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The computer giant's financial-education programs rely on a mix of long-distance and local learning.
David McCann, CFO Magazine
August 1, 2012
Most Fortune 100 companies have substantial formal programs for educating their top finance talent, and Dell is no exception. But the Round Rock, Texas-based computer giant may have a slight edge, thanks in part to its use of a simple tactic.
Almost all companies of Dell's size are globalized, and most try to homogenize their training programs as much as possible. They generally educate their employees in one of two ways: either virtually via the Internet or in classrooms scattered around the world. Dell, however, uses both of those methods. For example, for the third and fourth semesters of the company's Financial Development Program (FDP), a two-year program for high-potential recent college graduates and undergraduate interns, teams work virtually for several weeks and then convene for a week in Austin, Texas.
"I don't know of another company that combines the two approaches," says Tom Conine, founder of TRI Corp., which helps large companies design, develop, and implement financial-education programs (Dell is a client). "Going forward, decision-makers have to be able to work both virtually and face-to-face, and the team dynamics of the two are very different," says Conine. He credits the dual approach to Dell CFO Brian Gladden and Alicia Davis, the company's director of global finance learning and development.
The approach supports three education programs, geared toward finance professionals with varying levels of experience. In addition to the FDP, there is the Financial Rotation Program (FRP), for top talent with 5 to 7 years' experience, and the Global Financial Excellence Program (GFEP), generally for those with 10 to 12 years' experience who have just received or are about to receive their first executive appointments.
Learning Through Simulations
Dell's educational effort began in 2009, though the programs are still considered new in the company's culture. "These are contemporary programs that deal with the realities of today," says Gladden. To that end, all three programs feature simulations, in which participants form teams that make business decisions for hypothetical companies.
The simulations increase in complexity from one program level to the next. They require participants to make decisions relative to the entire business, about pricing, production, cost, new products, market direction, and more. "Simulations are effective because you learn by doing," observes Conine. "When you do that, you make mistakes that you learn a lot from. The simulations are also competitive, and most financial people thrive around that."
The simulations force participants to work under four different types of stress. They have to deal with time pressure, limited information, scarce resources, and divergent opinions from teammates. "When you mix those elements together," observes Conine, "it makes for real-world decision making under conditions of uncertainty." The simulator runs the various decisions made through an econometric model and spits out hard-number results.
In addition to the simulations, the FDP calls for participants to rotate among roles that include segment and operating-expense analysis, intercompany accounting, cash-management analysis, pricing, corporate planning, competitive analysis, financial services, credit analysis, external reporting, budgeting and forecasting, and logistics.
About 50 employees are enrolled each year in the entry-level FDP, which lasts two years. FDP graduates branch off to internal audit or finance roles. Within three years, they are eligible for consideration in the Financial Rotation Program. That lasts for three years, with three different one-year assignments, many outside participants' home countries. Roles include investor relations, assistant controllership, procurement (where a person would be an analyst for a commodity buyer), opex roles such as supporting the marketing budget, financial planning and analysis, treasury, foreign exchange, and cash management.
There is also a tax role, which Davis calls "relatively unique to our rotation, to understand not necessarily how to do an accrual but how value-added tax or transfer pricing works." Participants don't necessarily choose which assignments they get, she adds, but they can express a preference.
Studying Financial Excellence
At the third program level, the Global Financial Excellence Program, participants do benchmarking work at other companies, which are selected based on their reputation for maintaining best practices. The Dell employees work with the CFO and finance staff to understand how the issues those companies are dealing with relate to Dell. In turn, those companies send finance staffers to Dell for similar learning.
The GFEP participants also work on a team project; they deliver the results to Dell chairman and CEO Michael Dell. Last year's project focused on "purpose-driven companies" — those companies that execute against strategies that are clear, concise, and branded. Key take-aways included how every team member "lives the brand" at Coca-Cola, how the business-integration processes at Stanley Works function, and how executives are involved in recruiting at Goldman Sachs.
Meanwhile, Dell is developing a program to provide financial education to certain nonfinancial-employee groups. People from marketing, sales, research and development, and information technology will take four modules built around the income statement, the balance sheet, factors affecting profitability, and key financial ratios.
As a result of the programs, Dell is now more consistently focused on a core set of operational financial tools, says Gladden. "A good example is income variance, driving a consistent set of tools across the firm to measure the results of our business units," he says.
Can the return on Dell's investment in the educational programs be quantified? Gladden says they pay for themselves through less reliance on recruiters to find talent. Since he came to Dell as CFO in 2008, Gladden has tried to instill in his top staff the mind-set that they are building a 25-year career at the company, "rather than just joining to get a certain set of experiences to make you more attractive in the external market," he says. "This is about developing a culture and leadership capabilities for the long term."
Financial training at Dell comes in three parts.
1) Financial Development Program. Two-year entry-level program for high-potential recent college graduates and undergraduate interns. Areas covered include segment and operating-expense analysis, intercompany accounting, cash-management analysis, pricing, credit analysis, external reporting, and logistics.
2) Financial Rotation Program. Three-year program for top employees with 5 to 7 years' experience. Consists of three one-year assignments, often outside participants' home countries. Areas covered include investor relations, assistant controllership, procurement, financial planning and analysis, treasury, and foreign exchange.
3) Global Financial Excellence Program. For employees with 10 to 12 years' experience who have received (or are close to receiving) their first executive appointments. Participants visit best-practices companies to see how their CFOs and finance teams handle various issues.