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| Volume 7, Issue 7
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In This Issue:
 The essential skills [to be a CFO]
Working capital: Fourth and goal
 Iacocca may have found the leader
Top 10 enterprise risks
Less is more
 Risky business
U.S. 'earnings smoothing' under fire
No sex in health insurance
Most affordable places to live well
 The persistent credit crunch
Becoming the boss
What executives want now
Wage wars [overtime]
Is your Blackberry lowering your IQ?
 Your personal best: A magical team building activity
Have you had a nightmare interview?
 7 lessons from a bad manager
Effectively manage absenteeism
Public speaking panic
 The human trade
Staying power
 A tech chief reviews the Apple iPhone: My first 90 days
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The essential skills [to be a CFO]
To ascend to (and remain in) the CFO's office, you need much more than financial acumen.
No one becomes a CFO without possessing the commensurate finance skills. No one thrives as a CFO, however, without having much more. As Scott Simmons, vice president of Crist Associates, a Chicago-based recruiter, puts it: "No company wants
just a really good finance person anymore; they want someone who can go beyond that." But exactly what are those other essential skills? What capabilities, talents, and expertise should be in a CFO's toolbox no matter what industry or
company he works for or challenges she may face? To hear CFOs tell it, "toolbox" may be the wrong metaphor: magician's bag of tricks is more like it. There's nothing easy about mastering the soft skills they say are essential, and which seem to boil
down to clairvoyance, X-ray vision, and the ability to bend time. Ultimately, however, there is a common theme...
Read the article. Back to top
Working capital: Fourth and goal
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To buff up their fourth-quarter numbers, companies often play games with working capital. Unfortunately, the shine doesn't last, according to REL's Year-End Gamesmanship Scorecard.
Read the complete results of the 2007 Year-End Gamesmanship Scorecard, or review just those results that appeared in print in CFO magazine. Let the games begin. The working capital games, that is. Right now, companies all over America, in every
industry, are beginning a dash for cash. If past is prologue, many companies will go to great lengths to slash their working capital in the fourth quarter. The goal: to paint a beautiful picture of their cash flows by December 31 — one suitable for
framing in the annual report. To that end, companies will grant extremely favorable terms to customers, and make liberal use of discounts and rebates. They will step up their collection efforts, even as they hold back on paying their vendors. They will
push inventory orders back on suppliers. They will do everything they can, in short, to free up cash from receivables, payables, and inventory, the components of working
capital. But after the dash for cash is over, working capital will return, and with a vengeance...
Read the article. Back to top
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Iacocca may have found the leader
Former Chrysler chief Lee Iacocca, who wrote “Where have all the leaders gone?” in April, seems to have found one, finally. Chiefexecutive.net explores his blog.
“I spent a lot of years as a CEO and I am looking for a president with experience creating jobs and the guts to lead,” says former Chrysler chief Lee Iacocca in an Online advertisement paid for by the “Bill Richardson for president” campaign.
In his blog last Thursday titled “Bill Richardson is my guy” Iacocca seems to have finally found an answer to “Where have all the leaders gone?” a book he wrote that was published in April this year.
Incidentally, Iacocca’s clarion call for a leader with clean and bold plans was echoed by 258 C-level executives, earlier in August, when Chief Executive ran a survey asking corporate head honchos to “vote for each party’s presidential
candidates regardless of their affiliation” (see: “CEOs Pick Their Best and Worst Presidential Candidates for Business” dated 8/24/2007). These executives, according to Edward M. Kopko, CEO of Chief Executive Group “are looking for...
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Top 10 enterprise risks
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Managing business risk has always been a strategic imperative, but perhaps never more so than today.
Explosive global expansion, ever-more-onerous regulatory oversight and an environment of rapid change have spurred a growing awareness about the importance of understanding—and preparing for—potential threats to an organization’s competitive
position. For many companies, identifying and mitigating enterprise risk is a critical element of managerial strategy. At Procter & Gamble, for example, responsibility for management of strategic risks has been shifting to the company’s
global leadership council, CEO A.G. Lafley’s leadership team. Those top execs then work with a sub-team of professional risk managers to mitigate risks. What’s more, one of the six board meetings the consumer product behemoth holds each year focuses
entirely on risk management. “The buck stops with me and, in the end, with our board of directors,” Lafley told CEOs gathered for a roundtable discussion cosponsored by Ernst & Young and Chief Executive Magazine. “So we focus on strategy—and leadership
development, management succession and risk management are three things we try to do at the board level.” The growing emphasis on risk management in the upper echelons of corporations is due in part to the power that the Internet has bestowed upon the
average citizen. Disgruntled customers flame companies for disappointing service; amateur comics record elaborately staged prank requests to call centers and post them online. In short, a single misstep can result in an Internet missive that
spreads across the globe. “Between blogs and YouTube, we live in an environment where the perception of your company can change radically in five minutes, whether it’s because of a product failure or other event,” said Howard Brodsky, CEO of CCA
Global Partners, who agreed that managing a company’s reputation—and therefore all the risks that affect it—ultimately falls to the CEO. CEOs are not alone in giving
greater weight to potential crises...
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Less is more
When it comes to CEO severance more companies are rethinking first principles.
There are few subjects as toxic as CEO severance, especially when it comes to so-called “pay for failure” as when a CEO is politely shown the door when performance has been lackluster. Every so often another outrage du jour inflames
critics who fulminate about CEO compensation that is said to be out of control. The most celebrated cases were Michael Ovitz’ disastrous 14 month tenure as CEO of Disney where he walked away with a total payout of $140 million. When Hank McKinnell
was forced out at Pfizer after five years and a continuous slide in the share price he walked away with...
Read the article. Back to top
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Risky business
Only six non-financial firms now have an AAA credit rating from Standard & Poor's. Does it matter?
Six. That's how many non-financial firms in the U.S. Standard & Poor's now lists with their top-credit rating, AAA. Even at this time of vapid risk management, it seems incredible. Fifteen years ago, 25 firms rated AAA standing. But in a globally
competitive world awash with liquidity, where companies manage balance sheets primarily to boost shareholder
return and hedge funds hunger for risk above all else, AAA seems quaint. Piling on cheap debt and stock buybacks, which undermine creditworthiness, are the norm. Of
the six AAA-rated companies, only one is debt free. More than 50% of industrial firms are now...
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U.S. 'earnings smoothing' under fire
The Treasury Department on Oct. 19 chose University of Kansas professor Susan Scholz to probe the reasons behind public company financial restatements and their consequences. The U.S. regulatory model for accounting is heavily rules-based.
While this structure would seem to imply consistent approaches to, and presentation of, accounting results, this has not been the case. The current framework allows companies to follow the letter of the detailed prescriptive rules set forth in U.S.
Generally Accepted Accounting Principles (U.S. GAAP), while arguably violating their spirit. This has led to accounting practices designed to produce "earnings smoothing," which has proven stubbornly resistant to regulatory enforcement. The
discrepancy between accounting rules and corporate practices has led to earnings manipulation--which creates nasty surprises for investors during challenging economic times: --Understated subprime damage? Financial services firms and other
companies with direct or indirect exposure to the subprime credit crisis have posted...
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No sex in health insurance
With all the talk about health insurance in the news these days, most of it having to do with the 40 million or so people who have no health insurance
whatsoever, I know that the subject of the paucity of health insurance policies that cover sex therapy is not high on most people's radar. But it should be.
To many people, sex is considered a frill, something that is enjoyable to engage in, but certainly not necessary. Just look at all the fuss that was made about the issue of health insurance covering Viagra. While I can't compare maintaining sexual
functioning to keeping people free of cancer or removing a bursting appendix, this is an area that shouldn't be considered expendable either, especially to businesses...
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Most affordable places to live well
Triple-digit monthly parking fees, $12 movie tickets, clogged intersections and weekly grocery bills that rival some mortgage payments.
Welcome to life in the Big Apple. And Los Angeles. And Chicago. Of course, residents in these cities also get access to world-renowned museums, seats at the games of the winningest sports teams, well-kept parks and cutting-edge restaurants. But, it's
possible to enjoy such amenities without the hassles. Step one? Look for more affordable spots that offer a similar or better quality of life, and where the dollar goes far. First among them...
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The persistent credit crunch
Months after the market began feeling the ill effects of subprime "garbage loans," things still look terrible. Is there light at the end of the tunnel?
Call it a relapse, or maybe the troubled credit markets never really recovered from their summertime crunch. In any case, three months after a financial crisis spooked fixed-income investors, the debt markets are back in critical condition. Investors
still won't touch risky debt with a 10-foot pole. They're so scared they've shifted huge amounts of money into ultrasafe U.S. Treasuries, sending the yields on government debt back to low levels not seen since September. Treasury Yields Bottom
Out Bad news from Merrill Lynch (MER) and Citigroup (C) on Nov. 5 heightened the fear factor. "There is still a real discomfort in the credit markets that the subprime problems have not yet become evident," says Ward McCarthy of Stone &
McCarthy Research. The worry remains that...
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Becoming the boss
You're a new manager. Will you survive this rite of passage?
The Idea in Brief
Ask new managers about their early days as bosses, and you'll hear tales of disorientation, even despair. As Hill points out, most novice bosses don't realize how sharply management differs from individual work. Hampered by misconceptions,
they fail the trials involved in this rite of passage. And when they stumble, they jeopardize their careers and inflict staggering costs on their organizations. How to
avoid this scenario? Beware of common misconceptions about management: For example...
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What executives want now
Today's sought-after leaders are asking for more work/life balance and want, among other things, to protect themselves against real estate losses.
The business of executive headhunting is growing increasingly complicated. The issues that motivate today's top management talent to pursue new career opportunities have themselves grown more complex, in large part because of leaders'
desire for more work/life balance and/or the need to protect their assets. Many headhunters say search assignments used to be considerably easier to orchestrate when more management-level career climbers were willing to commit—with little or no
hesitation—to do whatever it might take to succeed in a new job if it promised big career opportunity. But executive recruiters now see a significant shift in how
talented business managers qualify and assess new career opportunities. Indeed, there is now a myriad of personal issues that they and client hiring organizations need to explore as they court so-called A players...
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Wage wars [overtime]
Workers—from truck drivers to stockbrokers—are winning huge overtime lawsuits.
There's a place in Reno, Nev., that practically mints money. It's not one of the many casinos in town. Nor is it one of the legal brothels that operate in the area. It is a law firm, located in a wing of a private home nestled in the foothills of the Sierra Nevadas.
From a utilitarian office, with a view of horses grazing in a neighbor's paddock across the road, attorney Mark R. Thierman pursues a practice that in recent years has won his clients hundreds of millions of dollars from some of the biggest names in Corporate America—and
produced tens of millions for himself. A Harvard Law School grad, Thierman, 56, spent the first 20 years of his career as a management-side labor attorney and self-described union buster. He has been pelted with eggs by construction workers and his tires have been
slashed by longshoremen. But in the mid-1990s he brought a series of cases on behalf of workers in California and established himself as a trailblazer in what had long been a sleepy, neglected area of the law...
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Is your Blackberry lowering your IQ?
Researchers have found that communication overload causes a professional's IQ to drop 10 percentage points. Think about that before you bombard the staff with e-mail
An on-again, off-again player, I attended my first tennis clinic of the summer this last weekend. I was taken aback by the BlackBerry addled behavior which newly seems de rigeur courtside. Between each drill at least two of the five participating players would scurry
off to sidelines, rummage in a sports bag, pull out a BlackBerry and check their email. In 50% of cases this was then followed by a furtive phone call. The tennis pro rolled his eyes and muttered under his breath but seemed to have learnt to tolerate these goings-on. Along
with tennis whites telephone etiquette seems to have gone out the window. So what's the deal here? Have the demands of our professional lives become...
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Your personal best: A magical team building activity
Picture this. I'd been asked to lead the final team building activity of the day before drinks and dinner. The audience will have been in meetings since eight in the morning. The
attendees would be police officers who are experts at making what they call "cop faces," expressionless features that don't provide much information or feedback for the facilitator.
I had to come up with a prize winning team building activity. I think I did; if it worked with them - and it did - it will work with your teams, too. Take a look at the new team
building activity: Your Personal Best: A Magical Team Building Activity. It's magical because it was a huge success with a tough-to-please and involved audience...
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Have you had a nightmare interview?
Looking for a little inspiration on a rainy fall day, I visited Alison Doyle's job searching site to see what she was talking about.
I found interviewing the topic of her day as well as interviews over lunches, a favorite way of mine to get to know a candidate in a more relaxed setting. So, I'll tell you a story about the last time I took a
candidate to lunch for a client company. She had applied for a sales position and I genuinely liked her and found her qualified for the role. Her potential manager had some concerns about her sales abilities but was comfortable with her experience in business
development. But, the sales role would have taken her on the road with clients quite a bit, so I thought a lunch meeting was in order. Midway through our lunch...
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7 Lessons from a bad manager
Many people work for bosses who are horrible at what they do.
It is an enviable situation that is fairly common. When circumstances such as these arise, most dwell negatively on the situation while complaining about how terrible their plight is. Naturally, this does not yield productive results. Nonetheless, the individual seems to
take solace in the whining. A much better approach when confronted with this scenario is to attempt to learn all you can from the situation. The changing of jobs is so common in this era that 5 years is considered long term tenure. People facing this dilemma often only need to deal with it for a short period of time. Typically, either the manager or the employee
move on within a reasonable time frame. If an individual tries to gain all the knowledge possible from that person, he/she skills will grow. I encountered a working relationship similar to what others experience...
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Effectively manage absenteeism
What's a manager to do when cubicles remain empty?
According to the most recent CCH Unscheduled Absence Survey, employers are losing ground when it comes to keeping workers on the job. Unscheduled absenteeism is on the rise and rates of absenteeism are at their highest level since 1999. And what continues to be of
most concern is that almost two out of three employees who don't show up aren't physically ill at all. The responsibility of addressing absences in most companies has fallen primarily on immediate supervisors. These supervisors are often the only people aware that
a certain employee is absent and are in the best position to understand the circumstances surrounding that absence. Their active involvement in the company's procedures is pivotal
to the overall effectiveness and future success of an absence program. But sadly, most supervisors...
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Public speaking panic
Public speaking ability isn't a talent reserved for politicians and telemarketers—corporate trainers find it useful, too. Here, seven steps to steady your shaking voice and spice up your monotone delivery.
Just because you love education, and the intersection between learning and corporate profit, doesn’t mean people are lining up to hear you speak. As acute as your understanding
of the human brain is—what with your psychology and higher education degrees—getting your own fears of public speaking under control can be daunting. Some tips:...
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The human trade
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When Paul J. Reilly, SVP and CFO of Arrow Electronics Inc., looks back at a long career in finance, his thoughts turn to a big decision at the end of his high school days.
"My friend's father was a finance guy at a big insurance company, and when I asked for career advice going into college, his recommendation was that accounting serves as the foundation for understanding a business," he recalls. "He strongly suggested
that I go into an accounting program in college." Reilly took that advice and never looked back. After a stint as a CPA in KPMG Peat Marwick's business assurance practice, he joined Arrow as director of reporting in 1991. The Melville, N.Y.-based
company, which provides products and services to industrial and commercial users of electronic components and computer products, was a much smaller operation back then than the $13.6 billion behemoth it is today. But Reilly liked what he saw. "I came
to Arrow because you had the opportunity to participate on the business side as well as the financial side," he says. "Also, we had a terrific leader at the time; our CEO, Steve Kaufman, interacted with people of all levels and in fact saw himself as
a teacher. To me, that's a very important part of our legacy in business. What we accomplish, obviously, is important, but what we leave behind -- the people we develop, the people we train, the people we're mentoring -- really are our legacy as
we move forward." Reilly's eyes are more and more on that legacy these days...
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Staying power
Unlike many U.S.-based manufacturers that have become displaced by offshore competitors, Emerson Electric, the $22 billion, St Louis-based electronics and
components manufacturer, continues to outperform a long list of competitors. How does Emerson continue to thrive, when so many of its competitors have faltered?
In this issue, Steve Player talks to Emerson's CFO Walt Galvin and Vice President and Controller Bruce Eckhardt about the financial inner workings that have helped Emerson to continue to compete and succeed as a global manufacturer. Like the
products they produce, Galvin and Eckhardt help to steer Emerson to consistent profits and growing cash flows.
Steve Player: Let's talk a little bit about Emerson's planning system -- it's been written up in Harvard Business Review, and we've certainly studied it from Beyond Budgeting and have developed a detailed case study. The BBRT uses it as an
example of a company doing budgeting in the traditional sense and doing it well; Emerson is the model to follow.
Walt Galvin: Well, our system is fairly traditional. We use it as a regular tool in managing. We do update our expected results every...
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A tech chief reviews the Apple iPhone: My first 90 days
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Hugh Scott, a VP of IS for Direct Energy, tells how this year's mega-gadget fits into his personal life, and why it doesn't fit into his work life.
Hugh Scott loves his Apple iPhone. And Scott, VP of IS for the wholesale business unit of Direct Energy, a retail energy provider with annual revenue of $8 billion, knows mobile devices: His IT staff of 60 supports some 500 smart phones. But even
Scott, who seven months ago called himself a "dyed in the wool BlackBerry user," doesn't pretend the iPhone is perfect, especially for business users. Scott spoke with CIO's Al Sacco about why he rushed out to buy an iPhone, what the device's best
and worst features are, and why Direct Energy doesn't plan to support it. I suffer from gadget envy. And the gadgets I like best are the ones that nobody else has yet. So when I heard about the Apple iPhone, I decided immediately to get one. First of
all, the thing is just so cool. I have to confess, I was an Apple fan long before the iPhone rumors began to circulate. I own three iMacs and three iPods. I love their intuitive user interfaces, and I love the way they look, from the flat, swivel
screen iMac in my home office to the pulsing heartbeat on my wife's iBook that sits on our kitchen table. Right off the bat, a few factors made me think I should wait on purchasing the iPhone: It's not a third generation (3G) device, the camera is
only 2 megapixels and Apple would inevitably lower the price before the holidays--but as soon as I saw my first iPhone in "the wild," I ran out and bought the 8GB version. (Why would I want to have anything less?) It was July 2, less than
a week after Apple released the device in the United States. Like everyone else who eagerly awaited the iPhone's release, I had high expectations. Did the device live up to those expectations?...
Read the article. Back to top
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