PMCC Interactive

Tag: Performance Management

  • The conversation about the role of the CFO- and where she adds the most value continues- but the bottom line is that Finance counts!

    Thirty some years ago, we began research on the role of the CFO and the impact of financial leadership on the performance of the enterprise.  After interviewing and reviewing more than 50 organizations and engaging thousands of CFO/Financial leaders in workshops around the world, we found that there were several determinants of success.

    Moreover, we found great frustration on the part of CFO’s wanting a seat at the “business management/Strategy table” and the rest of leadership questioning why they needed/should have that seat.  While that conversation continues, the accompanying link to the Visual Capitalist shows that significant progress has been made and that the conversation continues and that is a good thing.

    Enjoy the link:  https://www.visualcapitalist.com/future-of-the-cfo/

    Meanwhile, each day, we continue to prompt the conversation and help Clients create value by  improving the business of their business

  • Private Equity backed global business marketing firm

    Client Description:

    Private equity owned- Global business marketing firm

    Client Opportunity or Challenge:

    • The Client is a European private equity backed company; new investors have an aggressive growth plan in mind. Within 9 months of investment, the Client acquired 3 companies in the US- its first US investments.  Since growth via acquisition was not part of the core experience of our Client, our European Affiliate, Greene 6 Partners, based in Paris was engaged to support post merger integration and assimilation.  Since the diligence period was short, many risk areas were not well understood and required post acquisition remediation.
    • Most of the existing management team was leaving the company because of the relocation of  company headquarters, hence there was a time sensitivity to dealing with issues
    • We advised on a wide range of issues including
    Organization structure IT Risk
    Severance Tax structure
    Recruiting new employees and leaders Marketing
    Cash management and forecasting Finance and accounting
    Performance Management Outsourcing of key functions
    Real Estate and Leases  

    Role:

    Consultant and advisor

    Outcomes or Benefit:

    • Created due diligence and acquisition assimilation guide book for client to use in subsequent transactions
    • Devised strategy and criteria for Leasing decisions
    • Executed risk assessment as well as IT transition plan
    • Established structure for revised performance reporting including data structures
    • Provided criteria and assessed outsourcing proposals for key functions
    • Project managed issues resolution
    • Mentored interim staff
    • Served as surrogate general manager

     

    NOTE:

    Client names are not used because of Client privacy and Confidentiality Agreements.  Similarly, facts are cloaked to preclude people from deducing the Client name or situation.

  • PMCC Services Overview

    Built on more than 30 years of experience, we tailor services to meet our client’s needs. For an overview of our capabilities and point of view, read: 20110425PMCCI Services v2

  • Effective Financial Management- Setting a Developmental Agenda

    In most instances, enhancing financial management capabilities will require that leaders not just focus on that which can be made more effective and efficient- that is obvious and easy and does not create a lot of value.  Instead, Finance leaders will have to both focus on efficiency and at the same time focus on what has been missing and create those capabilities from the “ground up”.

    I recently attended a local CFO Breakfast.  The breakfast theme was financial leadership-and it lead to a lot of different interpretations in the discussion- but some common themes emerged and not all of them are new.

    • Role of finance
    • How can finance “get more respect” be more vital etc?
    • What should finance be working on….

    The answers are of course:  It depends on the individual circumstance.  I go to the school that all improvements are good improvements- and that the value of investing in upgrading capabilities will eventually accrue to the organization.  However, absent a specific change agenda, I suggest that Finance Leaders consider the following scenario and plan their mid to long term development agenda around the needs suggested in the scenario below:

    • Investors will always demand incremental returns….
    • There  is significant cash on the sidelines of public companies and investment funds
    • So …Companies will have to invest or return cash to shareholders or limited partners- which for a whole host of reasons, there is a general reluctance to do so…
    • Hence …there is pent up demand to invest- and in the Spring of 2011 this is playing out in the volume of announced large strategic deals
    • Meanwhile,,,, Banks are offering less leverage than once considered “normal”
    • And…. Lack of leverage staunches the ability to increase returns using financial engineering techniques
    • At the same time it appears that…. developed economy countries economies will not grow very rapidly in the near term and therefore not provide volume growth opportunities to the market
    • Hence….“Class of 2011 and likely 2012” deals will have to get their returns the old fashioned way- they will have to earn them through
      • Market Innovation- new products and new markets
      • Operating excellence- achieve best cost operations
      • Working capital creation and increased velocity
      • Causing…. the overall competitive environment to intensify as mergers and acquisitions that are sure to follow an economic downturn take place but in new formats and capital structures
      • And….place pressure on all competitors for enhanced performance
      • Which… if not properly managed could start the economic challenges giving rise to this scenario to start all over again…. Just when we thought we were emerging….

    To deal effectively in this environment, companies and their finance leaders will both have to ensure that the skills and capabilities in the finance group are sharp as well as ensure that the organization as a whole understands and is focused on driving returns for the business.

    If these assumptions are plausible for your organization, it stands to reason that companies will need to have above average capabilities in most all of the five following domains.  In fact the capabilities will have to be so good that they will both enable profitable innovation and growth- as well as pave the way for solid operating performance- and today, not many companies are necessarily good at both.

    Domain Relative Financial Management ability required in the business
    Financial Planning, Control and accountability Businesses will have to plan with more rigor to ensure that scarce resources are allocated in ways that will drive value and produce measurable results in the expected timeframes; Accountability processes will have to be real time and responsive to changing market conditions and company performance.
    Information for Decision Making Business leaders will need to have relevant, reliable and readily available information where and when they need it- in the formats that promote insight and compel action.
    Cost Structure Understanding Companies will not have just have to have low cost- they will require a best cost approach to the business- that is integrated- investing, cost cutting and operating rigor can’t operate independently. For success, they will have to operate together.  Capabilities will have to be in place so that people designing operations are doing so with the cost structure in mind so that they can make appropriate optimizing trade-offs and decisions.
    Business Literacy People planning and commanding resources will have to have a firm sense of the business of the business of how profits are earned and value is created so that they can make real time tradeoffs and decisions.
    Working Capital Capital deployment will be key.  Idle assets will have to be turned into cash and invested or used to meet the capital requirements of the business.    Similarly, returns on new capital invested will have to be closely monitored to ensure sustainable value creation.

    Time is tight and the stakes are high. Financial leaders will have to take stock to ensure that not only do individuals in the business possess capability and capacity in these domains, but that the fundamental business practices and processes are in place to effectively use and deploy these capabilities.  Some organizations will have to do some quick make or buy analyses to determine their organization’s own capabilities and the most expeditious path to developing and deploying them.

    • How do you rate your organization’s abilities in these domains in light of your business requirements?
    • What can you do to ensure your finance organization is up to the task?
    • What’s in the way of you accomplishing what you need to accomplish?