CFO Studio Magazine with Dominic Caruso, CFO, Johnson & Johnson

$350 million in revenue. After a flurry of acquisitions around 2006 and 2007, Day & Zimmermann concentrated on weathering the recession and then organic growth. And now, says Ritzel, “we’re in a solid position in all four of our businesses (engineering construction & maintenance; workforce solutions; government services & security; and manufacturing ammunition for the U.S. government and its allies). “So it’s the right time to invest.” Getting Ready to Acquire It appears that Ritzel isn’t the only CFO with those thoughts. According to a report by EY last October, the acquisition appetite is at a six-year high, driven by the need to expand at a faster rate than organic growth can provide. Markets are changing, whole industries are being disrupted, and sector boundaries are blurring, said the report. The long- term prospects for growth look positive, another factor spurring the interest of senior executives in 19 industry sectors, 59 percent of whom expected to pursue acquisitions in the 12 months following that survey, which took place in August and September of last year. Ritzel says seeking out “the right strategic fit and the right cultural fit” makes the process of acquisition more of a puzzle than it would seem on the surface. You can buy a business that complements your main business, which is how D&Z got into power maintenance in the 1980s. Or you can buy a competitor, which D&Z did in 1999. The company acquired, Mason & Hanger, was actually in three of the four businesses that D&Z was in; everything but staffing. For that reason alone, says Ritzel, “it was a great deal and the largest in company history.” Ritzel was on the front lines of the purchase and integration as VP and Controller for the then Government Services group. In this 18-month period, he oversaw that integration, while at the same time the company experienced a changeover in the CEO’s office as Hal Yoh replaced his father and the third generation took over the reins of the family business. At the same time, with the installation of its first ERP system, SAP, the company hit some bumps in the road. “We were having trouble processing invoices. It was a nail-biter of a time, and we had just done the biggest acquisition we had ever done,” says Ritzel. He adds the capper: “Put those three things together and that’s when I became CFO,” stepping into the top finance job at D&Z on January 1, 2001. Handling the Challenges The integration of the Mason & Hanger acquisition went pretty smoothly. Having been involved from the start, Ritzel says, he worked to “get all of the synergies out of it.” The startup of SAP was more challenging. Some of D&Z’s billing is complex, Ritzel admits. Government invoices, for example, have to be precise, “down into what they call CLIN (contract line item number) level billing.” He convened teams together to focus on “what had to happen,” not just to straighten out the invoicing problem, but to deliver the reports that were needed by the Business Unit management. He says the hard work was worthwhile. “This truly enabled us to change processes and get people more focused. It was more than just putting in an ERP. By 2003 we got everything streamlined and operating more efficiently, and that really jumped us to the next level.” Dividing His Time Ritzel has a document that he hands out to all the folks in Finance. The document outlines in clear color blocks the scope and potential value of the six critical areas that financial work is involved with, from transaction processing to regulatory reporting to management reporting, to decision support and analysis to planning and forecasting to performance/value/risk management. “The key is that in order to accomplish the priorities in all of those buckets, financial leaders need to work in four different roles. And you need to know what percent of your time should be put toward each role: Operator, Steward, Strategist, Catalyst.” Back in 1983 when Ritzel joined the company as Controller for a newly acquired subsidiary, he reported up through operations and not through the CFO. But that changed. Financial team members now report directly through the Finance chain and have a dotted line to operations. Being a good business partner requires finance executives to perform all four of the above roles regularly, even Operator, which involves problem-solving, customer focus, and building effective teams. “Getting the percentages proper in terms of how much of those roles are devoted to those six critical areas is what it’s all about.” Says Ritzel, “I try tomake sure I am spending more time each year as a strategist and catalyst as the finance team continues to get better. Generally, the higher up in the organization a finance leader goes, the percent of time in these two categories should increase.” With his interest in seeking out acquisition targets, it’s a given that Ritzel will be spending more and more time as strategist and catalyst. C Q4 2016 WWW.CFOSTUDIO.COM 15 GROWING AS A LEADER I n addition to dominating in the power market, D&Z is one of the top 100 defense contractors in the country. Its recruiting and staffing firm Yoh was recently named to Inavero’s “Best of Staffing” list for the third consecutive year. D&Z recently won a No. 7 ranking from Chief Executive magazine for the 10 top private companies in the development of leaders. Joseph Ritzel, Senior VP Finance and CFO, has held his position since 2001. Prior, he held several roles at D&Z, starting in a subsidiary as Controller (1983), and rising to VP and Corporate Controller in 1991. Outside of D&Z, Ritzel has leadership roles in several not for-profits that support individuals with developmental disabilities including Pride Ventures, Inc., where he is President, and Special Olympics New Jersey, where he sits on its Board. He serves as the executive sponsor at D&Z for PDARG (People with Disabilities Advocacy Resource Group). Once in the C-suite, strategic decision-making was top of mind. He is a member of the company’s leadership council, along with the eight other direct reports to the CEO. “This is the body that strategizes with the CEO and then leads their teams in executing that strategy,” says Ritzel. He believes the structure keeps the company lean, “and being privately held allows us to make decisions quicker.” With the strong leadership team Hal Yoh has built and the collaboration of the four business units, Ritzel believes Day & Zimmermann is in a solid position to achieve its strategic objectives in the years to come.