Wednesday, March 18, 2009

One Massive Layoff, or Slowly Let People Go

I was asked this question today, and I think it deserves a little bit of discussion. I will share my take on the subject, and then share the opinions I received from several of my friends on Twitter. Feel free to add your comments.
Let me come straight out with my main opinion - any excuse to not take care of the layoff all at once is covering selfish motives. Either we don't want to hurt someone's feelings, we don't want to face the music, we don't want to be the "bad" guy, or we are just scared or a bit cowardice. If the layoff is what the business needs, then it has to be done - period. Not doing it all at once will cost the firm money and could put everyone who is left in jeopardy as well.
I recently heard an entrepreneur needing to do a layoff say that he would reduce everyone's wages (instead of doing a layoff) and wait for certain people to quit. I have two issues with this - first, this entrepreneur is a coward who is afraid to confront his people with the truth, especially the ones he wants to let go. Second, if I were a betting man, I would bet that the employees he wants to leave will stay and his star players will leave.
I posed this question on Twitter and here are the replies from folks from all walks of life (just a quick reminder that Twitter only allows responses in 140 total characters or less, so please appreciate the abbreviations and brevity:

@jeremyhanks - Layoff all at once if u at all can. Get the shock through the system, people hate change, slowly might get u into the death spiral.

@MaritaR - Better putting things to an awful end than to perpetuate an awful time - massive layoff sadly better than a long time uncertainty.

@LearnSolMary - If must lay off, get it over with & move on so wound can heal. Wd ask client to be absolutely sure layoffs are the only way.

@virtualcfo - One cut and let the remaining employees now that they are ok . If not, moral and productivity will be hurt while waiting for the ax.

@VAinParadise - IMO Massive layoff and get it over with. When done is spurts it puts unnecessary stress on everyone and kills moral/production.

Friday, March 6, 2009

10 Attributes if a Great CFO

What makes a great Chief Financial Officer? How can a CEO know if they are getting everything they should from their CFO? These ten attributes are a big part of what you would find common with every CFO who adds great value to their company, staff, and community.  For the sake of simplicity, I will assume the CFO is male.  Please do not mistake my choice of gender with ones ability to be a great CFO.  I know many women that fill this role effectively and successfully!

1. A decade or more of senior-level experience - he needs to have been around the block a little bit as an executive, and other C-level roles are helpful (COO, CEO, etc).  He has done significant debt and equity financing transactions as well as guided successful entries and exits for shareholders.

2. Both breadth and depth of knowledge and experience -While industry knowledge is valuable, a big part of a his ability to add value to your firm will be his experiences in and around a multiple of industries.  He will possess the unique ability to understand and lead several, if not all, of the disciplines of the company with great focus and precision.  He needs to have significant experience helping companies obtain clarity, maximize cash, improve profits, and optimize their resources from a multi-disciplinary perspective.

3. Honest, ethical, and personification of integrity - These values cannot be understated.  The CFO works in a world that few outside of it understand.  If he abuses that in any way, then he jeopardizes too much.  He needs to be a person you look to who will always "shoot-straight."

4. People person, not just a number-cruncher - His people need to like him and trust him, and he needs to inspire everyone around him.  Some accountants and professionals do not enjoy working with a lot of people and collaborating for success.  These types will never be successful CFOs.

5. Strategist and Visionary -He is always thinking ahead.  Reporting on the past is an important function he oversees, but his value will come from his foresight and ability to strategically guide the company as a whole, not as individual parts.

6. Relationships with the investment and banking communities - He should know them, and they should know him.  His reputation should precede him.  He should be able to open new doors of opportunity and new schools of thought to his company in this area.

7. Open to new opportunities; flexible -If he always says no before hearing you out, then he will never succeed as the CFO.  In the broad and deep context of all of his experience and strategy for the company, he should be able to filter through opportunities and help the company implement the ones that best position the company to achieve its objectives and improve its competitive advantages in the market.3

8. Continual quest to learn and stay ahead - The worlds of finance, accounting, tax, and business are dynamic and always changing.  Ask him what the last business book he read was and what he gained from it.  If it was "The Goal" ten years ago, then he may not be on the cutting-edge of where the company and his area of responsibility need to go.

9. Diplomatic and persuasive - The CFO holds all of the confidential and valuable information to the business model and plans for growth.  He needs to carefully and professionally work with others around him without being abrasive but using persuasive communication to engender buy-in and loyalty.  These are sometimes rare traits, but a great CFO needs them desperately.

10. CEO's most trusted advisor; powerful resource to the board - Before the CEO moves on any critical decision, he should be in the CFOs office to discuss it.  The CFO should offer advice and direction to help the CEO make sound and effective decisions in the leadership of the firm.  If the CEO and the board of directors avoid the CFO, then he will not last very long.

Please feel free to add your comments and suggestions of why these may or may not be crititcal as well as any other attrributes you think I left off the list.