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Culture Shift

As Seen in CFO Studio Magazine Q2 2017 Issue

UP-TO-DATE TOOLS AND WORK/LIFE BALANCE CAN RESULT IN A HIGH-PERFORMANCE TEAM

There are many ways to define and measure what constitutes a team that is lauded as “high performing,” but when you get right down to it, “it’s all about the people and the culture.” That’s according to Scott Settersten, CFO of Ulta Beauty, the largest beauty specialty retailer in the U.S., based in Bolingbrook, IL. “It’s not just about hitting your financial targets. If you have a team that is unhappy, or doesn’t interact well with business partners, simply making your numbers is not enough. It spans way beyond that.”

Mr. Settersten spoke on “Building and Sustaining a High-performance Finance Team” at an invitation-only dinner discussion attended by CFOs from Chicago-area world-class companies. The event was held recently at Morton’s The Steakhouse in Chicago, and is part of CFO Studio’s Executive Dinner Series.

“People need a good environment to work in,” said Mr. Settersten. “They need to feel empowered so that they develop good working relationships across the enterprise and can work effectively to help move the business forward.

“You are the leader,” he said to his fellow CFOs in the room. “You own the culture. If you want a high-performance team, it’s up to you to set the pace.”

What Each One Values

The first pace-setting step in building a top-notch financial team is never forgetting that your employees have a life outside of the office. “Work/life balance is one of the hottest employment issues today,” Mr. Settersten acknowledged. “It’s very important to be open and adaptive to new and different circumstances, and provide your group with a decent chance to achieve the balance they crave and deserve.”

He suggested “role-modeling” examples of work/life balance to demonstrate how “it can be achieved without sacrificing on-the-job duties and responsibilities.” This could come in the form of flexible hours or telecommuting options, he noted.

In addition, be aware of the generational gaps in the workforce, and be sure to adapt your style when appropriate. “Different folks or groups value different things.”

Invest in the tools that can help your team members blossom into high performers. “You owe it to them to provide best-in-class software tools” to help them become more efficient and effective. “Maybe it’s the latest tax software that makes the process easier, giving folks more time to think about the outcome rather than compiling all the data,” he offered. “This will go a long way toward making people feel like you’re investing in them, that you’re concerned about their happiness and job satisfaction, and that you’re providing an environment where they can make progress and excel in their roles.”

Continue to show you care about the human side of your team by encouraging opportunities for career development. “Invest in training for your people to improve their skill set, whether it’s a specific subject matter expertise, or just general communication or leadership skills,” Mr. Settersten advised.

In some cases, however, you may need to reassess your talent. “If you have four high performers and one weak one, the high performers are going to look to you to address the situation.” Mr. Settersten acknowledged these are tough calls and difficult discussions, but sometimes they’re necessary to allow the team to move ahead.

The creation of a “road map” can help. “Talk with your team, acknowledge what the gaps are, and develop a plan on how you’re going to ultimately reach your goal.” But don’t stop there. “Engage with them, be accessible, and become an active feedback loop for them.”

The notion of a “road map” resonated with CFO Studio Business Development Partner Marilyn Bird, District President at Robert Half, which provides specialized staffing services for temporary and permanent accounting, finance, and bookkeeping professionals. “Having a definition of what a high-performance team means to you can help determine your action items, as well as how you measure where you’re trying to take the team.”

Keep It Going

Once you’ve witnessed your team transformed into a well-oiled machine of high performers, “It’s up to you, as the leader, to stay committed to sustaining the positive momentum.” Mr. Settersten said it’s a constant cycle of measuring and revisiting; and no news is not necessarily good news. “Go out there and proactively seek feedback to determine if you’re still making progress and achieving success.”

And don’t be afraid to ask for help. “Financial leaders resist seeking assistance because we’re the ones that are supposed to have all the answers,” Mr. Settersten explained with a laugh. “We may just try working harder, but working harder at the same thing isn’t going to solve the issue. You have to think about doing it a different way.” He suggested looking into benchmarking avenues and peer-to-peer networking groups to generate ideas, see what others are doing, and to borrow any best-in-class practices that make sense for you. After all, “More brainpower naturally leads to better outcomes.”

In addition, continue to invest in your team’s success. “The finance function always tries to do more with less, striving to be the role model for fiscal prudence in the organization,” Mr. Settersten pointed out. “We’ll feed the rest of the business, but in our area of oversight, we’ll just make it work somehow, because there’s not enough to go around, and it’s better to invest in sectors that are going to drive the top line and result in the biggest payoff.” That mind-set will suck the life out of your high-performance team, he said. “Resist the inherent urge to pass over your department when it comes to investing in new tools, training, and career-development activities.”

Worth the Effort

Mr. Settersten admitted there’s a lot to consider when building and sustaining a high-performance team. “With so many areas of finance in the CFO’s purview, and with tax laws and the like in flux, it’s quite a challenge. You’re always trying to get better while attacking a moving target.” That said, “It keeps it very interesting!”

But at the end of the day, Mr. Settersten said that we are all looking for the same kinds of things: “We want good people who are motivated and care about the quality of their work. We want to be able to foster a positive working environment for our teams so that, together, we can focus on delivering great business outcomes.”

Performance Boosts

As Seen in CFO Studio Magazine Q2 2017 Issue

AN INCENTIVE PLAN THAT REWARDS ALL EMPLOYEES IS PAIRED WITH BROAD TRANSPARENCY

Morale is high, people work hard and seem content, and every employee knows what’s going on behind the scenes at Kepner-Tregoe in Princeton, NJ. The multinational management consulting and training services firm implemented an incentive program as the market started to rebound after the global financial crisis of 2008 – 2009, and, at the same time, took the opportunity to offer employees greater transparency into its financial performance. As a result, “People are motivated in their roles, responsibilities, and decision-making; they’re educated about the business, and all that adds up to a sense of empowerment among the staff,” said Bill Baldwin, CFO and a Kepner-Tregoe Principal.

Mr. Baldwin spoke on “Driving Employee Performance and Engagement – Sharing Financial Intelligence and Insight” at an invitation-only dinner discussion attended by CFOs from New Jersey– area middle market companies. The event was held recently at Agricola Eatery in Princeton and is part of CFO Studio’s Executive Dinner Series.

Mr. Baldwin said the company instituted the incentive plan as a way of rewarding employees for their loyalty and sacrifice during a difficult time that, as at many organizations, included belt-tightening and cost-containment measures. And that naturally led to greater financial transparency. “It just seemed right to let people know if they’re on track to making their goals.”

A Pat on the Back

When the incentive program kicked off about seven years ago, every employee received a 10 percent bonus at the end of each quarter if the operating profit plan within their region was met. “This really registered with people,” said Mr. Baldwin. “It was motivation for them, and it changed their behavior in the business.”

While some incentive plans are based on revenue, “ours is centered around operating profit, and that has significantly altered the way employees view their decision-making when it comes to expenses,” said Mr. Baldwin. “They may reconsider the type of hotel they stay at, or choose a different beverage while dining or meeting with a client.” It’s up to the employee, he noted, “and that’s been empowering.”

These quarterly incentives are now team-based, he noted, since an annual incentive program has been adopted as well, to reward employees according to their individual performance record at the end of the year. “It’s all paid off because people take more ownership and accountability in the overall success of the business.”

Crystal-clear Reporting

With all employees striving to achieve personal and team-based incentives, “we thought it only fair to provide them with greater financial transparency” in an effort to eliminate what Mr. Baldwin called the “surprise factor.” He explained: “We don’t want to reach the end of a quarter or the year and have people surprised that the company or the region has not done as well as they might’ve thought.”

So for the past several years, Mr. Baldwin has been issuing a weekly report to all employees detailing the bookings for the current and next quarter, and comparing that number to the quarterly plan and forecast by region for the entire company.

The report also highlights anyone who has sold a new piece of business over a certain dollar amount in the past week. “When people see their name in lights, so to speak, they love it,” said Mr. Baldwin, who also calls or sends an email congratulating those high achievers. “That’s been very motivational, and great for morale.”

In addition to this weekly report, Mr. Baldwin and the CEO hold quarterly WebEx events (open to all employees) to provide an update on how the company is doing — both regionally and as a whole —what the future looks like, and how the incentives are shaping up. “We try to be as forward-looking as possible to give people an idea of what we expect the results to be for the year,” all in an effort to keep everyone informed from a strategic, operational, and financial standpoint.

“We are as open and honest as we can be with our messaging, and we’ve learned that it has to be repetitive and in terms to which people can connect.” To that end, employees are routinely educated on how to interpret the data contained in the reports, what the trends mean to them, and how the numbers are used by management. “We know we’ve been successful when folks start asking questions, and it becomes more of a two-way conversation. We’ve engaged them, and nobody has been kept in the dark,” said Mr. Baldwin.

Joseph Tammaro, Sector President at TD Bank, North America, and a CFO Studio Business Development Partner, pointed out that one of the biggest challenges in any organization is an “us vs. them” mentality. “It’s encouraging to hear the ultimate outcome of such transparency. A strong cultural foundation has been established, along with buy-in from the employee base who, as a result, will do what needs to be done to secure the viability of the company to move forward.”

Too Much of a Good Thing?

Overall, dinner attendees responded positively to Kepner-Tregoe’s methods, but a few questioned whether it was possible to be too transparent. Mr. Baldwin responded by acknowledging that there are, indeed, risks to transparency. “If a region is having a quarter where they don’t think they’ll make their results, but the next quarter is looking strong, we have to be careful that people don’t manage earnings from a soft quarter into a good quarter, or from one year into the next year.”

In addition, he said, there’s a fine line between being open and honest, and not creating anxiety or panic when business is not as good as usual. “We have to be very careful about our delivery because the last thing we want is people worrying about possible cost-containment actions or that their jobs may be cut.”

Mr. Baldwin believes the frequency of the messaging helps to quell any real fears. “We’ve been doing this for several years now, and people have matured in their thinking and do understand that there are cycles to any business and sometimes there are soft quarters.” And it doesn’t hurt, he added, that “in good quarters, every employee is recognized with a reward for a job well done.”

No More Fuzzy Numbers

As Seen in CFO Studio Magazine Q1 2017 Issue

Monetize talent-related growth strategies

-BY ALDONNA R. AMBLER, The Growth Strategist

Being able to attract, engage, and retain top talent is an important growth strategy of young or realigned companies. Yet most organizations still struggle when talent-related investments are involved because the discussions generally rest on vague information (fuzzy numbers).

Think about what happens when the CFO tries to get quantifiable answers to these HR questions:

How can we tell if a stay bonus was necessary?
Do career development programs pay off or are we just training people to leave and be productive at competing companies?
What degree of fit with our corporate culture does a job candidate need to be hired?
How can we tell if an employee is sufficiently engaged?
How much should our business invest if the typical millennial only stays with an employer a few years?
How much turnover is acceptable to us?
How do we know if we should be utilizing outside search firms or building our own recruitment department?
How much progress do we lose when key position vacancies linger?

Where You Can Start

The Society for Human Resource Management (SHRM), which provides professional certification for human resource professionals, leads the improvement of talent-related measurement, but there is a long way yet to go.

It pays to help your company’s HR professionals generate talent-related ratios to convey their proposed approaches to achieve your goal-related ratios. With such ratios in place, when your HR department wants to invest in a new engagement program, as CFO you can monitor its impact on retention, productivity, and capacity utilization.

Examples of Talent-related Ratios:

$___ cost for recruitment, screening, selection, onboarding/hire

$___ cost for engagement and retention/employee

$___ cost for incentives and bonuses (above base salary or wages)/ employee

#___ average months or years with our company/employee

%___ job vacancies OR %___ capacity

Examples of Company Growth-related Ratios:

% ___improved capacity utilization

$ ___ productivity increase

%___ reduction in people-related operating costs/gross revenue

Increasingly, HR directors must be involved in the process of monetizing desired outcomes. It makes sense to establish realistic baselines for talent-related ratios now, or your company’s decisions revert to fuzzy numbers, and your truly major investment decisions will be based on wishes, hopes, and guesses.