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8 SERIAL MISTAKES THAT COST YOUNG FINANCE DIRECTORS DEARLY

Montreal, 01 June 2012

Finance directors are so task loaded that they may overlook practices that are costing them dearly, in the short run, and career wise.  Our coaching and consulting experience has led us to identify 8 areas which all finance directors must inevitably address in order to escape the straight jacket of overheads.  You either do them right, or wrong.  None is individually critical, but bunched together they make a difference over time.   In any event, they are food for thought, and in some instances, a call for change before it is too late.

  1. NOT DEFINING A CLEAR VISION ABOUT YOUR NEXT FUTURE JOB

Career planning is essential, and so is a vision about where you want to be in 5 or 10 years.  Having a vision clarifies the roadmap to acquire the necessary toolset and skills.   A lack of vision makes it difficult to recognize whether a new proposal/offer is a good opportunity or a pitfall, whether it makes sense or not in terms of career progression.   All too often finance professionals make a bad jump for the wrong reason, in the wrong place, because of opportunism as opposed to smart planning.

     2.   MISUNDERSTANDING THE EXPECTATIONS FROM YOUR CEO AND/OR THE BOARD

All CEOs have expectations beyond the production of financial statements.  If it is not crystal clear what is your expected value added role to create a wow performance, you are likely to be confined to a shrinking overhead function.  This is the first stage to set yourself up for failure as a fledging finance director.  Getting rid of the ‘overhead’ tag takes heroic effort.  Prepare and organize for higher tasks.

     3.   TOLERATE AN AVERAGE TEAM

An average team makes you indispensable, to them.   Fine, but this is unlikely to last.   You might not be indispensable to your boss if you can’t deliver. If you find yourself unable to delegate, you are sure to limit your performance and remain stuck in the ‘overhead’ function:  long hours, overtime, unclear procedures and manifest frustrations.   As the saying goes, you are just as good as your subordinates.  Make sure you build a high performance team, train it, and reward it.

     4.   OVERINDULGE IN YOUR OFFICE SPACE

You like your office and your staff.  You hardly spend time on the shop floor or in marketing meetings.  And you might actually not have met a customer for years?!  If this is the case, you are missing out on a lot of things that would help you out craft a strategic role for the company:  business intelligence, in-depth company knowledge, opportunities to develop interpersonal skills, catching out problems early,  etc.   It might be time to spend a day with a salesman and position yourself to win the special projects.  Obviously you need to delegate to venture out of your office.

     5.   DISMISS “ IT” AS A POWERFUL LEVERAGE IN YOUR FUNCTION

Your company is growing and is thinking about implementing an ERP?  A dreadful word when the average success rate in ERP implementation is way below 50%.  So far, simple financial accounting systems and multiple excel tables have served you well.  You manage to get the financial statements out, under a reasonable delay.  In today’s world, accounting and reporting are meant to be automated and cleared early after closing.  Actually, a jump to the ERP world is just the spring board for you to create the business intelligence the company needs.  It will fall into your hands first.   Make the system work for you and get out of the “overhead” prison.   If you are unsure about managing an ERP project, jump to point 8.

     6.   YOU THINK YOU CAN GET AWAY WITHOUT A GOOD CASH FLOW FORECAST OF 12 MONTHS

You actually earn your first wings as Finance Director when you can produce a decent financing strategy for the company.   There can’t be any such strategy without a good cash flow forecast.  And you won’t convince the board, or your banker without one.   Mastery of cash flow puts you in charge of investment and asset allocation.  But I wish you good luck if a financial crisis hits you in the face, unprepared.

       7.  ATTENDING JUST ONE ANNUAL ECONOMIC CONFERENCE TO FIGURE OUT WHAT IS HAPPENING

This was all right 10 years ago.  The rise of China has shuffled the economic models.  Countries are stretched to make the necessary adjustments.  We are now in a continuous period of turbulence and economic instability.  Financial risks abound and the board and your CEO will rely upon you to spot them ahead.  When a crisis hits the financial markets, you ought to be ready in terms of interest rates, exchange rates, impacts on investments, changes in competitiveness, etc.  Under financial clouds, you will soon find out that availability trumps pricing.  Macroeconomic reading should be a daily task.

       8. YOU ARE PUT IN CHARGE OF A SPECIAL PROJECT, AND YOU DON’T BUY YOURSELF A FLASHLIGHT

You have been doing rather well lately and you are given responsibility for an important special project.  Your reputation and credibility is on the line.  You do well, and you move up.  You screw up, and you will remain in your office.   Now you are also most likely a tight budget manager and you know how to control your expenses.  And sure enough you don’t buy yourself the flashlight that could make the difference between success and failure.  The flashlight is the consultant with the expertise that quickly tells you whether you are on track or not.  The flashlight is not expensive.  The lack of it, is. Learn to work and use consultants.

Experienced CFOs know that these eight practices do make a difference.  Escaping the overhead straitjacket requires that you master the tools and mindset to put you on the fast track to CFO status.  If you recognized those eight points, you are on the right track.  If you would like to work on some of them, give us a call.  If this article really surprised you, you might read it again. 

André Du Sault

MBA (LBS), MPA (Harvard)

adusault@dusaulthaddad.com

514 777-1538

ADS directs the CFO Leadership Program, aiming at building outstanding CFOs.  We  provide individual coaching and programs to improve the value added performance in F&A departments.

Posted in CFO & treasury, Management ideas.

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7 Responses

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  1. Annie Marceau says

    Un article très pertinent.

  2. Fouzia Bilal says

    Excellent Assessment

  3. Milad Yacoub says

    very interesting
    thank you

    • Ania says

      This is exactly what I was looking for. Thanks for wrgitni!

  4. Patrick Montpetit says

    Well written and absolutely accurate, especially for small companies where the CFO has to do it all.

    • Atlas says

      This article acivehed exactly what I wanted it to achieve.



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