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Category: TRAINING/BUIDLING A FINANCE TEAM By providing employees with exposure to business units, AlliedSignal's CFO transformed finance training into a learning laboratory.
Roy Harris, CFO Magazine
October 1, 1999
In a way, AlliedSignal Inc.'s dedication to finance training seems almost a defensive strategy. "When you think of the job market and how competitive it is today, you have to work hard to retain people," says CFO Richard F. Wallman. The AlliedSignal answer to that challenge: "Use training as a career enabler," he says. "You've got to take care of your key people, and they've got to know there's a process to give them opportunities for the key jobs."
The Morristown, New Jerseybased maker of high- technology products for the aerospace, automotive, and other industries has remade its finance training operation in four years under Wallman. The backdrop for it all is the drive to make finance employees "integral players throughout the value chain, providing the expertise to capture, distill, and act on global information," as Wallman puts it.
So today, company training programs expose AlliedSignal's 2,400 finance professionals -- from their earliest days at the company--to a variety of job environments. Many are outside the treasury and controller functions and in industries beyond their normally assigned ones. And within those environments, these finance professionals are challenged to apply the Six Sigma principals of quality improvement, cycle-time reduction, and cost savings, to a range of administrative processes--a system that, in effect, provides an internal learning laboratory.
It is its prowess in tying instructional programs to problems within the company's 11 global business units that won AlliedSignal the 1999 CFO Excellence Award for Training/Building a Finance Team. And key to that success, says Lawrence A. Bossidy, AlliedSignal's chairman and CEO, is Wallman. "Richard has paid close, personal attention to establishing and strengthening our finance team's training curriculum," he says, and has "eagerly assumed a personal role as mentor and coach to many of the organization's top finance leaders, as well as recently hired graduates."
All the while, the company has been a financial beacon in its industries. Earnings grew 14 percent last year, to $1.33 billion, on a 5 percent upward step in sales to $15.13 billion, while free cash flow soared 38 percent, for example. And to the 48-year-old Wallman, the link is obvious. "It is through our relentless dedication to developing great people," he says, "that we will continue to grow and be a premier company, distinctive and successful."
"Pathways" to Succession
Companywide, what AlliedSignal calls training is actually a comprehensive program that starts with individual job modeling; includes a regularly revised curriculum, talent reviews, and performance management; and progresses all the way through succession planning.
In finance, that model has an additional element--the immersion of employees into the broader world of the business units. It starts with the Finance Pathways Program, an early- career training that provides tough new job assignments on a three-year rotational basis, augmented by targeted classroom work. "The goal is to ensure that finance MBAs will have three challenging assignments of broadened responsibility within the first three years of their careers," the CFO says. Managers, furthermore, get to see what happens when high- potential individuals find themselves "accountable for important bottom- line results from the moment they walk in the door."
The rotations serve another valuable purpose: to intersperse finance expertise throughout the company. And the promotion record under Pathways attests to its success; last year, in fact, 62 of 108 active participants entered the second and third rotations, with 40 percent of them moved across business units.
Not that finance itself is neglected. In fact, succession planning in finance is closely tied to the high-potential people that training identifies. It's all considered part of an elaborate education-and-development network at AlliedSignal, which culminates in a finance talent review process. Last year, 75 open positions were filled in finance companywide. Eighty-one percent of the jobs went to internal candidates--for an increase of 300 percent in internal job-fillings compared with 1997. In addition, jobs were filled in an average of 38 days, compared with a more-than- 120-day cycle time the prior year.
Behind the effectiveness in moving people up is an extremely pragmatic curriculum, revised every 9 to 12 months to reflect specific company needs. "The finance curriculum is built around action- and results-oriented learning programs," Wallman says, with classes "infused with the company's culture, and case studies that have practical application in everyday proj-ects." Finance managers teach almost every class, and a hallmark of the instruction is use of the corporatewide Six Sigma quality-improvement standards. Six Sigma techniques, pioneered by Motorola Inc., are also taught separately to every finance employee, first in the form of a six-day "green-belt" course, and later, as an option, through a four-week master "black- belt" course of instruction.
Training at AlliedSignal wasn't always such a servant to specific corporate needs, Wallman says. He remembers that when he first arrived, some past progress in finance training and other areas had been overstated. The company had taken some pride in its reengineering of receivables, for example. But while there had certainly been improvements, such as centralized credit collection, he says, "in reality, we had done an average job." Receivables thus became a prime early target for case work in finance training, and especially for Six Sigma applications. The result of this troubleshooting: "In 1999, we had $75 million to $100 million more in cash coming through receivables and inventory management."
The revisitation of receivables is typical of a broader perspective at the company. "When we say 'nothing is sacred,' we really mean it," says Wallman.
It's an approach, he says, that starts with CEO Bossidy. An expert in "focusing on the central issues, addressing them, and moving on," Wallman credits Bossidy with instilling the widely held view at AlliedSignal that the entire company must be reinvented every few years through targeted retraining. "It was operating excellence in 199394, then the move to Six Sigma in 199798," Wallman says of the thrusts of improvement over the years. "And the focus now is on enhancing Six Sigma and E- commerce."
Significantly, in the AlliedSignal vision, new philosophies are translated quickly to front- line practice using training as a major instrument of change, and drawing on the cross- functional reach of the finance department.
This process of constant reinvention, however, hinges on the openness to change that training helps instill among employees--and the feedback that comes during AlliedSignal's elaborate management-review program. Unlike the situation at many other companies, where lip service is given to reviews, "we really do sit down once a year and talk about where employees want to go with their careers. What skills do they need? Then we tailor a program to help them achieve that," Wallman says.
There is a downside to all this success in training, however. AlliedSignal takes some pride in following in the footsteps of General Electric Co., known as one of the great finance-training powerhouses. "I think they have great training practices, and we've deployed several of them," he says. "But there's really good and bad news in our becoming a mini-GE," Wallman says. GE is known for supplying the ranks of other companies-- with CFOs, among a range of top-level executives. And that's the bad news. "Four former AlliedSignal people recently have moved on to become CEOs of other companies, and four more are CFOs," he says.