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First Days

Stepping Lightly into the CFO Role
Alix Stuart, CFO Magazine
May 1, 2001

Despite the "business casual" dress code he'd seen at SAP America, Nabisco veteran Edward Lyons decided to stick with his customary wardrobe when he took over as CFO at SAP last December. "There was a young team here, and my role was to come in as the senior finance leader, to provide some structure," he says. "So my approach was, here comes the suit and tie."

Or not. Within three days, Lyons realized his attire was strangling relations with his new colleagues at the Newtown Square, Pennsylvania- based technology concern. So to open the lines of communication, he lost the tie and switched to khakis.

Every day in America, one or two finance executives begin their first day on the job as CFO, according to recent data collected by market research firm Hunt-Scanlon Corp., in Stamford, Connecticut. And while sartorial strategies may not be of utmost importance, Lyons's example suggests that command-and-control-style takeovers are out and a more culture-sensitive approach is in.

"By fitting [yourself] into a company's culture and truly listening to the concerns of your employees and board, you build the credibility and loyalty you will need for tough decisions later on," says Pam Lassiter, who has advised hundreds of finance executives as principal of Lassiter Consulting, in Weston, Massachusetts. One of the first priorities for executives making a transition, she says, should be to meet with key people, from secretaries to the CEO, and to listen to what they want from the finance department. This approach is particularly important with younger staffs, comments Accenture partner Cathy Greenberg-Walt, citing company research on management in 200 companies. "The generation that's in the workforce now craves honesty and the chance to collaborate," she says.

Probably the first tough decision that falls to a CFO is which staffers to keep and which to shed. It takes a sensitive hand to assemble a strong team quickly enough to appease the CEO without slashing morale in the department or losing people with unique expertise. When he started at SAP, Lyons says, "my hope was that within my first 100 days, I would be able to assess the team, and if changes needed to be made, I would [be able to make them] quickly." Serendipitously, he notes, the company had a formal review process already scheduled for January, which gave him time to get to know his staff as well as to gather objective information to make evaluations. By early March, his team was solid: Lyons kept all but 3 of the existing 120-person staff. He planned to announce priorities, new developments, and succession plans with the team at an April off-site meeting.

QUICK MOVES

In some transitions, though, time is of the essence. Robert Crouch, formerly controller at Modis Professional Services Inc., a staffing services firm based in Jacksonville, Florida, filled his boss's shoes just as the company was reversing plans to split into three separate public entities last fall. After sitting down with CEO Timothy Payne in January to chart a new course, he had the immediate task of redirecting the 300-person staff, most of whom were still disappointed that the initial public offering wasn't going to materialize.

In this case, redirecting meant killing popular projects and moving some staff into newly created, operations-focused roles. For example, Crouch moved his director of financial reporting into a role that involved more communication with business-unit leaders, and promoted his assistant controller to director of financial reporting. "That was a big change for both of them," says Crouch.

How did he do it? Crouch says his transition was enhanced by a big team meeting that was called to explain the changes, and by one-on-one meetings with people whose jobs would be most affected. "As long as you're listening to what people would like to do," says Crouch, "I think they're willing to give you the time to make it happen." As of April, only one manager had left, and no one had been laid off. Of course, Crouch's history with the team, as well as decisions he had made before becoming CFO, helped smooth his transition. "I had been down in the trenches, working those late nights with the team, and I think that helped them trust me," he says.

Crouch made the right moves, says Lassiter, by listening even as he was making major changes. "Asking your former peers what they need from you to do their jobs better forces them to think of you as the leader, and gives them a chance to air their issues," she says.

Yet a CFO, whether new to the company or an insider, is invariably preceded by his or her reputation. Just ask former PricewaterhouseCoopers partner Kevin Thompson, who assumed the CFO role at one of his audit clients, Red Hat Inc., in November. Once at the Raleigh, North Carolina-based Linux developer, he faced a finance team that was accustomed "to calling me when they needed something done, and I'd jump," he says. "Now I was telling them what to do."

So, to help redefine his relationship with his staff, he says, "the first thing I did was get the finance team leaders together to just talk about the transition." To open the discussion, Thompson recalls, he pointed out the long lapse in finance leadership, since the previous CFO, Harold Covert, had left in July, and asked what problems that vacuum had posed. He also asked them, "What concerns do you have about me leading this group?" The answers varied, he said, from the fact that he'd spent his career in public accounting and had never held a corporate finance position before, to wondering how he would change the reporting structure, something he admits he hadn't thought much about before.


Since then, Thompson has overseen significant activity in Red Hat's finance department, including integrating two major acquisitions while simultaneously ramping up the department's use of new accounting software. While his history with the company has helped in those efforts, he attributes their success largely to the fact that he initially focused on listening and observing. "The relationships I was able to build in those first two weeks have been critical," he says.

Of course, fitting into the culture doesn't mean losing your own unique edge. Lyons, for example, still keeps a sport coat in his office. --Alix Nyberg

FIRST IMPRESSIONS

What not to do on the first day..

  1. Don't criticize prior practices. You are never fully aware of the facts, and people start to resent the implication that intelligent life arrived only after you joined, says Sal Borello, CFO of Glynn Electronics.
  2. Don't come in planning to make major changes on Day 1, according to Jamie Hudson, vice president, treasury, at Staples Inc. You could get burned and look like a fool. Assess first.
  3. Don't hide in your office and read, regardless of how tempting it is to sift through internal analyses and old presentations. Day 1 is a prime chance to meet other people and ask questions.
  4. Don't swagger. You already have plenty of authority vested in you by the CEO; you don't need to assert it immediately.

Source: Lassiter Consulting




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