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You are here: Home / Archives for Risk Management

January 21, 2015 By Samuel Dergel 4 Comments

Lessons Learned from Target Canada: Strategy vs. Culture vs. Leadership Talent

The closing of Target in Canada within a couple of years of the iconic US retailer expanding its business in an attempt to become multi-national in an attempt to complete and grow against its main competitor (small company based out of Arkansas) is sad.Strategy Culture Leadership Talent @DergelCFO

Sad because over 17,000 people lost their jobs and need to start over.

Sad because the brand of a true ironic American company has taken a big bruising.

Sad because, if the expansion was executed correctly, it would have changed, and probably improved, the retail landscape for Canadian consumers, not to mention the impact it could have had internationally.

And most importantly, sad because it didn’t have to turn out this way.

I have waited to share my thoughts on this news so it could allow me to think about how to comment on this property, while taking in the commentary and opinions of others.

There are those that come out and blame the logistical failure that led to empty shelves.

A number of people pointed to pricing differences between the US and Canada that had Canadian consumers scratching their heads at the perception that Target Canada’s pricing was inconsistent and unfair.

Pundits point to the poorly chosen locations ‎that Target chose after the demise of Zellers in Canada, as well as the strategy of opening too many stores at once while not learning this new and culturally different market.

In the end, while these may be reasons (excuses) for a series of failures, the failures of execution stem from the failure of leadership. And this goes all the way to the top, and every leadership level on the way there.

Imagine the scene in the boardroom at Target a few years back. Imagine executive management making a very slick presentation to the Board as to the Who, What, Where, Why, When and How of expanding into Canada. Imagine that everyone was giddy with expectations of success, profits and accolades. The strategy was set. All was needed was the execution of the strategy.

When I picture the final approval at the table, my childhood memory is of Captain James T. Kirk saying those famous words “Make it So, Number One”.

Obviously, “making it so” is a lot easier said than done. Target’s Canadian adventure is one more highly publicized misadventure for MBA case studies of the near future.

Leadership Talent is where this fell apart. All the actions or inactions, reasons or excuses, come from the fact that the right people were not hired or promoted to make this grand scheme work.

I continue to see, time and time again, situations where companies do not bring on board the best possible leadership talent to execute. Execution not only means following the original strategic plan, but making sure that the plan continues to evolve as the situation evolves. The mistakes we know about, as well as the mistakes we will never hear about, all contributed to the demise of this $4 billion dollar adventure for Target shareholders.

I also continue to see, time and time again, choices being made in executive hiring that are emotional, personal and illogical. Vested interests lead to decisions being taken without proper assessment of the true needs compared to the knowledge, skills and abilities of the best candidates for these mission critical roles.

The bright side of the Target foray into Canada is the impact that Target culture has had on a generation of Canadian employees. I enjoyed reading and hearing about the warm, motivating, employee excellence and recognition culture that permeated the organization. ‎I believe that employers and employees across Canada will benefit from the introduction of these ideas into businesses across Canada for years to come.

But to paraphrase Peter Drucker:

Culture may eat strategy for breakfast, but Leadership talent ensures that there is food on the table. 

Filed Under: Bankruptcy, Board, Companies, Failure, Hire your Next CFO, Leadership, Peter Drucker, Quotes, Target

February 4, 2014 By Samuel Dergel 4 Comments

The Sleepless CFO

Being Chief Financial Officer can be stressful. The responsibility that the CFO bears for the company they work for is not a 9 to 5 job. Most CFOs I have met and spoken with agree that the role takes up most of the hours they are awake, and even some of the hours they should be sleeping.Couple In Bed With Husband Suffering From Insomnia

So what keeps the CFO awake in 2014?

To find out, I reached out to my CFO Advisory Group. My CFO Advisors were instrumental in providing me with relevant and realistic input as I wrote my upcoming book. Guide to CFO Success: Leadership Strategies for Corporate Financial Professionals is published by Wiley & Sons, and will be available at all fine bookstores end of March 2014.

I recently asked my CFO Advisors what top their top 3 concerns that keep them awake at night. After reviewing their responses, here are the top 3 current issues that are keeping CFOs from getting a good night sleep.

#3 – Team

CFOs are worried about their team. Some CFOs are concerned about how to continue to grow and motivate their staff. Others are losing sleep worried about retaining the staff they need or dealing with the aftermath of unforeseen resignations. There are some CFOs who are unsure of how they will succeed in acquiring and developing the new talent they need to make their team even better.

Regardless of the type team based challenges facing the CFO, they know that they can only be successful if their team is strong enough to support them. When the finance team is not giving the CFO what she needs to succeed, this can cause anxiety and sleeplessness for even the most experienced CFO.

#2 – Growth

Growth can be an issue for many CFOs. Or, rather, the lack of growth is the real issue. Most for-profit companies define success as making more money, and for the Chief Money Counter, growth drives corporate financial success. It is the Key Performance Indicators of this growth that informs the CFO if the company will reach their targets or not.

When companies are continually growing their revenue and profit, all is good. Few companies though, do this regularly and consistently. Financial success for most organizations can only come when sales rise and profitability continues an upward trend. For the CFO, who knows they are king when the results are good, and the court jester when the results aren’t, losing sleep over growth is understandable indeed.

#1 – Cashflow

Cash is King. The ultimate responsibility of whether there is enough cash to do what needs to get done rests with the Chief Financial Officer (even when their team does the technical work). CFOs are concerned with cash from all sides, whether they are collections issues, access to capital and lending or how to make decisions about allocating cash in the most effective way.

Cash is, by far, the most common issue that is keeping my CFO Advisors awake at night. What is interesting about this response is that cash was a concern for most of my CFO Advisors, yet they all come from different industries and company sizes. It seems that cash issues are a challenge in most, if not all companies. While the type of cash challenges will certainly change based on the situation facing a company and its industry, most companies, and therefore most CFOs, are anxious and losing sleep over cash.

What is keeping you awake at night?

Filed Under: Blog, Books, books for CFOs, CFO Poll, CFO Research, Executive Coaching, Executive Search, Executive Search, Guide to CFO Success, HR, Sales Department, Social Media, Speaking and Training, Successful CFO, Wiley

August 14, 2013 By Samuel Dergel 1 Comment

CFOs: IPOs are coming back. Are you ready?

Initial Public Offerings were hot commodities in the early and mid oh-oh’s. Most finance leadership reading this blog remember those days well, and some of you did very well financially because of it.

The recession that occurred towards the end of the last decade put a stop to that IPO train. Companies needing capital for growth had to look elsewhere, and many companies were unable to succeed because this driver of growth dried up.IPO (Initial Public Offering)

For the past few months I have been hearing the rumble of the oncoming IPO train. A number of CFOs I have spoken with in the past months have shared with me that they are being given the strategic responsibility to be ready for when the IPO market comes back. There is a feeling of cautious optimism that this catalyst for economic growth will soon be back.

How can a CFO prepare for the talent challenges to come?

One of the biggest challenges that an uptick in the IPO market will face is that there is a small pool of talented mid-level professionals with relevant and recent IPO experience. The amount of work needed to be IPO ready is significant. When the IPO dam breaks, many companies will be rushing to get their IPO done. If the talent challenges are not planned properly, companies will have to be more reliant on expensive external resources (think audit and law firm rates). Companies who properly plan for their talent needs in advance will be able to go public earlier, which could be very beneficial as well.

Another significant challenge to companies that are currently private is that the cost of being public is expensive. A CFO needs to ensure that they have the leadership and professionals on staff that can deliver the quantity and quality of timely and correct information necessary to be considered a well-run public company. CFOs bear the burden when their finance team is not able to deliver accordingly.

CFOs who have been mandated to prepare for an upcoming IPO by their board need to have a talent plan to ensure they can meet their needs for going public and staying public. This plan for talent acquisition, development and retention is necessary to balance the costs of going public and staying public.

This talent planning business will not be easy. But those that start planning now will be at an advantage.

CFOs, get ready. You could be in for a very bumpy ride on the IPO Express.

Filed Under: Board, Board, CFO Coach, CFO Coaching, CFO Coaching, CFO Compensation, CFO Consulting, CFO Search, CPA Firm, Finance Team, Finance Team, HR, Human Resources, Investor Relations, Investor Relations, Investors, Investors, IPO, Public Company, Succession Planning, Succession Planning, Talent Management, Talent Management, Talent Management, Team Structuring, Team Structuring, Team Structuring, Training and Development, Training and Development

July 11, 2012 By Samuel Dergel 1 Comment

CFOs & Reputation Management

The Chief Financial Officer cares about reputation. They care about their personal reputation, the reputation of the company that employs them, and the reputation of the people and companies their employer does business with. Reputations are very important to CFOs.

Michael Fertik, founder & CEO, Reputation.com

To find out more about how Reputation Management affects the Chief Financial Officer, I spoke with Michael Fertik. Michael is founder and CEO of Reputation.com, a leading and award-winning Internet Reputation Management Company based out of Redwood City, California. Reputation.com’s mission is to empower individuals and businesses to control their privacy and reputation online.

Fertik sees Reputation Management as a very important issue for CFOs. He finds that CFOs are not only a key organizational leader working to manage the reputation of the company, but that Chief Financial Officers are also very aware that managing their personal reputation is key to their career success. In today’s age where every person has to manage their own career and be their own PR agents, being responsible for your own reputation is important to CFOs, who tend to have high profile visibility on the internet.

With CFOs often responsible for Risk Management at a company, Fertik finds that CFOs are many times the one calling on Reputation.com to help instead of the head of marketing or communications.

Fertik believes that CFOs need to know how important Reputation Management is to a company. Referring to a survey of risk managers, Fertik points out that the number one major risk to a company is not financial risk or catastrophic risk, but reputation risk. He points out that this is true no matter the size of the company.

There are 2 factors that affect a company’s reputation according to Fertik.

Product / service reputation. This impacts corporate reputation, customer reputation, business positioning and strategic leadership reputation.

Personal reputation of key executives, including the CFO. Every potential and current  customer, supplier and employee is looking you up on the Internet AND making decisions based on what they find. Fertik says that surveys show that the internet is the number one source of information on people and companies and that people rely overwhelmingly on quick assessments based on very quick searches to make actionable decisions about those subjects.

How does Reputation.com help CFOs manage their Reputation Risk?

Reputation.com’s product suite, with dashboards, maps and understandable tools, makes it easy for Risk Managers and CFOs to identify and remedy online reputation problems.

CFOs that have been part of an executive team that has had to deal with a reputation crisis know that these challenges can have catastrophic impact on their company and its employees. In a crisis situation, Michael’s team at Reputation.com continues to deliver results as reputation crisis experts with their ability to operate 24/7, using their tools and learned knowledge from helping companies in crisis all over the world.

Fertik recommends that companies take a proactive approach to managing Reputation Risk. He says that it costs 20 times more on average to solve a reputation crisis as opposed to preventing the problem from happening on the internet in the first place.

Have you ever had to manage a reputation crisis as CFO?

Filed Under: All of Samuel's Blogs, All of Samuel's Blogs, All of Samuel's Blogs, All of Samuel's Blogs, CEO, CEO, CEO, CFO, CFO, CFO, CFO Relationships, CFO Relationships, CFO Relationships, Chief Financial Officer, Chief Financial Officer, Chief Financial Officer, Michael Fertik, Personal Branding, Reputation Management, Reputation.com, Trends

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