CFO Confidential

Where do finance chiefs go for advice?


At many companies the CFO is a trusted confidant of the CEO, a valuable sounding board for all kinds of issues. But when CFOs themselves need advice, whom do they call?

Sometimes the CEO, to be sure. Or perhaps the finance second-in-command. And for certain technical problems, such as accounting or legal questions, there are usually specific advisers on call. But what if the CFO worries, say, that the CEO is not attentive enough to financial concerns or is disregarding his advice? For complicated issues such as company politics or the CFO's professional development, it sometimes seems there are few places to look for help.

Harried finance chiefs bemoan a lack of time for formal networking events with their peers, such as those sponsored by finance organizations or professional groups. "With the time constraints of the job, it's almost impossible to add formal networking meetings," says Oreste Petillo, CFO of Environmental Data Resources Inc., an environmental-information provider in Milford, Connecticut, that is a business unit of DMG Information, a subsidiary of a British conglomerate.

The sensitive nature of many CFO concerns further complicates matters. "CFOs live under intense scrutiny and have to be extremely careful what they say to the outside world," says Laurence Stybel, founder of Stybel, Peabody and Lincolnshire Inc., an executive-placement and career-management firm based in Boston. "They take the issue of confidentiality extremely seriously. They wouldn't be airing the dirty linen with their barber or their brother-in-law."

So whom do CFOs call in time of need? Some find confidants outside the company — specifically, peers at other companies who are facing similar issues. Others, particularly at larger companies, turn to finance chiefs of different business units. And some find that sometimes the best advice is closer to home.

Identifying finance peers from other companies has proven invaluable for Andrea Freedman, vice president of finance at Method, a San Francisco–based maker of environmentally friendly cleaning products. "I've got a handful of other CFOs in other businesses, most of which are bigger than mine, whom I can call and ask for advice," she says. "I value people who might be dealing with some of the same issues I'm dealing with but who may be at a later stage." Freedman's group of informal counselors includes former bosses and mentors, as well as contacts she has made at conferences. These colleagues can provide guidance on technical finance issues as well as career advice, she says.

Jon Cargill, CFO of $1.4 billion Oklahoma City–based Hobby Lobby, an arts-and-crafts retailer, has a more formal arrangement with two fellow CFOs. The trio met at a local bank function two years ago. "Personality-wise, we hit it off," he says.

The three CFOs, who are all employed by privately held, noncompeting companies, have since met for quarterly lunches, drawing up group bylaws that include an agreement not to recruit from one another's companies and a promise to keep all discussions confidential. They discuss a different topic each quarter, sometimes inviting other company employees. "If we're going to talk about tax issues one quarter, I'll bring my tax manager with me," says Cargill. Recently, the group has swapped ideas about risk-management techniques. Benchmarking such shared concerns as the cost of insurance coverage has also proved helpful, says Cargill.

Inside Knowledge

For situations in which a deep understanding of the company is critical, or when the stakes are too high to speak with an outsider, internal advisers work best.

"I can go back to some mentors I've had and run situations by them, but since they're not with the company there are certain details I can't share," says Petillo. Instead, he often relies on advice from the divisional CFO to whom he reports. He also calls on his fellow business-unit finance leaders for counsel. The group meets annually at the company's off-site finance conference, which creates a foundation that allows Petillo to feel comfortable consulting with these contacts throughout the year.

Other CFOs cite their boss as the first person they turn to for internal help. "Both the CEO and I should have a very good understanding of the company and the goals we're trying to achieve, so he should be in a very good position to provide perspective on a dilemma," says Robert Flexon, CFO of NRG Energy Inc., a publicly traded power generator based in Princeton, New Jersey. Method's Freedman also cites her CEO as the first person she looks to for advice in many situations.

The board of directors can provide insight, too. Given their newly emphasized watchdog role, directors might seem more adversaries than allies of the CFO at times, but Flexon says those who ignore the board's expertise are missing out on a rich resource, particularly the audit committee. "An audit committee chair is typically someone who has walked in the same shoes as the CFO in a past life," Flexon points out. "To talk to someone who has that experience while knowing your company and having the same perspective on governance is quite valuable."

Quality Time

It may not be easy for busy CFOs to find time to maintain a network of advisers, but it's worth the effort, says Petillo. "You have to try to keep those contacts," he says. Petillo often reconnects with his mentors and former co-workers by E-mail after big sporting events. "I'll send a quick zinger if my team beats [a contact's] team," he says. "It just keeps up the relationship."

Flexon notes that waiting for a free moment to reach out to a mentor may prove futile. "The workload doesn't get lighter," he says. "It's a fairly relentless kind of environment, so you pick and choose when to take a breather, and you periodically force yourself to make a phone call."

Of course, some advisers can be much easier to maintain a relationship with: spouses, for example. Freedman says she enjoys a "very private resource" in her husband, an entrepreneur who ran a 400-person company in his native Ukraine and sold it before moving to the United States. "It really helps to have someone from outside the company who's not emotionally involved with a particular issue," she says. "He doesn't charge much, and he always seems to be available."

Kate O'Sullivan is staff writer at CFO.

CFOs on the Move

General Motors has appointed Frederick Henderson vice chairman and CFO. He succeeds John Devine, who will remain with the struggling automaker for a year to assist in the transition.... Calpine CFO Robert Kelly has left the power generator in a management overhaul. Eric Pryor will serve as interim finance chief.... American Axle & Manufacturing Holdings has promoted Michael Simonte to CFO from his current role as VP and treasurer. Former CFO Thomas Martin is now executive director of special projects.... John Luttrell, formerly EVP of finance at home-furnishings retailer Cost Plus, is the new finance head at teen-clothing chain Wet Seal.... Ferro, a maker of specialty materials, has named finance chief James Kirsch to fill the CEO seat following the recent death of chairman and CEO Hector Ortino.... Robert Bowen is the new finance chief at GSI Group, a maker of precision components.... Mantech International has appointed Kevin Phillips to the CFO post at the security-tech firm.... Johnson Outdoors has tapped David Johnson to lead the finance department at the recreational-products company.


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