The Road To Cfo22

the new road to CFO.

move up in the world.®

how today’s top finance execs are earning their seat at the top and achieving success.

the new road to CFO. how today’s top finance execs are earning their seat at the top and achieving success.

The role of chief financial officer (CFO) has expanded significantly in the past decade with the advent of heightened scrutiny in an intense regulatory environment. CFOs now have more responsibility and attention paid to them than ever before, in large part due to the implementation of Sarbanes-Oxley. As a result, the staffing professionals at Ajilon Finance have observed that the role of CFO has become more strategic and also, more competitive. Today’s CFO has evolved from chief financial officer to chief “business strategy” officer. They have moved beyond crunching the numbers and now must be capable of advising their management teams and boards on what the numbers truly mean, as well as analyze and articulate the impact of financial and strategic business decisions. This evolution means the road to becoming a CFO has changed and so has the criterion for success. Today, CFOs must be able to go beyond the traditional set of responsibilities and into managing a variety of business operations including finance, IT, procurement and HR . In our conversations with companies staffing their finance teams, we’ve found as they rapidly grow and evolve, the desire for specialist CFOs has increased. The following report explores this evolution, based on our experience working with CFOs and the companies who hire and manage them, and also provides a first-hand look of how others have achieved success as finance chiefs in the current environment. For those of you who aspire to become CFOs, we hope this will provide some helpful insight into different ways to achieve your goal. For senior executives we believe the insights that follow will enable you to work more effectively, and better hire, retain and manage CFOs in your organization.

2

the traditional path vs. the new road. There is no longer a clear path to securing the top finance job. Traditionally, CFOs came from senior management positions at top public accounting firms or worked their way up from starting in finance (controller or treasurer) with one company.

treasurer

controller

partner, CPA firm

responsible for the collection, maintenance, investment, and disbursement of funds

a company’s chief accountant; also called comptroller

managing partner who has a role and stake in the operational and strategic direction of the firm

x

a

v

CFO

MBAs are displacing CPAs on the career track to becoming chief financial officer. A study by Deloitte Consulting shows that chief executives prefer CFOs to have advanced management degrees rather than accounting licenses.

Today, with the expanded role of finance chiefs and the increased demand for specialist CFOs (those who have a specific area of expertise such as M&A, turnarounds, etc.), many are coming from various disciplines and taking more individualized approaches to securing the top finance job. Companies are constantly seeking out finance talent that can help the company during various points of its growth. Key skills in high demand at companies large and small, and in various stages of their lifecycle include: securing private equity, spinning off a division, managing mergers and acquisitions, raising public capital or ensuring Sarbanes-Oxley regulation compliance. The traditional path to becoming a CFO has become somewhat outdated. With this shift, aspiring CFOs need to think more broadly and more competitively about their career track. Although experience at a Big-Four public accounting firm or as a controller or treasurer is still extremely valuable, to compete in today’s marketplace aspiring CFOs should look to bring more to the table and determine the best ways to differentiate themselves in an increasingly competitive market.

“You can’t rely on just knowing the ABCs of accounting,” explains Diane Albergo, manager of member career services at the Financial Executives International (FEI), a membership organization for CFOs and senior financial executives. “You need a strong business sense.” — JOURNAL OF ACCOUNTANCY, “WHAT DOES IT TAKE TO BECOME A CFO?” CAROL LIPPERT GRAY

3

From our perspective, in today’s world, being a CFO means becoming your CEOs chief of staff. CFOs should have a prominent role in strategic decision-making and be a trusted advisor to the CEO. Also, given the important role boards play today, a CFO should have the hard and soft skills necessary to know what the board is thinking, anticipate their inquiries and help the CEO successfully navigate that territory to accomplish key business goals. This requires a much greater depth of business knowledge, not just accounting acumen. Today’s CFOs should look to demonstrate the following experience and traits to make themselves valuable, marketable contenders for the top finance spot:

experience » MBA in finance, CPA, CFA » Business management » Industry experience/knowledge » Cross-functional/operational expertise » Sarbanes-Oxley compliance management » Offshore business operations management » Clear understanding of FAS/GAAP principles

skills » Strong leadership, strategic planning and thinking skills » Understanding of complex financial concepts » Excellent communications skills (including listening!) » Negotiation skills » Analytical skills » Ability to balance both the short-term priorities and important long-term goals » Ability to understand all parts of a business/industry » Deliver meaningful financial management information for decision-making » Understanding of non-financial areas of the business such as IT, HR and legal » Understanding industry trends and market forces » Sales and political skills » Strong employee management experience

traits » Honest, ethical, and possessing a high degree of integrity » Trustworthy and dependable » A balance of toughness and openness » Attention to detail » Career-oriented with a desire to continue learning/ be educated on new techniques, standards, etc. » Self-confidence

4

how they made it. 5 questions for Mike Porcelain, CFO

Q1 Would you say you became a CFO through a “traditional” or “non-traditional” path? Mike Porcelain, CFO Comtech Telecommunications (NasdaqNM: CMTL) Melville, NY

A My career-track has been a mix of traditional and non-traditional experience, all of which has helped me become a CFO at a high-growth company. I started my career at KPMG, which was back then, one of the “Big Six” public accounting firms. There, I gained experience with the audit side of the business. After I spent a few years learning SEC rules and GAAP accounting, I moved on to PricewaterhouseCoopers (PwC) because it offered me an opportunity to work on the transactional side — mergers and acquisitions. After spending a few years with PwC, I went on to work for a publicly traded Fortune 500 technology company to gain operational expertise. I then took all of my experience to Comtech Telecommunications, a mid-cap technology company where, after three years of learning the business, I became CFO. My Big Six and public company experience both contributed equally to my becoming a CFO. Q2 At what point did you know you wanted to be a CFO one day? A Initially, I knew I wanted to take one of two paths: 1) become a partner at a major public accounting firm or 2) become a CFO. After spending some time on the audit side at KPMG, I realized I really wanted to pursue a CFO role with a publicly traded company. The first step in achieving this was to gain some M&A and operational experience. So the moves to PwC to do M&A work, and

then to a tech company for the operational experience, were both intentional and part of my plan to get on the CFO track. Q3 What do you think has changed for CFOs in the past decade? A Most certainly, the regulatory environment has changed, impacting CFOs and other finance professionals significantly. Regulations have become much, much more stringent making our jobs more intense, and oftentimes more difficult. In recent years, I’ve also observed that there has been an unnecessary fear among accounting professionals caused by this shift. Only now, years after SOX was passed, is it beginning to neutralize. I also see more pressure on companies — and thus their CFOs — to make acquisitions that provide immediate payback on a cash flow basis. Shareholders want to see accretiveness right away and have a payback within five years on acquisitions. It has become much more difficult to “sell” a longer-term strategic deal or strategy than it was in the past. Just look at Time Warner Cable’s acquisition of AOL. It’s a long-term strategic play, yet Richard Parsons (CEO of Time Warner) is catching a lot of heat from the investment community and the media. Yet, years from now, many of the skeptics may be looking back and say, “Keeping AOL and Time Warner together was the smartest thing Parsons ever did.” Q4 Do you think it is more or less challenging to become a CFO today? A It’s definitely more challenging. Companies and corporate boards are somewhat more nervous about bringing

5

in CFOs from the outside because they may not be able to judge — first hand — the level of integrity that the candidate has or the level of experience. I think it’s a much more rigorous process to become a CFO than ever before. I think it will become very difficult for people without actual CFO experience and a track record to come in from the outside. For me, starting my CFO track at my current company as the Vice President of Finance for five years before being promoted to the position was extremely helpful. In those five years I was able to learn the company, the business, build relationships and establish myself as a credible, ethical and responsible financial professional. It’s very important to establish credibility and relationships in this job.

Q5 What advice do you have for today’s aspiring CFOs? A Pay attention to everything. Continue to learn as much as you can about regulations, your industry, your company, and its competitors. (The SEC Institute offers great programs to keep you up to date!) Build a team of good mentors, peers and direct reports. Without a team you have nothing. This is not a job you can do alone. It is invaluable to have good mentors you can turn to for advice, peers you can run things by and work effectively with, and direct reports you trust. Trust your gut. If you sense there might be a problem with something or someone, trust your instincts and do whatever it is you need to do to check it out. It’s all a part of the job.

“I’d say you have to be careful not to get too focused on any one aspect of the job. Don’t be the acquisition guy, or the IT guy, or the compliance guy. And don’t be overly preoccupied with saving money. Four years from now, when you ask who the really great CFOs are, it will be the ones who kept their eye on shareholder value. And that requires a broad orientation.” — ANDY BRYANT, CFO, INTEL

6

how they made it. 5 questions for Adrian Schmotolocha, CFO

Q1 Would you say you became a CFO through a “traditional” or “non-traditional” path? Adrian Schmotolocha, CFO Professional Building Maintenance (PBM) Corp. Burbank, CA

A I took a non-traditional path to CFO, having started my career on the business development side, and earning an MBA versus a CPA. Working with start-up companies I learned how to build businesses. I noticed I always had our finance exec with me, and thought to myself — I need to be able to understand, analyze and strategize with financial data if I want to get anything done. If you can’t map financial data to operations, it’s difficult to push business strategy forward. So, I started on the path of a more finance-focused career. Q2 At what point did you know you wanted to be a CFO one day? A One of the start-ups I worked for was a telecommunications company. When the industry crash hit in 2001, I decided I wanted to turn companies around. That’s what excited me — the challenge of turning a company around successfully. Then, the opportunity came at my current company to help grow a small business into something greater as the CFO. My financial acumen, business development and M&A experience could help this company achieve its goals. I took the job without hesitation. Q3 What do you think has changed for CFOs in the past decade? A Gone are the days of being just an accountant or tax pro. CFOs today must possess sales skills. You have to be able to understand, articulate and sell the company vision — and have the financial models to back it up.

CFOs today are relied upon to empower the CEOs vision, but also to ground it. One must be a visionary themselves to look at things differently, see how you can make things happen — and to look beyond just the raw numbers. How could this strategy work? If we made it work, what are the potential outcomes? I also think CFOs today should have M&A experience given the environment we’re in, especially at smaller companies. That is the key to high growth. If you don’t take advantage of those opportunities, someone else will and take your market share. Q4 Do you think it is more or less challenging to become a CFO today? A I don’t think it’s any more challenging to be a CFO today. However, I do think a different type of individual will rise to the top. Companies now want someone who meets new marketplace demands — an MBA to help you think outside of the box, someone who knows how to build relationships and credibility with investors, financiers, brokers, the board and members of management. Q5 What advice do you have for today’s aspiring CFOs? A Avoid having tunnel vision. You must be flexible and aggressive, on top of the ball — all the time. If you’re only thinking about cutting costs, you’ll miss opportunities to help grow your company. Constantly look at who's out there (e.g., investors) and build relationships with them. Establish credibility, a reputation for yourself and your company — prove that you get it, and can deliver!

7