When the Hygrade division of Sara Lee Corp. launched a new meat product last July, the effort had a champion in the finance department. Divisional CFO Mark Johnson played a key role in securing the $10 million investment needed to bring Ballpark Singles hot dogs to market, after recognizing that it would command higher-than-usual margins.
"I saw [early on] that it would add more to our bottom line than the typical product," says Johnson. And armed with that information, he says, "it was easier to secure capital for investment from the company."
That type of involvement from finance is just what Sara Lee is hoping to make the rule at its 100-plus units. In fact, Judith A. Sprieser, chief financial officer for the entire group, wants to turn unit CFOs into some of the most influential managers in the company. To do that, she is spearheading a new hiring, training, and assessment program for its finance employees aimed at essentially turning them into competitive weapons. "At most companies, the CEO is driving the car and the CFO is in the backseat, commenting on what they've just passed," says Sprieser. "We want to put the CFO in the front passenger seat, telling the CEO to look out for bumps in the road ahead."
Sprieser is not alone in her desire to groom finance executives to be business partners (see "Sometimes a Great Notion," May). That goal seems to be a rallying cry at companies of all sizes. What's making that process a priority at such companies as Sara Lee, Johnson & Johnson, and Colgate-Palmolive, however, is the lack of available finance talent in this tight job market and the need to train and retain the finance talent that is already in place. The goal at Sara Lee, Sprieser told an audience at the 1998 Forbes CFO Forum in June, "is simply to never have to go outside again to hire a CFO."
While Sara Lee has had corporate training in place for three years, Sprieser was inspired to tailor a program to finance after hearing one of her divisional CFOs complain about spending 60 percent of his time generating financial reports. That wasn't the only problem, however. "We had been finding," says Sprieser, "that not all of our [divisional] CFOs were well rounded. Some were being promoted to CFO without a good grasp of the controllership function, operations, or IT."
To ensure that Sara Lee's CFOs are equipped with the skills to fulfill her vision, Sprieser began carefully plotting their career paths. The first step was to "identify the key functional skills" every CFO needs, she says. Developed by a CFO task force, the six major areas of expertise identified--operations finance, MIS, controllership, planning and analysis, communication, and broad experience-- are supplemented by 24 specific skills.
In 1996, the first of several training programs aimed at upgrading the functional skills of CFOs and their direct reports was introduced. The finance executives who fall into this category--of 4,000 finance employees at Sara Lee, some 500 qualify--now take time out to upgrade their skills in such areas as information analysis, product costing, and inventory management.
The two-day programs, which are run in-house, feature outside speakers, such as the former corporate controller of Johnson & Johnson, and Bob Frigo of General Electric, who spoke about the cost savings gained from shared services. In addition, professors from Northwestern and the University of Chicago are often asked to run short sessions. Says Mark Johnson, "The presentations were very real world. Johnson & Johnson demonstrated that changes that needed to be made [reengineering the finance department] could be made."
This fall, Sprieser says, the training effort is "moving to a much higher level of skill refinement." About 100 CFOs and "CFO-ready individuals" will be required to participate in an 18-month program focusing on executive skills. The program is unique in that it will be tailored to the participants' individual needs. Some CFOs, for example, might be asked to take a management seminar on leadership or a presentation-skills course to polish their public-speaking abilities. "We're raising the bar for our divisional CFOs," says Sprieser.
The Review Process
The idea of customized training is key to much of the Sara Lee model. The company, in fact, tracks its 500 financial officers--the CFOs and their direct reports--registering detailed skill profiles. That includes everything from whether the candidate is fluent in Spanish to whether he or she shows a knack for leadership. The company then uses the information to make important hiring decisions. "John Smith, for instance, may need to get some operations experience," says Sprieser. "So if an opening comes up that would expose him to that, we'd try to place him there."
To chart the participants' progress, a rating system for both functional and executive skill development has been devised. Current divisional CFOs rate their own staff members, giving grades of "highly developed," "developed," or "underdeveloped." "The grading is almost like a pass/fail system," says Sprieser. "A candidate won't get a CFO job until he or she is highly developed in all the functional areas." Sprieser, who once a year meets with divisional CFOs about who the up-and-coming talent is, plans to ask Steve McMillan, president of Sara Lee, to chart her own progress, since "nobody can get enough feedback." And, says Sprieser, she'll participate in the training if McMillan sees her lacking in certain areas.
Armed with such information, Sprieser is convinced that the company will have so many potential leaders that it will never have to recruit top managers from the outside. While the corporation has not yet achieved that mission, Sprieser says it is getting closer. "At most of our divisions, we have a clear succession candidate in mind," she says. Two years ago, 40 percent of unit CFOs were inside promotions. Today, 73 percent are. Such in-house grooming, she says, is imperative. "When we started this program," Sprieser recalls, "it was a good vision for morale and for helping top people in the organization. Now, however, I'm even more emphatic about the training because of the tight job market. Retention is key."
Sprieser estimates that she now spends about 15 percent of her time on finance-professional development, including reviews. "If they don't display executive skills, they won't be getting the best reviews from me and probably won't move up," she says.
To date, Sprieser reports that "the program has far exceeded my hopes for it." And it is being monitored internally to see if similar training can be introduced in other areas, such as marketing and operations.
Sprieser hopes top talent will find the prospect of landing more interesting jobs just as alluring as a large salary. "We are hiring fewer people for clerical positions," says the Sara Lee CFO. "I hope we will eventually have a more streamlined organization with fewer, but more highly compensated, employees."
Equally alluring is the prospect of finding opportunities beyond the finance division. Bob Kopriva, president of the Jimmy Dean Foods division, for example, was previously CFO of the group. The chief financial officer of Chilean operations, Alphonso Stransky, was recently promoted to president of the hosiery business in that country. And Sprieser hopes she herself can serve as an inspiration. Before becoming the group's CFO, she was president of Sara Lee's $700 million baking division.
The elevation in status of finance officers is appealing. But if everyone is concentrating on strategy and forecasting, who will do the numbers crunching? Sprieser plans increasingly to outsource those functions. Outsourcing carries some risks, of course, not the least of which are the timeliness and accuracy of the reporting, and the aggressiveness of follow-up. But Sprieser thinks such risks are worth taking to get a finance department that is contributing to corporate performance.
"By freeing financial employees from financial reporting, they have more time to work on value-added propositions," she says. "When we have big meetings and I look around the room, I see more and more CFOs who came up through the [new] process. These are people who have a real passion for the business, and that makes me feel really good."