CFO Studio Magazine - CFO Innovation Award Winners

26 WWW.CFOSTUDIO.COM 2nd QUARTER 2015 T he year 2009 was a flashpoint for how corporations motivated their employees. With the onset of the recession, resources for wages and benefits were scaled back in many businesses. The corporate priority had to be profits first, productivity second, and culture third. Fast-forward to 2015 and witness one effect of economic recovery: the globalization of many industries. Keeping these geographically —and sometimes culturally—diverse employee groups productive has been a challenge for many organizations. When you can’t leverage money as motivation and you have several different business cultures merging within one organization, how do you maintain morale and keep productivity high as well as guide employees so their work meets the goals of the company? Recently, finance executives from a wide range of industries gathered at a CFO Studio Executive Dinner to discuss strategies for keeping large, diverse employee groups unified and productive. The event was hosted by CFO Studio and Real Estate Strategies Corporation. Steve O’Connell, CFO of Lenox Corporation, led the discussion. In 2006, Lenox was acquired by a company that was not financially sound. This, combined with the onset of the recession, forced Lenox into bankruptcy. Though the company climbed out of bankruptcy in 2009, the business faced tight credit afterward. While Lenox has recently started to see a real pick-up in its results, its harrowing financial position for years put limits on the compensation the company could offer employees. “There’s a really fine line between being able to manage very modest wage growth and keeping a happy workforce,” said O’Connell. “We need a couple more years of prosperity to improve what we can do for people. We’ve just been trying to keep health care costs flat or up 5 percent at the most, but we’re not in the position to make our health care more attractive.” Flat wages, stagnant bonus pools, and reductions in benefits have been an issue for many companies, including a few at the Executive Dinner table. Nick Visco, CFO at SEALConsulting, Inc., a global SAP solutions and services provider, spoke about the effectiveness of transparency with employees. He believes taking the time and care to explain the status of the company and the goals goes a long way toward gaining employee buy-in. “Treat all your employees like grown-ups,” saidMr. Visco. He added, “I spoke with them as if they were all partners in the business. I let themknow they were all integral to what the business was trying to do, and I told themhow I need their support. You have to let everyone know how they fit in and show them howwe’re going to do this together.” Compensation Beyond Salary Bill Baldwin, CFO of Kepner-Tregoe, management consultants, described implementing a restricted stock plan. He worked with a brand that had to implement salary reductions as a result of declining sales. Mr. Baldwin and his team introduced a plan that stipulated that if the region where an employee was working met its operating profit target every quarter, those employees would be paid a quarterly incentive. The incentive would get employees back to earning close to their pre-reduction salary. It was a sliding scale from 80 percent up to 100 percent of operating profit. The caveat was if the total company’s results were less than a certain percentage of plan, there was a holdback to protect the total profitability of the business. “What the plan did was really change the mindset of the employees,” saidMr. Baldwin. It changed how they viewed andmanaged the business. In the past, they were revenue- focused.This plan changed their mindset to “revenue is important but operating profit is evenmore important.” Employees began to make different business decisions around their CFO STUDIO EXECUTIVE DINNER SERIES L. to R.: Ron Tassello, Michael VanPatten, Walter Cirillo, Steve O’Connell, Andrew Zezas The comments made by these guests are their own and may not reflect the opinions and/or policies of their companies or of CFO Studio, Real Estate Strategies Corporation, and/or its promotional partners. Culture, Productivity, and Profits Managing and motivating diverse or globally based employee groups