Chief Financial Officer - CFO Brings Logic & Order to what would otherwise be Chaos

Chief Financial Officer - CFO

Brings Logic & Order

to what would otherwise be Chaos

Functional Evolution of Finance

Cash

Language of Finance

Business Analysis

Business Planning

Business Partner

The Role of Finance Company Variables

• Type and Size of Business

• Financial Health of Business

• Personalities and Backgrounds of Senior

Management and Directors

• Speed of Change

The Minimal Roles of Finance Demanded & Unavoidable

1st – Administration of Money for Company

2nd – Provide the Language of Finance as a Common Denominator

(Minimal Role of CFO)

The Larger Role of Finance

• Applying Financial Skills to the Broader Context of the Total Business…

Current & Future

as a

Business Partner to General Management

Mission of Finance

1. To Provide:

a. Value to Customers

b. Appropriate Return to Investors

c. Responsible Environment for Employees and

Communities

Bakane, CFO

Mission of Finance

2. Operate in Partnership across All Units and

Functions to Further Corporate Goals

3. Add Perspective and Match the

Organization’s Needs with Capital Sources

Evolution in CFO Requirements

Evolution in CFO Requirements

Accounting Details Specialists

Translator CFO of (not necessarily CPA’s)

Specialists (accounting)

for MBA’s(Senior Management)

Student

Start-Up

Multi-Billion $ Business

CFO Mgt. Principles are the Same!

• Old or New Economy

• Small or Large

• Domestic or Multinational

• Good or Bad Company

External Demands

Growing Amount of Required

Financial Reporting (Auditing)

By Government Agencies (IRS,

SEC)

and Investing Public (Analysts)

Strong Technical Knowledge

Need to Directly Control the Information Released

CEO’s Increasingly Turning to CFO’s to:

• Influence Decision Making

• Craft Internal and External Strategies

• Communicate to and Help Manage the Board

• Manage other Functions

CEO’s Increasingly Turning to CFO’s to:

• Help Manage Operating Companies

• Help Corporate Financial Literacy

• Add Economic Value

• Help Manage the CEO

CFO Company Variables

• Health of Company

• Personalities and Backgrounds

of Senior Executives & Directors

• Type and Complexity of Company

• Speed of Change

CFO’s Intimate Interactions

• Board of Directors

• Audit Committee

• Compensation Committee

• Executive Committee

Base Organization

C o rp o rateA u d it

C o rp o rateA cco u n tin g

M an agem en tR ep o rtin g

&B u sin ess A n alys is

In ves to rR elatio n s

Treasu rer

C F O

Expanded Organization

C o rp o rateA u d it

C o rp o rateA cco u n tin g

M an agem en tR ep o rtin g

&B u sin ess A n alys is

In ves to rR elatio n s

Treasu rer

C F O

SharedServices

ProcurementSCM

InformationTechnology

StrategicBusiness

Unit,CFO’s

StrategicPlanning

MergersAcquisitionsDivestitures

CEO

Audit Committee

CFO

COO

Board of Directors

OPCP - Presidents

Consultants

Corp. Staff

Analysts

Share Holders

Major Suppliers

Business Partners

Employees

Finance Employees

Civic Leaders

Admin.

CFO

Immense Time Consumption

Setting Strategies

• Corporate

• Financial

• Personnel

Tricon – CFO Strategies: Prioritize

1. Reduce Debt/Re-franchise

– Get to Investment Grade

2. Staff the H.Q.

3. G&A Reductions Shared Services

4. Standardize & Integrate Systems for Y2K

5. Create a System Wide Co-Op

Setting Financial Policies

• Internal Control

• Accounting Policies

• Measurement Standards/Benefits

Setting Financial Policies

• Financial Administration of Business

– Annual and Long Range Plans

– Evaluation of Major Expenditures

– Evaluation of Economic Trends

– Capital Structure

Setting Personnel Policies

• Hiring, Training, and Development of the

Finance Function

• Structure and Staffing

CFO’s People Focus

• Structure

• the “Best” Key Personnel

• Working Relationships

• Communications

• Operating Procedures

Corporate Skill Curve

Technical

Mgmt.

Leadership/PoliticalMgmt.

Small/Low

Size/Complexity of Firm

Large/High

Ski

ll R

equi

rem

ents

Functional Skill Curve

Entry

Middle

Sr. Mgmt.

TechnicalSkills

ManagerialSkills

Multiple Tasks

Political &Leadership

Skills

CFO Career Grid

Corporate

CostAcct.

Planning,Reporting,Investor

Relations

BusinessAnalysis,Treasury

StrategicPlanning

Acct.AuditTax

Entry

Manager

New Co.’sInternationalCrossfunctional

New Areas

CFO as a Business Partner

- Assistant General Manager

Ethics Leadership

• Honesty• Promise Keeping• Fairness• Respect for Others• Comparison

(Social Commitment)• Integrity

• Teamwork & Trust• Diversity• Recognition• Ethical Management

Practice• Communications• Empowerment

The CFO

CFO Dilemma(s)

• Conflict of Interests

• Credibility

• Integrity

Becoming the CFO

The Last Hurdle

To

CFO

Lessons Learned – C.F.O.

• Importance of Your Team

• Functional Confidant – OM, Kennedy; YUM, Knopf

• The Bigger the Ego, the More Time you Need

to Manage it

• Succession makes everyone Crazy

L.L. – C.F.O. II

• Corporate Culture is Important to Understand

and Manage

– Almost all are Different

• Do a Couple of Changes Well.

vs.

Lots of Change with little accomplishment.