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General Mills CFO Recounts Layoffs, Growth

As the world’s sixth largest food company goes global, its finance chief stresses softer skills.
David RosenbaumOctober 2, 2012

At the CFO Rising West conference in Las Vegas on Tuesday, General Mills CFO Donal Mulligan detailed his priorities for building a successful finance team as his company weathers tough economic times both globally and at home — even while it expands into new markets abroad.

This summer, Mulligan says, General Mills, which had $18 billion in 2011 sales, shed about 850 of its 35,000 jobs, with 2% of that job loss hitting his finance department. According to Mulligan, the reorganization was driven by a 10% increase in overall cost of goods sold and economic conditions in developing markets where higher prices led to a decrease in consumption. 

That, he says, “is unusual in the food business.” To hold costs stable as the business grows – which, Mulligan says, is how companies become world class, at least from a cost perspective – it became necessary to cut operating costs to maintain margin. But he describes the reorganization as a “one-off” in an overall growth strategy.

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In this difficult environment, Mulligan wants to improve finance’s cost to the company relative to sales. To do so, finance needs to get “more efficient” by streamlining and automating as much as possible financial closes, accounts payable, and other basic financial reporting functions. That will help free up finance’s time for business process improvement, capital utilization guidance (“Our business partners know profit and loss; not so much about cash flow”), the effective management and analysis of critical company data, and other more value-added activities. 

Indeed, Mulligan says, more people in his finance department are “focusing on business process management and data flow” than they were five years ago. That’s because finance partners more closely with the business, becoming an enabler of strategy rather than a recorder of its success or failure.

To leverage finance’s abilities as a business partner, and to wring efficiencies and economies of scale out of finance, General Mills is nearing the end of a five-year roll-out of an SAP enterprise-resource-planning system in just two places, one in the United States and one in Europe. The ability to integrate global financial data electronically, without having to depend on local business units e-mailing or faxing spreadsheets, will, says Mulligan, enable the company to standardize many financial processes without being tied to time-consuming, error-prone, and expensive spreadsheet consolidation efforts.

The SAP initiative will also help drive General Mills’ long-term goal of overseas expansion.“We did the Pillsbury deal in 2001” Mulligan told the conference, “then we went five years with nothing.” But the last two years have seen increased merger and acquisition activity outside the United States, and with General Mills now selling products in over 100 countries, Mulligan has recognized the need to build up finance’s M&A capabilities. 

The Softer Side
To be a truly effective enabler of M&A, he believes, the finance department’s capabilities must go beyond the technical skills required for deal making, business process management, and even data integration. It must venture into the people skills sometimes described as “soft” — a term that causes Mulligan to wince.

In company-wide internal surveys, Mulligan has seen a direct and positive correlation between employee performance and retention and whether those employees describe their managers as “good” or “great.” And the difference between a good and a great manager, in Mulligan’s view, is largely the degree to which the manager invests time and energy to support his report’s career and success. Mulligan chooses to promote those managers who have shown their willingness and ability to invest in their reports.

“As a career in finance evolves,” Mulligan says, “project leadership becomes more important. And the technical skills – accounting, analytic skills – that brought a person to the point where he or she is considered for project leadership become less critical.” What Mulligan wants to see is growth “on the people side.

“At the senior levels,” Mulligan says, “the differentiator is people skills.”

Mulligan says he learned the importance of developing personal relationships with reports when he worked abroad, and was not surrounded by the corporate resources and structure available to him in the United States. “You realize,” he says, “that your success is depends on the success of the people who work for you, and that you’ve got to get beyond your own technical skills.”

Mulligan identifies three “inflection points” for a finance career, at General Mills or any large organization. The first comes when he or she becomes a manager, and must “coach and provide council.” The second is when a person begins to manage a portfolio of businesses, which requires “an even higher level of people skills.” Finally, the person must become a mentor, coupling his or her own success to that of their mentee’s.

To inculcate this understanding into his finance team, Mulligan leads by example, explicitly by promoting those people who have shown growth on the “people side.”

Asked whether it’s possible for people who don’t naturally possess these skills to develop them, Mulligan says one of his bosses once told him, long ago, that “If God didn’t put it in there, it’s hard.” But Mulligan believes that with broad input on performance from all levels of the organization, individual development plans, clear career paths, and real-time feedback, people can learn and improve.