Public relations being what it is, companies tend to gloss over any bad news. Hence, when a CFO leaves a company, and the employer issues a statement noting the departing finance chief is “leaving to pursue other opportunities,” you can bet those opportunities involve sleeping late and scouring job boards for work.
That was not the case for Mike Devine. When executives at Philadelphia-based maternity-apparel retailer Mothers Work Inc. reported that CFO Devine was leaving to become finance chief at accessories specialist Coach Inc., the announcement read more like the minutes from the last meeting of the mutual admiration society. “We congratulate Mike on his new position,” said Mothers Work president Rebecca Matthias in a statement. “Although we will miss him, we recognize what an opportunity this is for him.”
Devine was equally effusive. “It is with a heavy heart that I leave Mothers Work,” he said. “I leave behind a great company [and] one of the best finance jobs in Philadelphia.”
Observers says the love fest was anything but PR. Devine, a Wharton alumnus, helped transform the finance department at Mothers Work, elevating the unit from a numbers- crunching function to a service-oriented department focused on partnership and corporate strategy. Though he’s worked in a variety of settings — from conglomerates like Honeywell Inc. to small-caps like industrial-store operator Strategic Distribution Inc. — Devine says all his experiences have helped him find a home in retail.
Recently, Mike Devine took a few minutes to talk to CFO.com about the value of working in different sectors, the importance of company support in pursuing an M.B.A., and his approach to building a finance team.
You’ve worked for companies in a lot of industries. Was that intentional?
I guess looking back there does seem to be a lot of variety in my jobs. But at the time, as I worked my way through my career, it didn’t seem that way because there’ve been are a number of constants in each job. For example, in most cases, I worked in a very fast-paced environment. Distribution has been part of virtually all the businesses that I’ve been involved in. Most jobs have had field organizations. Managing and budgeting those organizations, and subsequent inventories, has been something I’ve dealt with across industries. So while the products have been different and the industries have been different, there have been a number of striking similarities.
I don’t think I’ve purposely avoided being in an industry for too long, but I do think the variety has benefited me up to this point. It helps me understand the motivations of all parties that might be involved in any business transaction: I’ve been the manufacturer, I’ve been the distributor, I’ve been the retailer. So the variety has served me well.
I would have to say that I think I’ve found a home now in retail. I love the excitement and the fast pace of retail. In retail, you get your report card every day when the sales figures hit your desk.
When you enter an industry that’s new to you, what do you do to get up to speed quickly?
There’s no simple answer to that. It boils down to hard work and digging in. When I joined Strategic Distribution, the company was just coming into its own and was only a $35 million revenue run rate. So I wore all the hats and learned that business by doing. I was really thrown into the fire. I got involved in operations and sales, often talking CFO to CFO with the potential client.
At Mothers Work, the finance function was underdeveloped, and we needed a talent infusion. It really forced me to roll up my sleeves and get involved in the details and perform a number of the different finance functions myself. When you’re doing that and spending long hours, you learn the business pretty quickly.
You also had to raise the overall level of the finance department. How do you go about putting together a first-rate finance team?
I’ve always built my finance teams and functions with the theory that finance is a customer service organization and our customers are primarily internal — starting with senior management, the board of directors, and line management. So I tried to breed that feeling of “We are here to serve.”
Partner then with line management and help direct them in their everyday decision making. Earn their trust and get finance involved in the day-to-day decision making and strategic direction of the organization. What that does first of all is raise the group’s prestige within the organization. Line management begins to come to us to seek our guidance, and I think then that gives the finance team a feeling of empowerment and makes the job more fun as well.
The finance function is not just a scorekeeping and accounting function. It needs to help provide the strategic direction for the organization. When you serve you customers well, and they embrace your help, it can really empower the team. And that allows you to do some great recruiting and allows people to step up and perform.
Let’s talk specifics. Can you take us through the steps you took in developing the finance team at Mothers Work?
When I first came to Mothers Work, finance was really not involved in the planning and the strategic planning and annual operations planning — that is, the ad hoc financial analysis around day-to-day business decision making. I feel that is really one of the critical roles where finance can contribute to an organization.
So, the first thing we did was I personally started to get involved in partnering with the other vice presidents. Eventually, we won over their trust and then we went out and recruited a real top-notch director of financial planning and analysis that perpetuated and broadened the relationship. We also made more routine some of our ad hoc analysis — some of our planning and forecasting models. That really helped the line management, particularly our folks in stores operations and distribution and logistics. Incorporating financial modeling into their decision making was a big step-up. That was the first major thing we did — really develop the planning and analysis function.
I think our second-biggest contribution was in human resources. When I first started, the HR function was little more than a personnel function. They kept track of the company’s employees, took care of benefits and of payroll. The thing is, and this may sound a bit corny, but in a service industry such as retail, people really are your most important asset. And with the things we were trying to accomplish at the corporate level, we really needed to develop our human capital.
So we worked very hard in the HR function. I went out and recruited a very talented VP of HR and was able to recruit a couple of key people under him. We went from being a personnel department to being a fully functioning human resources department. The department then helped us grow the business by attracting other talented people in design and merchandising. It also helped me to build out the rest of the finance team.
The other thing we wanted to do was be cost-conscious. We did that by turning some people over in the finance department who didn’t share our vision. Instead, we brought in some people who were more aggressive, who wanted to be involved more in day-to-day decision making, as opposed to being caretakers. We didn’t however, increase the size of the staff by much. Across a 50-person finance organization, I doubt we ramped up staffing by even 10 percent.
You’re joining Coach at a time when consumers are feeling less inclined to spend money. What can a CFO do to help a retailer when sales are down?
From a financial management perspective, it’s about focusing on margin improvement. It’s managing inventories — not to let inventories get away from you as sales slow. And then, of course, you make sure to turn over every rock. You want to make sure you’re tightly controlling every expense control.
I’d also say, and we believe this here at Mothers Work, a market leader with a strong management team is ultimately going to benefit the most and come out of a down cycle in a much better position than someone who doesn’t have that position as market leader. I think Coach is well positioned to get through this downturn and to come out of it even stronger.
As CFO, how much will you be involved in E-commerce at Coach?
I’ll be involved quite a bit. It’s an area where I have a lot of experience. We were very successful at Mothers Work with our Internet site, which has been very profitable.
The key thing I’ve learned is to recognize the Internet for what it is: the catalog of the new millennium. So the key is to roll E-commerce into the existing business without building a whole new infrastructure to serve it. That can eat up the gross margin pretty quickly.