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Readers write to address employee engagement, the locations of shared service centres and the reliability of credit ratings.
CFO Readers, CFO Europe Magazine
December 8, 2008

CFO Europe welcomes your letters. Send them to: The Editor, CFO Europe, 25 St James's Street, London SW1A 1HG, UK.

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Please include your full name, title, company name, address, and telephone number. Letters are subject to editing for clarity and length.


It's not surprising that most employees feel disengaged, given the dire economic conditions ("Making a Connection," October). But CFOs shouldn't dismiss this as a symptom of the financial crisis that cannot be addressed until the situation improves. With a little investment, they can substantially improve engagement in their workforce, with excellent returns.

A recent survey we carried out in the UK revealed that one of the top drivers of employee engagement is senior management being seen to take the right decisions for long-term success. Leaders must be even more visible during this period to maintain trust and show that they're responding to the concerns and well-being of workers.

Improving managers' capabilities to support engagement is an area of relatively low investment, which can reap dividends at this time. Enabling this requires leadership support, appropriate rewards for managers and training to develop managers' coaching skills.

Nick Tatchell
Senior Consultant, Towers Perrin
London, UK


Home Sweet Home

In response to "Here, There and Everywhere" (October), I agree that there are increasing pressures to look for new locations for small shared service centres (SSCs) particularly for low value-added items. But the need for effective talent management in established locations is equally important.

At Kellogg's, our SSC in Manchester is considered to be our European controller's office and is a key part of the business, rather than some SSCs that are not as integrated with the head office as they could be. What's more, Manchester offers a huge pool of graduates — with both accountancy experience and language skills — which has helped us attract a very high-quality workforce. As mentioned in the article, these factors are particularly advantageous in lean times, when the role of the SSC becomes integral in increasing financial efficiency.

John Gregory
European Financial Services Director
Kellogg's Shared Services Centre, Manchester, UK


Reasonable Rates

The article "Over Rated?" (September) was right to flag up concerns about the reliability of credit ratings, but did not tell the whole story. Users of the ratings have a responsibility to inform themselves about what information a rating conveys. The ratings are designed to take a view of an issuer's default probability, smoothed over the economic cycle. Thus an issuer can be suffering in a downturn, but not be downgraded instantly. Ratings do not react quickly, nor do they rate the liquidity of the security in the market, or its likely price.

The rating levels, from triple A onwards, also do not tell the whole story. Subscribers to rating services can access analysis and commentaries, which discuss the strengths and weaknesses of an issuer and its sector. But that should not be the sole driver of investment decisions. For a more immediate indicator, Moody's KMV and other market-driven ratings exist. Also useful are sudden share price movements, increases in credit default swap spreads and, of course, common sense in setting investment policies to avoid concentrations of risk by geography, sector or asset class.

However, the fast deterioration of the financial status of complex mortgage-backed securities showed that the agencies did let down investors. As a consequence, there has been a political imperative to "do something," resulting in the recent draft regulation for rating agencies by the European Commission. This regulation attempts to micromanage the agencies' activities, creating excessive compliance burdens, which in turn could raise costs, freeze competition and stop innovation in ratings services. But with their credibility at stake, the agencies themselves have already begun addressing the issue, by changing, for example, their methodology to take into account the vulnerability of a securitisation rating to changes in market liquidity. This proves that behavioural changes among the rating agencies are possible without extensive interventionist regulation.

Martin O'Donovan
Assistant Director, Policy & Technical
Association of Corporate Treasurers, London, UK




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