Leadership in Finance: CDW’s Ann Ziegler

The CFO tries to help her staff manage in uncertain times by explaining the logic behind the numbers.
Kate O'SullivanJune 26, 2009

Major changes began at CDW well before the market meltdown of last fall. Formerly listed on Nasdaq, the seller of computer hardware, software, and services went private in October 2007, after the credit crunch had begun but nearly a year before the economic crisis exploded last September. The company, which reported revenue of $8.1 billion in 2008, was bought by the Chicago private-equity firm Madison Dearborn Partners for $7.3 billion.

At the same time, the finance department underwent a change of its own: finance chief Barbara Klein retired in May 2008 and was succeeded by Ann Ziegler, former CFO of Sara Lee’s food-and-beverage division and a onetime mergers and acquisitions attorney at the giant law firm Skadden, Arps. Today, Ziegler is trying to manage the uncertainty in the environment and keep her finance team focused on the future. She talked with about her approach to providing leadership in today’s economic environment.

What are your thoughts on leadership in the current economy? Do you think these times call for a different style of leadership?

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I think that in times of uncertainty people are looking for leaders. They’re looking for clear thoughts about what an organization needs to do.

It is a difficult time because of the uncertainty. CFOs are used to looking at a lot of historical trend data to help them make decisions, but now the historical data might not point to a clear path forward because we keep hearing that it’s different this time. As a leader, you really need to be communicating what you’re doing and why you’re doing it.

Ziegler: A tester of sacred cows.

The other thing uncertainty creates is the opportunity for leaders to test and retest the sacred cows. If there’s ever a time to lead change and have an organization be open to change, this is it. The uncertainty provides the opportunity to revisit old assumptions.

What are some of the changes you’ve made? Since you haven’t been there for that long, has it been easier for you to challenge some old assumptions that may have preexisted you?
One example is that as the company grew up over time, inventory was actually scarce in technology. As technology was growing and evolving, there would be a hot technology, and it would be difficult for distribution companies to inventory it because the supply was so hard to come by. So CDW adopted the approach that fast pay makes good friends. If an OEM was trying to decide how to allocate its inventory, CDW would get a nice big slug of it because CDW was quick to pay and had a great sales and marketing team that would go through that inventory.

Coming into the company new, I didn’t have that legacy approach. One of the things we did last year was to focus more on working capital generally, and specifically payables management. It’s a very small and tactical example, but it shows how in times of uncertainty you really have the opportunity to test and question whether you should still do things a certain way. In my mind, an organization is more open to making those changes because they understand that the world or the economy is likely to be a bit different going forward.

Did you meet resistance from vendors or from anyone inside CDW?
Of course we met resistance, but everybody understands it. We’re part of a supply chain. You can talk very credibly with vendors when you point out to them that they’re now [taking longer to pay] their suppliers, so why should we pay them in fewer days?

What other changes have you made in the way you’re communicating to staff and throughout the company?
I’m trying to spend more time on explaining the why as opposed to simply “here are the numbers” or “here is this change that we want to implement.” I find that explaining why we’re doing it, why I think it’s important that we do it, is very helpful in terms of getting support across the organization.

Another thing we did recently was standardize and centralize our travel policy. There are a lot of reasons why historically it wasn’t centralized and wasn’t necessarily standard. But in this environment, everyone is interested in eliminating waste. If you explain it as “here’s what we save,” it’s very difficult for people to say no, whereas before, everyone had their favorite airline and maybe you would get some pushback.

What are mistakes that finance people can make in terms of leadership right now?
Obviously we’re in a significant downturn. Everyone knows there will be a recovery, but what keeps me up at night is the question of when. CFOs in particular need to be careful to do the right things — managing working capital, managing the balance sheet, and eliminating waste, but also keeping in mind what the organization will look like when you come out of the downturn, and where you need to have resources at that point so that you can take advantage of opportunities. Make sure you’re cutting all the fat, but don’t cut into the muscle and bone, or it’s going to be a slow recovery for the company.

With all the cuts that so many organizations have implemented, a lot of workers are very anxious. How do you keep your staff energized and focused on their jobs?
I talk about the need to keep their eyes on the ball so that we’re positioned as the economy recovers. We’re a technology solutions company, and a large part of our business is highly transactional. At the end of every day we get a scorecard of sales. It tells us how we’re doing against plan and how we’re doing against the same day last year. That’s very effective in keeping people’s eyes on the ball.

Are you doing more formal communicating in forums like Webcasts or town hall meetings?
I just finished several town hall meetings with our selling organization, giving them an opportunity to ask questions as well as an update on where we are in the big picture in terms of the financials. We’ve done those historically, but we’re probably doing a bit more of it, both because of the economic environment and because we’re private now. Our workers no longer have the advantage of looking at the 10-Qs, press releases, etc., that you have when you’re a public company. We provide a lot of data on our intranet.

You mentioned that wondering when the economy will turn around keeps you up at night. Are you doing anything to help yourself be able to predict what will happen for your business or for the economy generally?
One thing I’m doing more of is talking to people in almost any setting I’m in. I try to engage them, no matter what their business is, to learn what they’re seeing. I look at all the normal data — employment, GDP growth, credit — but I think the really leading indicators might be coming out of people’s business. Everyone is willing to talk about what they’re seeing, both year-over-year and sequentially. There is a big focus on sequential data. Is it better than last month? Is it better than last quarter?

You might have several good weeks, but you’re always worried that that’s not a trend. I think every finance executive today needs to have all of their scenario planning done. I’m not sure I’ve ever done so many scenarios in my life. What happens if there’s an uptick next month, or six months from now, and what are our contingency plans? Which actions do we put in place if it happens sooner, if it happens later, and what do we need to do to make sure the organization and the business are appropriately positioned?