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You are here: Home / Archives for Restructuring

February 25, 2015 By Samuel Dergel Leave a Comment

CEO: When Your Brand New CFO Leaves

Dear CEO,

I noticed in the news that the CFO you hired with big fanfare only a couple of months ago has left. Your press release quoted your recently new and currently past Chief Financial Officer saying that he is returning to his previous employer because the role is too good of an opportunity to pass up.The CFO Revolving Doors

I have never been Chief Executive Officer of a publicly traded billion-dollar revenue company. I do imagine, however, that the conversation your new CFO had with you must have felt like a kick in the gut, among other places. I am sure that it was not a good day for you.

You know more than most that the past can never be changed. The question remains what can be learned from this ordeal.

While I was not involved in the drama that evolved both before, during or after this incident occurred, I have seen it happen too many times in my weekly coverage of CFO Moves across the US, Canada and the UK. Here are some pointers that you can give to other CEOs so that this does not happen to them.

1) Don’t fall in love with the wrong candidate. Technical, interpersonal, leadership, communication skills are all great. But to hire a great CFO to take you to the next level, you need to connect with motivation of the candidate.

2) Be honest with yourself. You may run a great company but your CFO to be is coming from an ever better environment, understand why they are saying yes. If you know you are runner-up, you may find yourself holding the bouquet at the alter.

3) It’s not just about money. Never, ever think that a CFO takes a role just because of the compensation package. Sure, CFOs are money motivated, but once basic needs are met, other needs are much more important.  (Maslow’s hierarchy of needs is the same for CFOs, except their basic needs are different than most).

4) Select your executive search partners carefully. I know that you understand the value of working with retained executive search for hiring your key leaders. Not all search firms are created equal, and not always should a search firm you have used in the past be the one you use for a critical search like your next CFO. One key differentiator you search firm needs to have is the ability to truly connect with the executive candidates. When looking for a Chief Financial Officer, a great retained search team has the ability to act as an advocate for the needs of the CFO candidate. The closer your recruiter can become a true partner to your CFO candidate, the better opportunity you will have for hiring a CFO where you will be his or her first choice.

If there is a cloud to this silver lining, it is that your recently retired CFO is available to cover until you hire again. I wish you all the best in hiring your next CFO. This time, I know you will make a better choice.

Wishing you continued success,

 

Samuel

Filed Under: Books, books for CFOs, Guide to CFO Success, How Samuel Helps

February 6, 2014 By Samuel Dergel 2 Comments

3 Lessons Learned: The Failure of Heenan Blaikie

The Canadian legal and business communities are getting over the shock that a storied, successful and well known establishment corporate law firm has decided to shut its doors this week. (Read the Financial Post: Heenan Blaikie partners vote to wind up operations)Heenan Blaikie

Heenan Blaikie has been an icon in the business community in Canada for decades. The fact that it can just disappear and disintegrate in a matter of weeks leaves many lessons to be learned. Here are some of the things that were reinforced for me this week.

#3 – Job security is a myth

The only place that job security exists is in your head. There is no such thing as a safe, life-long, job.

Throughout my career in recruitment, I have always heard from individuals that were looking for the safety and security of a career in a firm that is too big to fail. And every so often, stories of failures, restructurings, refocused strategies and mass-layoffs make the headlines. If you would have asked any employee (and many partners) this past December if they had any fear for their career with the firm, they would have given you a look that would be a mix between being puzzled and that you must be out of your mind.

Don’t ever think you have job security. I don’t care what company you work for, even if you work for supposedly secure jobs in government. You job is at risk. If you don’t want to be unemployed, or to minimize your time in transition, you must build and invest in your network. You can only expect your network to work for you if you have invested in it before.

If you’re a CFO or senior finance professional, you may want to read my chapter on CFO Transition in my upcoming book.

#2 – Beware the multi-headed monster

If you’re my age, you remember Sesame Street well. You will also remember the two-headed monster with a smile.

Professional services firms have a challenge becoming a business like the others. The nature of this type of firm (accounting, legal, engineering, marketing or even executive search) can be very perplexing. In most publicly owned businesses, the boss is the CEO and the Board represents the owners. Managing relationships for an executive in a standard environment can be challenging enough. While there is a chain of command, the number of people to keep happy is limited and controlled.

In a professional services firm, every partner is the boss. Add a number of people with big egos and who are not afraid of litigation and you can find yourself facing a multi-headed monster that is not as cute and cuddly as the Sesame Street version.

Managing relationships is a key component for the success of any executive. From the perspective of a CFO, I believe it looks like this. In my soon to be released book, I discuss the issues of managing these relationships for success, and dedicate one chapter to the challenges of managing the relationships of the people you report to.

#1 – The world is changing. Are you?

This applies to all businesses as well as individuals.

The post-mortem on Heenan Blaikie will continue for a while. When a personal relationship breaks up, there is his story, her story and the truth. In a partnership that has many heads and egos, the story can only be more complicated.

From an informed outsider’s perspective, the legal industry has been going through changes in the past years and decades, mirroring the changes that have been going on in rest of the business world. In today’s world, business needs to grow to keep their competitive advantage, needs to assess strategic opportunities and threats, and must take on a more global perspective while keeping a local flavor.

All businesses must adapt to the changing realities facing them. Failure to do so can lead to doors closing.

On a more personal note, each one of us needs to be aware that to continue to stay relevant and employable, we must continue to improve, change and adapt so that we can thrive. Sitting at your desk while the world changes outside your window will only leave you dazed, confused and lost when security leads you outside the building.

What are you doing to:

    • Create your own job security?
    • Get the best out of your work relationships?
    • Stay ahead of the curve in a continually changing world?

Filed Under: Failure, Failure, Heenan Blaikie, Job security, Personal Branding, Professional Services Firm, Uncategorized

October 19, 2012 By Samuel Dergel Leave a Comment

The Quick CFO Turnaround

This is not about a CFO turning a business around quickly.

This blog is about the Quick Hiring & Unhiring of a CFO.

As someone that tracks CFO Moves every week across the country, I see this too often. Every time I see it, it bothers me, especially when I know that it could have been avoided in many cases. Here is one recently reported example of one Quick CFO Turnaround – Ulta Beauty CFO out after 6 weeks on the job.

An outsider will never really know the reason a person leaves their position. Like a divorce, there is the official story, the company’s story, the employee’s story and the real story.

That being said, here are some things that can be done to ensure CFO hires are done well, and can be successful over the long term.

    • Use an Executive Search Firm: You can read my previous post 4 Reasons you should use an Executive Search Firm when hiring your CFO.
    • CFO Readiness: Previously I wrote Are you Ready for your First CFO? The same Readiness that applies for a company’s first CFO applies when a company has had a CFO for a very long time and needs to change.
    • Onboarding: CFOs need to plan their Onboarding. My take on Onboarding is in blog The First 90 Days of a New CFO. As one CFO who went through a Quick Hiring & Unhiring told me recently “I wish I read the book before I accepted the job”.

Hiring for any executive level position needs to be treated seriously. Unfortunately, in too many cases, companies that do not treat their executive level hiring needs with the proper attention and resources necessary. This can end up doing serious damage to their company.

Many executives that are approached for career opportunities rely on their own business acumen to assess and accept career positions. When executives, CFOs included, are looking at career opportunities for themselves, they should know that they are minimizing their own career risk when the company they are being considering by is working with a reputable Executive Search firm.

CFOs: Has being hired by a company that worked with an Executive Search firm make a difference to your career?

Filed Under: Career Management, CFO Moves, CFO Moves, CFO Readiness Program, Courage, Onboarding, Talent Management

November 8, 2011 By Samuel Dergel 3 Comments

Ask Samuel: My finance staff doesn’t deliver

Dear Samuel

I was wondering if you can help me with some thoughts on a situation I continually face.

I would really like to be able to focus on adding value to the business, both from a longer term strategic view as well as helping the company make the right decisions on an ongoing basis.

I am finding however that I am spending too much time reviewing and correcting the work of my team. Sometimes I find myself having to do the work that my team was supposed to do because of vacations or unplanned time off.

How can I get beyond this?

Frustrated in Fresno

Dear Frustrated,

As CFO, you are only as strong as your finance team allows you to be.

A smooth functioning finance team does not happen by itself. It requires:

– knowing what work needs to get done

– preparing an org chart that allows you to be properly staffed so that the work get done, right, the first time, on time.

– staffing your team with the appropriate people

– replacing poor performers and people that do not have the skills you need

– having a talent development plan to ensure the people on your team continue to develop.

Not only do you need to make sure your team is well prepared to support you, you also need to know what your vision is as CFO, and what your personal action plan is to make it happen.

Having a sounding board, like a CFO Coach, can certainly help you stay on track to ensure you develop your team properly, as well as help you prepare your vision and action plan.

If you’d like to ask Samuel a question, click here.

Filed Under: Ask Samuel, Financial Executive Coaching, Succession Planning, Succession Planning, Succession Planning, Team Structuring

November 3, 2011 By Samuel Dergel 2 Comments

Is it time to replace your CFO?

There have been lots of topics online recently about the need for a CFO. Some of these articles have been referred to in my previous blogs. I recently realized that these articles and blogs talk only about bringing a Chief Financial Officer on board, but do not about replacing a CFO.

I’m very pro-CFO. I am close with a lot of CFOs and know many, many more. So why would I write a blog about replacing the CFO?

When a CFO is hired, they are the right fit for the job. (Unless a company hires the wrong CFO). However, change is a constant. Companies change. Industries change. Economies change. Not only is change a constant of our current business landscape, but change is happening quicker than ever. So in a very short period of time, the CFO that was hired and right for the job may no longer be the right person if he or she is not changing and growing along with the company.

For the CFO that wants to continue to be successful with the company they are with, they need to constantly challenge themselves to grow and make sure they can meet the needs of the company as it grows. Coaching can provide support and guidance towards a path of continuous improvement for the CFO.

What I see in many cases is that a CFO gets lazy. Rather than continue to grow, these CFOs focus on their abilities and get stuck in the past.

So, when should a company replace their CFO?

1) When the company has changed, and the CFO hasn’t.

2) When the major investors lose confidence in the CFO.

3) When the company is getting ready to change, and the current CFO does not have the skills and abilities necessary to be a leader for that change.

Some of my CFO Search mandates are driven by these factors. The remainder of my Chief Financial Officer Searches are due to

1) a CFO leaving the company by their own choice

2) a CFO that was asked to leave the company

3) the company hiring their first CFO.

So how exactly does a company hire their next CFO when their current CFO is still in his or her chair?

Stay tuned (and click “Sign me up!” on the right of the blog page to get Samuel’s CFO Blog delivered to your email inbox as soon as it’s published).

Filed Under: Assessment, Assessment, Chief Financial Officer, Chief Financial Officer, Chief Financial Officer, Chief Financial Officer, First CFO, Hire your Next CFO, Hire your Next CFO, Hire your Next CFO, Investors, New CFO, New CFO, Private Equity, Public Company, Search, Training and Development, Training and Development, VC, VP Finance

September 14, 2011 By Samuel Dergel 12 Comments

Negotiating your CFO Employment Contract

Congratulations! You have been offered the role of CFO at a company you are excited about. You’re buzzed, and pleased with yourself, and so you should be. However…

… keep the following in mind:

    1. From my experience, most CFO roles last an average of 3 years. The time to prepare for your next job is today.
    2. The best time to negotiate the terms of your employment is when you begin your employment.

Some Warnings:

    1. Be sure to have an employment contract. An offer letter may not be sufficient to protect you.
    2. Have the employment contract reviewed by competent counsel before signing.
    3. Do not resign from your previous role without ALL the details being worked out.
    4. A proper employment agreement not only protects you, it protects your new employer as well.

Now, let’s take a look at some things you should be looking for in an employment contract.

(Please note: I am not offering legal advice. I am reviewing points worth considering when negotiating your CFO employment agreement. For specific advice with regards to your employment situation, I recommend discussing it with competent counsel.)

Issues to consider for your employment agreement.

    1. Base compensation – you know how this works. You want more and they want to give you less. This is where all those years of sharpening your negotiation skills come into play.
    2. Upside – regular bonuses, special bonuses, stock based compensation etc. – many conflicts arise because of lack of clarity on how this works. Be sure it’s clear.
    3. Severance – you may be asked to leave. It happens. Having clarity on what happens if you are asked to leave is important not only for your cash flow after you leave, but for your reputation as well.
    4. Notice – you love your new job, but a better one might come along. What will your responsibilities be upon leaving?
    5. Restrictive covenants – usually includes non-disclosure and non-competition clauses, but may include others. It may be detrimental to your new employer for you to take your next job at a direct competitor. Ensure that the time limits on these restrictive covenants are reasonable, and get competent legal advice as to their reasonability.
    6. Relocation – there should be no guessing games when it comes to relocation for your new role. Will they cover moving expenses? Transition costs? Cover your ‘out-of-the-money’ mortgage? Clarity here is key.
    7. Other benefits – What will be offered in insurance (health, life, disability)? Will there be a car? Access to the corporate jet?

Issues outside your employment agreement that you will want to have a clear understanding of prior to accepting:

    1. Office – I have seen CFOs get off on the wrong foot when they get an office that was not what they were expecting. It can really sour the relationship.
    2. Resource support – Will you get an Executive assistant? Will you share one? Will you get to choose your own? (See Does a CFO need a PA?)
    3. Allowable expenses – What expenses will you be allowed to charge to the company? Is there a policy for executives?
    4. Professional Development – You should have a budget for allowing you to attend conferences you deem necessary to ensure you are on top of your game. You don’t need to be going hat in hand to the CEO each time.
    5. Coaching – Does your CEO have a Coach? If he or she does, then you should have the budget for one too. If your CEO doesn’t have one, you should recommend that he or she gets one. (See 5 Reasons why you need an Executive Coach)
    6. Team Headcount or Staff Budget – Before accepting the role as CFO, you need to know what the cost of your team is, and get clarity on the leeway you will have to make changes you feel are necessary to deliver to the rest of the company. (See A Strong CFO needs a Strong Finance Team)
    7. Onboarding – Ask what the plan for “Onboarding” is. You might get blank looks. Make sure that you have an onboarding plan that allows you to develop the internal relationships necessary for success. (If you want to know more about Onboarding, we will be posting a Blog on the topic soon. Click on the “Sign me Up” Button on the right to get blog updates directly in your email inbox).

Special situations.

In special situations, keep this in mind: When the company’s risk increases, so does yours.

    1. Restructuring – if you start off in a restructuring situation, or you are called upon during your mandate to turn the company around – you need to address the following situations.
      • Bonuses. If you accomplish the goals set out, you should have potential for an upside. Be clear on what the upside is.
      • Getting paid. You’re working hard for the company. If the company has no cash, and you’re busting your chops, what is the guarantee you will get paid.
      • What happens on bankruptcy, buy-out, new investment etc. How do you protect yourself and your career? Work these things out in advance.
    2. CEO leaves permanently or temporarily – It is time to renegotiate. (See Are you a CEO in Training?)
    3. Poison pills and takeovers – time to renegotiate.
    4. Where the CEO or other executives are getting special compensation privileges, it may be time for you to ask for more as well.

Remember, a key reason your new company is hiring you because you are supposed to be a great negotiator! Show them how you negotiate a win for all sides.

Filed Under: All of Samuel's Blogs, All of Samuel's Blogs, All of Samuel's Blogs, All of Samuel's Blogs, All of Samuel's Blogs, Bankruptcy, Board, Board, Board, CEO, CEO, CEO, CFO, CFO, CFO, CFO, CFO, CFO Coach, CFO Coach, CFO Coach, CFO Coach, CFO Coaching, CFO Coaching, CFO Coaching, CFO Coaching, CFO Compensation, CFO Consulting, CFO Consulting, CFO Consulting, CFO Consulting, CFO Relationships, CFO Relationships, CFO Relationships, CFO Relationships, CFO Search, CFO Search, CFO Search, CFO Search, Contracts, Executive Coaching, Executive Coaching, Executive Coaching, Executive Coaching, Executive Search, Executive Search, Executive Search, Finance Team, Finance Team, Negotiation, OnBoarding, OnBoarding, Personal Assistants, Recruiters, Speaking and Training, Successful CFO, Successful CFO, Successful CFO

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