, requests, follow-ups, etc.

Of course, there are always exceptions…

For the CFO with exposure to international measurement systems from this season's joke #2, the last stage of the bank's field exam included physical inventory counts at three locations specifically selected by the bank. This is habitually done by auditors and examiners in order to (a) establish the presence of various inventories and (b) verify the accuracy of the subject's records. Obviously, nobody at the audited company has any impact on the choices of locations, timing, or people sent to perform the task. In fact, the CFO, who every year faces a financial audit and three bank exams, never knows who the hell the counters (usually junior auditors) are.

This time was bound to be different. One of the locations the bank selected was the company's storage in Savannah, GA. A day before the scheduled visit the CFO gets a phone call. An agitated young man in the receiver tells her that he is from the bank's Jacksonville office and that, according to Google Maps, the drive is 2 hours and 40 minutes each way. "And it's Friday! This is outrageous," he says.

The CFO was perplexed: anyone who had dealt with these matters even for one month would know that she had nothing to do with the rookie's plight; that, if it was up to her, she would much rather avoid the scrutiny. Considering her executive position and professional status, she could've just hung up on this wimp. But she is the one with a sense of humor, remember? So, she asked the boy, "Well, what would you like me to do? Move the inventory to Jacksonville, or cancel your visit?"

"Could you, please, cancel it?" was a hopeful answer.

Job Search: Unemployment & Depression

At the end of February, The Ladders featured Debra Donston-Miller's article Depression is Making Unemployment Longer, which reiterated the well-known fact that unemployment walks hand in hand with depression and anxiety, and that, in turn, diminishes your ability to get employed.

It's a vicious circle, you know. A person looses his job – that's on its own is a hard blow to his ego. Nevertheless, he gets right on all job boards – Monster, CareerBuilder, etc. – posts his resume and applies to every single opening that matches his qualifications. As time goes by, he keeps lowering his expectations – now applications go out to jobs with smaller titles and lower salaries. Still, the response is not too hot.

Nowadays, the statistical probability of converting applications into a recruiter's or hiring manager's interest is around 2% for high-level financial professionals – CFOs, Controllers, Financial Directors, etc. The national numbers of people not being able to find employment in one, sometimes two, and more years are scary.

While you are waiting for the sparks in the dark, your spirits get lower and lower. You become listless, loose interest in everything – depression really kicks in. The anxiety of not being able to support yourself when the savings and unemployment compensation run out gets overwhelming. You swing between over-hype of appraising your possession for possible liquidation and inability to move a muscle.

Still, you force yourself to apply every day, you do your networking, ask people around. Finally, quantity turns into quality: you've sent out 100 resumes and someone finally called you. You've had a positive response after the phone interview and now you are going for a face-to-face appointment. Anxiety floods you – the workspace environment, which you have not experienced for several months, seems so alien to you.

You are prepared, though – you are a seasoned executive with superior qualifications, a likable person, well-spoken, know how to handle yourself. The interview seems to go well, but there are so many candidates, and you might have said something wrong just because the depression and anxiety ate some of your confidence away. Every day you wait for a call back, but nobody ever does; nobody even sends an email to let you know that you did not qualify – people don't do those sort of polite things anymore.

Now, you are loosing hope altogether: it is more and more difficult to make yourself even to look at the job listings. It seems like staring at the television screen all day without seeing what's on is a better option…

You know what? I am not going to tell you that it will get better. I am not a fortune teller. I don't know it, but neither do you. Yes, it's fucking tough out there! As I always say, we live in a new economic reality. The truth is that you may need to rethink your entire life. But you cannot let the depression eating away your time. FIGHT IT! Do you know what happens with every single day you waste on giving in to nothingness? It disappears and you will never get it back.

The Ladders' article quoted cognitive behavioral psychologist Deb Brown, who suggests creating a routine for yourself as one of the helpful tools. My readers know how big I am on time-management and routines. Whether you are fighting the unemployment depression or job frustration, scheduling your time and filling your day with meaningful tasks always helps. And when you are unemployed, you have an opportunity to do things that you never had time for before: study Spanish with that Rosetta Stone pack you've got for your birthday two years ago; transfer all those home videos onto DVDs, get yourself fit.

You don't really need more than two-three hours a day to look for new openings and apply. Spend the rest of your free time (FREE TIME – when do we have it otherwise?) catching up on your life. And don't be a prisoner of your schedule either – let go of it for a day, when you feel frustrated.

And listen, even if things with employment never get better and some drastic decisions will need to be made, at least you will not need to look back at the long stretch of a complete misery right before that.

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.

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

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