As business owners work to get more done with less, they depend on their staff to work harder for the benefit of the business. Annual performance reviews don’t always provide a complete window into the work that staff is doing or motivate improved performance. Sometimes it just feels like “things aren’t getting done right.” And, the longer staff has been with the company, the more difficult they are to replace with every passing year.
There is a dichotomy when we reach the C-Suite. In some companies, there is a revolving door for the CFO, as they get blamed for lackluster company performance. In other companies, where the CFO has long served as a trusted advisor, dissatisfaction at long term declining performance is glossed over because of past successes. The decision to make a change at that level is never easy. What procedures are buried in the head of the CFO rather than being written down? What important issues will fall by the wayside because of the change?
The business owner had recently hired a Chief Operating Officer to take over day to day operations of the company. It became apparent that the CFO, a long-time trusted advisor, was getting behind in her work and providing less information about how the company was running. The owner was interested in taking a smaller role, but needed more information to help guide the new COO. She reached out for advice in restructuring her accounting and finance function, looking for a new approach, more transparency, and better results.
The company is in its second generation, and the owner had hired the CFO 15 years earlier, when she first became CEO. As the company grew, the CFO hired her own son as the Controller, even though he lacked a finance background. As a result, internal controls are lacking. The finance and accounting department operates behind a curtain of inside information. Reporting isn’t GAAP and was incomplete and slow in coming. The CFO brushed off complaints of inadequate reporting and was unwilling to establish a working relationship with the new COO.
Like many entrepreneurial businesses, the company relies on the knowledge of its tenured staff to handle key processes on a consistent basis and pass those processes and procedures on to new employees. While this works for small companies, when companies grow to middle market size, the staff gets too large, and has too many layers to have a sustainable and consistent knowledge transfer.
As companies grow, there is credit to be passed around to those who have helped build it. But nobody can sit on their laurels. The health of the company is based on the procedures and data that are provided by senior management, and especially the CFO. Within that office lies the primary operational data that is the result of the company’s efforts, and the financial information, KPIs and dashboards that provide answers to the ultimate question, “How are we doing?” Without a regular stream of accurate information, it’s difficult for line employees, managers and ultimately the company to move forward.
Just as any employee needs to contribute to the ongoing good of the company, the CFO and other C-Suite executives must contribute to the company on an ongoing basis. The age-old question, “what have you done for me today?” is just as relevant for senior management as the line employee. If they are not willing to pull their weight, it’s time to find someone else to do the job.
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