ORGANIZATIONAL FITIS GENERALLY ASSESSED DURING THE SMALL TALK AT THE BEGINNING AND END OF AN INTERVIEW... PAGE 6

VISION & VALUETHE RAISON D’ÊTRE OF THE CFO IS TO USE HIS FINANCIAL PROWESS TO CREATE VALUE... PAGE 12

LEADERSHIP1 IN 5 CEOs of $2 BILLION PLUS COMPANIES COME FROM 1 OF 20... PAGE 9

FINANCIAL STRATEGYAN APPROACH THAT DELIVERS A SUSTAINED COMPETITIVE ADVANTAGE FOR A COMPANY OR AN INDIVIDUAL... PAGE 14

ASSESSING THE

AN INTERVIEW GUIDE | A WHITEPAPER BY THE PHILLIPS GROUP

CONTENTS

THE PHILLIPS GROUP +971 50 940 7537 | shane@tpgleadership.com | www.tpgleadership.com

ASSESSING THECHIEF FINANCIAL OFFICERWHO COULD BECOME THE CHIEF ARCHITECT OF YOUR COMPANY’S GROWTH TRENDS

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ORGANIZATIONAL FITIS GENERALLY ASSESSED DURING THE SMALL TALK AT THE BEGINNING AND END OF AN INTERVIEW

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LEADERSHIP1 IN 5 CEOS OF $2 BILLION PLUS COMPANIES COME FROM 1 OF 20

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12VISION & VALUETHE RAISON D’ÊTRE OF THE CFO IS TO USE HIS FINANCIAL PROWESS TO CREATE VALUE

FINANCIAL STRATEGYAN APPROACH THAT DELIVERS A SUSTAINED COMPETITIVE ADVANTAGE FOR A COMPANY OR AN INDIVIDUAL

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REDUCING COSTSBY EMBRACING TECHNOLOGY AND BECOMING INNOVATIVE AGENTS OF CHANGE

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RESOURCE ALLOCATIONTO STRIKE A BALANCE BETWEEN CURRENT AND FUTURE INVESTMENTS

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16CONTROLSTO REDUCE THE COMPANY’S EXPOSURE TO IDENTIFIED RISKS

17MITIGATING RISKSA RISK CAN BE DEFINED AS ANY EVENT THAT THREATENS THE ACHIEVEMENT OF THE BUSINESS OBJECTIVES

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ASSESSING THECHIEF FINANCIAL OFFICERAN INTERVIEW GUIDE

AFTER INTERVIEWING 250 CHIEF FINANCIAL OFFICERS, I thought it was interesting that only 8% passed their initial assessment for the position. One CFO even

balked at me when I asked him to describe his vision for the financial agenda of his company. He continued to explain that creating a vision was not the job of the CFO, that his job was to play a supporting role. He told me the vision should come from the Chief Executive Officer. Needless to say he was disqualified.

I would contest that the CFO is a visionary and often a critical value creator in a company. Take for example a small advertising boutique formed in 1967 called CramerSaatchi. CramerSaatchi grew to become one of the largest advertising agencies in the world and is

most notably recognized as Saatchi & Saatchi. Saatchi & Saatchi executed 35 acquisitions totaling more than $1.5 billion between 1972 to 1987. Their share price skyrocketed from $25 a share in 1980 to $500 a share in 1987, increasing the company’s value by 20 times in less than seven years. Take a moment and imagine your own personal net worth, and then imagine growing that value by 20 times to get a feeling for what Saatchi & Saatchi accomplished. The company simply experienced white-knuckle, explosive growth during this time period. The architect of this growth was not one of the creative visionaries the firm was so renowned for employing but rather their Financial Director, who was none other than Sir Martin Sorrell. From 1975 to 1984, Sorrell was busy perfecting his CFO skills and became a master of the “Earn Out” acquisition strategy. Not too long after he left Saatchi & Saatchi, the company’s share price dropped by 98%, while Sorrell went on to build the world’s largest advertising firm, WPP Group.

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For a more recent example of a leading CFO one can look at Mr. Mark Loughridge, CFO of IBM. Mark took over as CFO in 2004 and has played a leading role in defining the company as it divested its PC business. Loughridge has developed the company’s plans as it relates to how to grow profit and earnings per share as well as how to invest its cash. He has championed more than eighty acquisitions and is one of the key architects of IBMs vision for 2015. His total compensation for 2011 was $8 million while his company, IBM, surpassed $100 billion in revenue last year. Mark Loughridge possesses a potent mix of financial and strategic

skill sets and to many he is the living definition of the modern day CFO.We can see with the examples above that top performing CFOs are visionaries, they are strategic leaders who take initiative and are critical impact players who help define the face of an organization. In any executive assessment, especially in a CXO assessment, the individual in question must have vision and a sense of direction. An executive cannot transmit something they do not have and if they cannot give direction to their own careers, they will not be able to give direction to a large and complex team of executives.

AN EXECUTIVE CANNOT TRANSMIT SOMETHING THEY DO NOT HAVE AND IF THEY CANNOT GIVE DIRECTION TO THEIR OWN CAREERS, THEY WILL NOT BE ABLE TO GIVE DIRECTION TO A LARGE AND COMPLEX TEAM OF EXECUTIVES.

Top performers begin with a vision; they exude a sense of direction, and are meticulous in their execution. While the skill sets of a CFO may vary depending on the needs of an organization there are a few universal threads which all top performing CFOs must share; vision is one of them.

This assessment of a CFO looks at 8 critical areas and is designed only as the beginning of an exhaustive selection process. There are several areas I have left out such as organizational impact and the ability of the CFO to create consensus with

the Board or their ability to influence power players of which they have no authority over.

This assessment is generic and a proper selection process should always be bespoke

Mark Loughbridge, CFO of IBM, takes the

podium and becomes the world’s number

one CFO for 2012

- The Wall Street Journal

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For example, if a company is under duress and requires to be restructured, it will require a very different CFO than a company which is delivering record profits and is preparing for an Initial Public Offering. As well a company that is looking to grow organically will require a very different CFO than a company that is

looking to grow through acquisition. So before any candidate assessment can be made, first an assessment of the company must be completed. A deep understanding of the vision and direction of the company must be developed as only then can a CFO who is a fit be found.

This assessment guide is designed to be a generic suggested starting point and a blunt initial first pass as part of a much larger and regimented selection process. It should allow you to identify your top ten candidates; however your top candidates, once selected should be exposed to the Six Point Selection process or an equivalent process as described in the following pages.While there are many more relevant areas to look at when assessing a CFO, such as Tax Strategy, Financial Analysis,

The 8 critical areas this assessment looks at are:

Funding, Capital Structuring and others, I have chosen 8 to start with. These 8 were chosen as a beginning not an ending.

I start with organizational fit as one begins to assess fit during the small talk at the beginning of a meeting. I chose to assess Leadership next as I have argued at the beginning of this paper the CFO is a critical leadership role. As the title suggests, it starts with Chief, it is not Financial Chief Officer it is Chief Financial Officer, and thus the emphasis is on leadership ability first and financial acumen second. I then move onto Vision & Creating Shareholder Value, which can be seen as the paramount duty of the CFO. Then the rest of the competencies are explored in detail.

To be clear it is not important where one starts the assessment. It is important to be thorough andthe initial interview should take approximately two hours. That is 8 sections with 15 minutes spent on each.

A full selection process should entail several stages as described in the Six Point Selection process below;1. Behavioral Interview2. Chronological Interview

3. Technical Interview4. Case Study 5. Psychometric Testing6. References One cannot over estimate the impact a CFO has on an organization, thus organizations are encouraged to invest in a regimented, thorough and exhaustive assessment of their CFO candidates. I will not go into an explanation of the Six Point Selection process described above as I do not have space in this paper to do so, instead I will focus on the initial interview. n

AS THE TITLE SUGGESTS IT STARTS WITH CHIEF, IT IS NOT FINANCIAL CHIEF OFFICER IT IS CHIEF FINANCIAL OFFICER, AND THUS THE EMPHASIS IS ON LEADERSHIP ABILITY FIRST AND FINANCIAL ACUMEN SECOND.

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ORGANIZATIONAL FIT

ORGANIZATIONAL FIT IS generally assessed during the small talk at the beginning and end of an interview. CXO executives often use a gut check of whether or not they

would like working with this individual and whether or not he / she would be a successful addition to the team. This accepted small talk phase of the interview is an excellent opportunity to retrieve key information about the candidate. As part of casual conversation one can ask where the candidate is from, where they grew up and where they went to high school. I did not cover it in this assessment but it is important to also ascertain how senior the CFO is by asking who he reports to and who reports to him. You may find that the CFO is actually reporting into a Regional CFO who in turn is reporting to a Group CFO, which may leave your candidate lacking any real autonomy in his or her role. This is important to note.

It is also interesting to note how many boards he or she sits on, and which management committees he or she participates in, as your CFO should be comfortable managing heated debates with senior stakeholders, board members and influential members of the economy.

During this part of the assessment it is critical to look for early expression of the candidate’s core personality. As children we often play to our strengths, therefore kids with natural

interpersonal skills might gravitate to team sports and introverted deep thinkers may have a penchant for solo activities. So the interviewer will gain insight into the candidate’s drivers, subconscious motivators and competencies by looking at the incumbent in early development.

As a child did the candidate enjoy group activities or did they prefer to play alone? The assessment should contrast professional competencies with early development interests. Thus in high school it is interesting to note what was the candidate’s favourite class and sport. Did they take on early leadership roles such as Captain of the Basketball team or Best Boy?

The next part of Organizational Fit & Impact questions provides insight into the individual’s self awareness and self image. It is recommended to ask the candidate to describe themselves in a personal manner,

not a professional one. For example one could answer the question “describe yourself...” by saying, “I am a professional Executive Search Consultant with 10+ years of experience who enjoys building championship leadership teams”, or from a personal perspective “I

YOU MAY FIND THAT THE CFO IS ACTUALLY REPORTING TO A REGIONAL CFO WHO IN TURN IS REPORTING TO A GROUP CFO, WHICH MAY LEAVE YOUR CANDIDATE LACKING ANY REAL AUTONOMY IN HIS OR HER ROLE.

STATISTICS OF A TOP PERFORMER

HIGHSCHOOL

COLLEGESTUDENT

HIGH PERFORMANCE

EMPLOYEE

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describe themselves should be written down and then later in the interview the candidate should be able to demonstrate this trait in their professional careers.

For example the interviewer could then

ask “at the beginning of this meeting you mentioned you were creative, can you give me an example of a time you had an innovative idea which increased revenue or reduced a cost?”. Doubling back during the interview process creates checks and balances to ensure the candidate is speaking from the gut and not just trying to give you the answer they think you want to hear.

Furthermore it is important to understand how the candidate thinks about achieving goals. Often the top performer will have adopted a personal vision early on in life.

At the very least the top performer will describe goals such as making the football team, or getting accepted to their favourite university with verve and brio. They will demonstrate a systematic approach to goal

achievement and a penchant for success metrics, such as vividly remembering

where they finished in school.

In contrast the underperformer may be void of any vision,

might have only a vague idea of their performance in high school, and might have serendipitously ended up at some university or into some job as they roll with the punches of life.

While it is true that some people are late bloomers and we should be mindful of that, it is interesting to note a candidate’s early performance. The statistical probability of someone being a top performer in high school, a top performer in university, and then a top performer in their chosen profession is quite high.

Success breeds confidence and self esteem, which is required by any leader of a sizeable denomination. So we cannot say with absolute confidence that an individual will perform well in his or her profession because in early development they were top performers, but we can say the statistical probability that this individual will continue to perform at above average is higher than if they did not perform well in school. When the candidate answers the questions below take note of not what they are saying but how they are saying it. Do they present the answer with confidence, with a sense of direction and insight?

AS CHILDREN WE OFTEN PLAY TO OUR STRENGTHS, THEREFORE KIDS WITH NATURAL INTERPERSONAL SKILLS MIGHT GRAVITATE TO TEAM SPORTS AND INTROVERTED DEEP THINKERS MAY HAVE A PENCHANT FOR SOLO ACTIVITIES.

DOUBLING BACK DURING THE INTERVIEW PROCESS CREATES CHECKS AND BALANCES TO ENSURE THE CANDIDATE IS SPEAKING FROM THE GUT AND NOT JUST TRYING TO GIVE YOU THE ANSWER THEY THINK YOU WANT TO HEAR.

ORGANIZATIONAL FIT

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Assessing fit is a rather sophisticated technique and one could write a book about it. For the purposes of this assessment I believe this is enough to get you started and moving in theright direction.

Please see some suggested questions below.

n Childhood – Where did you grow up? Was it fun growing up there? What was your favorite game as a child?

n High school – favorite classes, sports, interests, grades? Leadership positions?

nUniversity – favorite classes, sports, interests, grades? Leadership positions? Student body positions?

nSelf image – How would you describe yourself, not professionally but who are you as a person? Okay and professionally, now how would you describe yourself? What do you see as your greatest value proposition?

nWhat is your personal vision? What is the raison d’être (purpose) of the next ten years of your life? (Top performers will often describe their vision and describe a systematic approach to achieving it. They are so charged up and excited about the direction they are taking in life that they enjoy talking about it; underperformers in contrast find this question uncomfortable, they often stare off into space and try and muster a personal vision on the spot.)

nWhat is your strategy to achieve this vision? (Top performers will demonstrate a regimented and systematic approach to achieving their vision. They will have thought about what key milestones must be realized in order for them to achieve their vision. Underperformers in contrast may struggle to present a strategy as they have never given it any serious thought.)

nWhat are your salary expectations in the short run? (This is an uncomfortable question for all candidates and can sometimes be asked at the end of the interview.)

nWhat are your salary expectations in the long run? (Many top performers will have a clear vision of how much they should be earning in 10 years from now. They should be bench marking themselves off their mentors and industry gurus.)

nCurrent family status – married, kids, no kids?

nCommunity involvement / non-vocational leadership roles? (Is the candidate contributing to the community in which they live? A candidate who is making an effort to give back can be more comfortable in the role of coach or mentor others on the team; much more due diligence is required than this one question but you can start to build a body of evidence for the candidate who is a natural mentor.) n

ORGANIZATIONAL FIT

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LEADERSHIP

house. Virtual leadership factories have begun sprouting up all over the country.

In fact, a USA Today article published in 2008 revealed that one in every five CEOs running the 1,187 public companies with a market CAP of over $2 billion or greater at the time, had previously come from one of 20 companies. That is 20% of all CEOs of large cap publically traded firms come from one of 20 companies. The top leadership factories in the US at the

time of the article were GE, IBM, and McKinsey. In fact GE had created 26 CEOs

of $2 billion orgreater companies in 2008. The purpose of leadership is to create more leaders and CFOs who live by this philosophy should be identified, attracted and retained by companies who want to beat their markets. The first step in assessing leadership capability is to understand their philosophy around leadership itself. The first question in this section, “What is the purpose of leadership?” will allow you to see the candidate’s leadership philosophy. Further in the questionnaire is another question which asks “You cannot be promoted if you cannot be replaced, discuss?”. The majority of executives will fail to see how these two questions are linked and thus a red flag mechanism can be created, should the

1 in every 5 CEOs, of publicly traded US companies with $2 billion plus market capitalization, come from 1 of 20

DRIVING A TEAM TO ACHIEVE goals in a competitive market is one of the most challenging tasks a senior executive can face. Individuals who score high on this section will have

a clear idea what leadership is and specifically what values and traits the ideal leader should epitomize. As an organization can never outperform the capabilities of its leadership, the purpose of leadership should be to create more leaders.

As an organization becomes more ambitious and develops, its hunger for leadership becomes insatiable. Many US companies have such an appetite for leadership talent that they have become experts in developing leadership in

“I SUPPOSE LEADERSHIP AT ONE TIME MEANT MUSCLES; BUT TODAY IT MEANS GETTING ALONG WITH PEOPLE.” - MK GANDHI

$2bnx20

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THE PRICE OF GREATNESS IS RESPONSIBILITY. - WINSTON CHURCHILL

THE VERY ESSENCE OF LEADERSHIP IS THAT YOU HAVE TO HAVE VISION. YOU CAN’T BLOW AN UNCERTAIN TRUMPET.- THEODORE M. HESBURGH

THEIR ABILITY TO ARTICULATE A CLEARLY DEFINED GOAL FOR

THE GROUP.

THEIR ABILITY TO CREATE A CLEARLY DEFINED PROCESS TO

ACHIEVING THE GOAL.

THEIR ABILITY TO GET THE TEAM TO TAKE OWNERSHIP OF THE GOAL.

THEIR ABILITY TO CREATE CLEARLY DEFINED SUCCESS METRICS,

MILESTONES AND A POINT OF ARRIVAL FOR THE ACHIEVEMENT

OF THE GOAL.

THEIR ABILITY TO ACQUIRE AND RETAIN A COMPLIMENTARY MIX OF SKILL SETS TO ALLOW PEOPLE TO LEVERAGE STRENGTHS & WEAKNESSES.

THEIR ABILITY TO CREATE MUTUAL ACCOUNTABILITY ACROSS FUNCTIONS AND ORGANIZATIONAL BOUNDARIES.

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LEADERSHIP

promoted if you cannot be replaced, discuss?” as relating to succession planning and how important it is to institutionalize succession planning into the organization. The growth of the organization depends on its ability to produce a steady stream of competent and capable leaders; as is demonstrated by winning case studies such as GE, IBM and McKinsey.

As the leadership assessment continues the successful candidate should demonstrate the ability to embed the values of the idealized leader into the company. It should be grafted onto the recruitment process, the succession plan, the promotion plan, the compensation and benefits plan; it should resonate throughout the organization. For

example McKinsey has a very clear picture of what leadership should look like at their organization, they recruit against it, they promote against it, they reward people who

echo it. They live it. It is the job of the team leader to create this type of a culture and only the top leaders in the world are capable of achieving this benchmark.

Having a vision of what leadership is in an organization is only part of the equation, the real question is can they actually lead a large and complex team? A top performing leader must understand how to harness the power of a team. They must be capable of aligning a group and will be a key factor in mobilizing people to follow a new direction. Candidates who score high on the teambuilding questions of the leadership section of the assessment will have a clear idea of what kind of infrastructure must be created to drive a team from good to great. I will provide a base line for this answer,

however team building is fluid and no two CXO executives approach it in the same way. Some may stray from the formula I suggest, what is most important is the extent to which

WHERE THEY WILL HAVE ISSUES IS IN CREATING OWNERSHIP OF THE GOAL WITH FRONT LINE STAFF, CREATING MUTUAL ACCOUNTABILITY FOR THE GOAL ACROSS BUSINESS FUNCTIONS AND ACQUIRING AND RETAINING A TEAM WITH A COMPLIMENTARY MIX OF SKILL SETS.

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For starters when assessing an executive on teambuilding I look for the following;

Please see suggested questions below;

n What is the purpose of leadership?

nWhat is your team building philosophy?

nWhat are the key elements of team building? Describe 3 of the most important aspects of teambuilding? (Leveraging Strengths/Weaknesses, Common Goal, Common Approach, Common Measure, being mutually accountable, creating ownership).

nHow do you embed your team building philosophy into the organization? How do you embed this into your recruitment process, your training & development, you career planning, promotions, innovations, compensation & benefits?

nWhat do you think of the phrase “You cannot be promoted if you cannot be replaced?” How do you embed this philosophy into your organization and even the role of the CEO?

nDescribe a time you were able to turn around an underperforming team. How did you do it?

nWhat are the key attributes of a successful culture? What are the attributes of a successful leader? How do you embed these values into your organization?

nWhat actions and support, in your experience, make a team function successfully? n

LEADERSHIP

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While I do not have time to go into an explanation of something as complex as team dynamics in this white paper, I have provided enough for you to get started. By following these guidelines you will at least be able to benchmark your CFO candidate’s team building philosophy against the above list.

Often Chartered Accountants will be very strong at creating a clearly defined goal, developing a common process or path towards the achievement of the goal and will have prudent success metrics in place. Where they may have issues is in creating ownership of the goal with front line staff, creating mutual accountability for the goal across business functions and acquiring and retaining a team with a complimentary mix of skill sets.

Thus in summary candidates who score high in this section will have a clear idea of what the purpose of leadership is, what leadership should look like in the organization and have a keen vision of what infrastructure they will create to lead their team to success.

Finally they will be able to embed all of this into every facet of the business in an effort to create an enduring organization whose culture will become a virtual

THE RAISON D’ÊTRE OF THE CFO is to use his financial prowess to create and capture value for the shareholders. This will require the savvy CFO to be a strategic visionary, a team leader,

and a creative business partner.

Thus the assessment starts by looking for examples of significant value creation. Divesting shared services such as a call center and outsourcing it at a discount can provide a large upside for an organization. Right sizing an organization, or acquiring a competing business can deliver an impactful lift to a company’s value. Sophisticated decisions which require intense financial strategy are at the heart of the CFOs job description. These decisions cannot be relegated to anyone else. Candidate’s who are not thinking about value creation may be more focused on the day to day running of the business and may not have a strategic role at all.

Vision was discussed in depth at the beginning of this paper and its importance cannot be underestimated. The CFO should have a clear vision for the finance division of his or her company. Often one of the primary reasons the

VISION & CREATINGSHAREHOLDER VALUE

GOOD BUSINESS LEADERS CREATE A VISION, ARTICULATE THE VISION, PASSIONATELY OWN THE VISION, AND RELENTLESSLY DRIVE IT INTO COMPLETION. - JACK WELCH

top performing CFO has for changing employers is that their current company’s operating platform is incapable of achieving the CFO’s vision. If the top performing CFO feels another organization’s platform will be a catalyst to their vision, that particular company becomes very attractive. Understanding the executives personal and professional vision become key elements of both the selection process and the attraction process.

As part of their vision the CFO should develop and communicate a compelling finance agenda. They should be able to clearly articulate the financial goals of the company in both a short and long term context.

The three most important goals of the finance department should be easily recalled by a leading CFO. Creating a vision is only 10% of the job, 90% is getting the team to commit to the vision. A CFO who is creating a vision and driving change within the finance function will be able to articulate his or her finance agenda with ease. As he or she struggles to get their team to take ownership of the vision they may have had to communicate it on a daily basis in a litany of forms. Candidates who cannot recite their vision for the finance department may not be heavily involved in the 3 to 5 year business planning process and most likely are not internal change agents. Failure to recite a vision can be a red flag that this individual is not a CFO and may be a Controller with a CFOs title.

WE ARE LIMITED, NOT BY OUR ABILITIES, BUT BY OUR VISION

- KHALIL GIBRAN

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VISION & CREATINGSHAREHOLDER VALUE

Below are a few questions suggested to test a candidate’s ability in Vision & Creating Shareholder Value;

nCan you give me an example of your biggest impact as it relates to building shareholder value?

nMany people feel that current public company reporting practices actually destroy shareholder value, discuss?

nWhat is your vision for your current department?

nHow will the role of the CFO change over the next 5 years? (wait for candidate to answer and then ask) How are you adapting to these changes and what critical course corrections will your department have to make in order to stay competitive in the near future?

nWho is the visionary on your current CXO team? Do you share their vision?

nCan you give me an example of a time when you were able to successfully create and communicate a compelling financial agenda? Why was it successful?

nWhat is your vision of the finance department of the future?

nDescribe a time you had an innovative idea that increased efficiency or increased revenue?

nDescribe a time you felt the vision of your company was slightly off focus? Were you able to influence your leadership team to change directions?

nIn your mind who are the top 3 CFOs of this region? (Candidates who are aware of other top performers in the market are developing a vision for their own personal and professional development)

nWhat makes a top CFO? n

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FOR THE PURPOSE OF THIS white paper, strategy is defined as an approach that delivers a sustained competitive advantage either for a company or an individual. Therefore if

the company’s vision is to be the leading IT company by gross revenue or to be the law firm with the highest billings per partner; the strategy would then be how the IT company will achieve the highest gross revenue in its industry or how the law firm will achieve the highest billings per partner.

The strategy will describe an approach to the fulfillment of the vision which delivers a

sustained competitive edge.

A winning strategy can be developed by the CFO of a billion dollar company or it can be created by an entry level Account Manager.

Strategy takes place in all areas of an executive’s career and those executives who advance to the top are the ones who are using winning strategies. In the case of the entry level Account Manager his or

IF YOU KNOW THE ENEMY AND YOU KNOW YOURSELF, YOU NEED NOT FEAR THE RESULT OF A HUNDRED BATTLES. IF YOU KNOW YOURSELF BUT NOT THE ENEMY, FOR EVERY VICTORY GAINED YOU WILL ALSO SUFFER A DEFEAT. IF YOU KNOW NEITHER THE ENEMY NOR YOURSELF, YOU WILL SUCCUMB IN EVERY BATTLE. - SUN TZU

her vision could be to be the number one Account Manager in the country, and his or her strategy may be to create distribution channels his competitors do not have access to. In this instance an executive does not have to wait until they are leading a large team to exercise their strategic skills. Continuous improvement and competitive strategies can be developed at all levels in the organization.

In essence life is about strategy and anyone who is interested in being competitive should have numerous examples of creating and executing strategy. Candidates who complain that they are not in a strategic role should be eliminated immediately. Strategy is omnipotent for the CFO as finance threads every department and every area of the business. Finance affects every employee in the form of compensation and benefits which can often be the largest piece of the P&L of a business.

In its more implicit form it is embedded in every business activity as controls or can be as complex as sophisticated derivative hedging strategies used to minimize the company’s risk exposure.

Financial Strategy is the bedrock of any top performing CFO and a critical pillar of any competitive business.

FINANCIAL STRATEGY

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As CFOs become more sophisticated they are able to direct human behavior within the organization and seamlessly graft controls onto the over-arching strategy of the business.

They are masters of generating consensus and commitment to new ideas. A strategy which is not successfully executed is a useless strategy as the test of any good idea is in its execution. A leading CFO will know how to get their teams to accept and implement the master plan.

Below are some suggested questions to test a CFOs strategic acumen;

nHave you ever had an idea which has allowed your company to enjoy a sustained competitive advantage?

nCan you give me an example of a project

you worked on in which you had to switch strategies mid-project? What was the situation, how did you recognize a change in strategy was needed, how did you implement the change? (Reducing foreign exchange exposure, changing a banking relationship, divesting or outsourcing an element of the business, etc.)

nWhat is the toughest thing about implementing a new strategy?

nCan you give me an example of a time when you were able to reduce working capital in your organization? What are three strategies for reducing accounts receivable? What are three strategies for reducing inventory? What are three strategies for increasing accounts payable?

nYour company has requested you to increase the Return on Assets. What are two strategies to achieve this goal? Have you ever spearheaded such an initiative in your professional career?

nDescribe a time you developed a strategy from scratch. What was the situation, how did you implement the strategy, and what was the result?

nHave you ever successfully implemented the outsourcing of your organizations non-core business functions? What was the situation? How did you recognize that the opportunity for outsourcing was significant?

nCan you give me an example of a long term, 3 to 5 year, business planning effort you championed?

nWhat is your philosophy of strategic development and business planning?

• How often do you review your strategic plan?

• Do you include outsiders in your strategic process?

• What are the key steps in a successful strategic planning process?

• How do you get alignment across the Board, C-Suite, Business Units, Line Managers

and Employees?

nWhy is it 90% of strategies fail to be implemented? Why do only 10% of companies successfully execute their strategies? (Sophisticated candidates will state that this is due to a lack of ownership and internalization of the company strategy by its staff. Leading executives will institutionalize processes to allow front line employees to influence and help create strategy. They will create infrastructure which allows the strategy to be fluid and ever changing as the market and company evolve.)

nDescribe the most exciting acquisition of your career? Was it your idea? What was your strategy of evaluating the acquisition target?

nIs your current/previous company’s strategy competitive? What changes would you make to it to make it more competitive?

nIn your industry who has the most competitive strategy of all? How can you compete against them? n

FINANCIAL STRATEGY

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ONE OF THE PARAMOUNT FUNCTIONS of the CFO is to develop and nurture an effective set of controls for the business. He or she will examine each process in the

business that involves financial transactions to see where there is a risk of losing assets and then install controls to reduce the company’s exposure to the identified risk.

Controls also increase the quality of financial data that is being relayed back to the CXO team, from which critical business decisions will be made. While every company will want to operate in a zero risk environment, the catch is controls can be very costly. A risk free operating platform is often too expensive to be competitive, thus a certain level of risk is always present in the company and the savvy CFO knows exactly how much risk is acceptable. Often clients will chose a CFO from the same industry as after working for twenty years in a specific sector an executive develops a deep understanding of the inherent risks in the sector. The mature, seasoned CFO is able to leverage controls to direct human behavior as required by the over-arching strategy.

This type of re-engineering requires the experienced hand of a master craftsman who is able to identify legacy controls which are no longer needed and has the foresight to see where the gaps in the system are as markets

change direction. What is critical to assess is the candidate’s creative problem solving skills and their understanding of human psychology.

Below are some suggested questions regarding controls:

nCan you give me an example of a project you worked on that was suffering from control problems, how did you pinpoint where the problem was? How did you find the problem, how did you fix it and what was the result?

nThe CFO often inherits a companywide measurement system that is based on historical needs, rather than the requirements of its current strategic direction. How do you prune out those measurements that are not resulting in behavior aligned with the strategic direction? Can you give me an example of a time you were able to step into a role and link performance measures to the strategy of the organization? (Candidates with a commanding knowledge of controls will gravitate to re-engineering legacy control systems when they take on a new CFO position, while CFOs with an elementary understanding of the subject matter will be gun shy to change traditional control set ups. If a company takes a drastic change in strategy, a change should be echoed in its control systems)

nWhat was your most challenging

assignment as it relates to implementing reliable control systems?

nWhat is the toughest part about constructing reliable control systems?

nCan you give me an example of a project where you were able to design new controls for new systems from scratch? What was the situation, what did you do and what were the results?

nCan you give me an example of a time when you were able to create a measurement and reward systems to channel behaviors into correct areas?

nCan you give me an example of a time you re-engineered control systems to create value for your company?

nDescribe a time you effectively removed a control from the business with positive

results? n

CONTROLS

THUS A CERTAIN LEVEL OF RISK IS ALWAYS PRESENT IN THE COMPANY AND THE SAVVY CFO KNOWS EXACTLY HOW MUCH RISK IS ACCEPTABLE.

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In today’s environment most companies will have a Chief Risk Officer but even so the CFO should be heavily involved in risk assessment in the business and have a deep understanding of risk management.

Suggested questions to assess a CFOs risk competency are listed below:

nWhat is your risk philosophy?

nCan you give me an example of a time you were able to successfully identify and mitigate a significant risk for your company? (E.g. Loss of key business partner, Forex risk, system failures, loss of brand image, investment losses, interest rate increases)

nWhat are the three biggest risks to your department?

nLooking at our current business model what do you think the most likely risks for the business would be?

nDescribe a time when you successfully institutionalized a risk monitoring process?

nHow do you define your organization’s risk appetite?

nDescribe a time when you aligned your board and stakeholders on the appropriate risk appetite for the business?

nDescribe a time when you process re-engineered your risk reporting

function?

nHow do you define a company’s risk threshold? n

MITIGATING RISKS

ONLY THOSE WHO WILL RISK GOING TOO FAR CAN POSSIBLY FIND OUT HOW FAR ONE CAN GO. - T.S. ELIOT

A RISK CAN BE DEFINED AS any event that threatens the achievement of the businesses objectives as defined by its vision and strategy. The CFO must not only be aware

of all past risks to the business but should be proactively seeking the probability that new unknown risk events may occur.

Traditionally companies buttress their risk policies with layers and layers of preventive actions aimed at dealing with risk events which have already occurred. The greatest risks are the ones which have not occurred yet and are completely unknown at this moment.

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CFOs today must embrace technology and become innovative agents of change. Questions focused on a CFOs ability to deliver cost reductions and increase efficiency are below:

nWhat is your philosophy of cost reduction and increasing efficiency?

nCan you give me a specific example of how you benchmarked your firm’s performance to assess how efficiently it was performing? How did you identify where opportunity gaps were and how did you propose to bridge these gaps?

nCan you give me an example of how your knowledge of bottlenecks in the production process affected your decision regarding capital expenditures?

nWhat is the industry average cost to earnings ratio? How does your organization measure up to industry norms?

nHave you ever created a system or policy which encourages efficiency improvements throughout the organization? Across all departments and divisions?

nCan you give me an example of a re-organization you have spearheaded? How did you recognize that a re-organization was necessary? How did you re-align staff? How did you align people processes and strategy?

nDescribe a time you were able to significantly reduce your company’s fixed costs? n

REDUCING COST

THERE IS ONE RULE FOR INDUSTRIALIST AND THAT IS: MAKE THE BEST QUALITY OF GOODS POSSIBLE AT THE LOWEST COST POSSIBLE, PAYING THE HIGHEST WAGES POSSIBLE. - HENRY FORD

INCREASING EFFICIENCY IS THE FOCUS of any company which aims to be competitive. Technology has delivered the biggest efficiency gains in recorded history and the CFO of tomorrow will have to be tech savvy. Being up to date

with the latest IT approaches that can deliver value for a company is a must.

Today organizations are doing more with less on an epic level. Automating a process can reduce risk exposure, increase efficiency and reduce costs all at the same time. Today companies are delivering multi-billion dollar revenues with a fraction of the staff and the cost than that of even 10 years ago.

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Below are suggested questions for this section:

nWhat is the most difficult decision you have had to make as it relates to Capital Expenditures?

nHave you ever been in a situation where there was a disagreement with your Board about which projects should get funding and which shouldn’t?

nWhat is your philosophy of investing excess cash?

nHave you ever created a separate WACC for each department? (Creating an internal capital market.)

nWhat are the three biggest mistakes a CFO makes as it relates to Capital Expenditures?

nDescribe a time your investment allocation has outstripped your growth rate? What was the result? What did you do to course correct the situation?

nWhat is your investment philosophy? n

RESOURCE ALLOCATION

INVESTING RETAINED EARNINGS effectively requires the decision making rigor of an expert CFO. Current growth opportunities, future expansion prospects, research & development, upgrading current facilities, pension

fund investments, paying dividends to shareholders, special projects, etc, the list of investment needs is never ending and the winning CFO knows how to strike a balance between current and future needs.

As the gate keeper to the company’s annual budget and guardian of its liquidity, the ability to expertly allocate financial resources is the touchstone of financial acumen.

RULE NO. 1: NEVER LOSE MONEY. RULE NO. 2: NEVER FORGET RULE NO.1. - WARREN BUFFET

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SUMMARY

THE PHILLIPS GROUP

In many ways the Chief Financial Officer position is the least forgiving CXO position, as a failure to perform one’s duties effectively can result in imprisonment. The pressures of the position are tremendous and only seasoned candidates who can handle the intense heat of the boardroom should be entertained for the position. The role requires mature individuals with the gravitas to create impact with senior stakeholders and the political acumen to manage the sophisticated undercurrents of a global arena. All of this must be underpinned by the rock solid character of an executive who has the courage of their convictions. I hope this white paper enables you to make a better selection of your next CFO, as it is but a small glimpse into my craft and profession. I have created this for free as it is my honor to contribute to your success moving forward. The bedrock of a prosperous society is strong ethical business and ensuring you choose your CFO correctly is critical not just to your company but to the community. Should you have any questions about my assessment please do not hesitate to

Helping companies build championship leadership teams has been a tradition in the Phillips family for generations. From helping Fortune 500 companies acquire and retain top performing senior executives to advising

leading Chief Executive Officers on developing their human capital, Shane has executed CXO assignments all over the world. His passion for helping people and companies develop leadership capability has driven him to engage the media, where he is now the host of Dubai Eye’s career show “Eye On Careers” as well as a contributing writer to CEO Magazine and Global Citizen Magazine. Shane holds an MBA from London Business School and a B.A. in Psychology from the University of British Columbia. He is a Non Executive Board Member of Fortis

Group Holdings and Chairman and Founder of Big Brothers Big Sisters UAE. A former Executive Board Member of the Canadian Business Council, President of the Club for Canadians and a volunteer with Families with Special Needs, the United Way and Young Achievers.

THE PHILLIPS GROUP is a boutique executive search firm specializing in senior placements. The firm finds its roots planted in the 1970s in Canada where The Phillips Group was first founded. After the retirement of Carl A. Phillips the business was closed for a period of years only to be re-opened in Dubai. With two generations of Executive Search experience, The Phillips Group offers high touch bespoke service for clients looking to hire the best people. Services offered include Executive Search, Executive Assessment, Recruitment Process Out-sourcing, and Training & Development.

SHANE PHILLIPS BIOGRAPHY Shane is currently the Managing Director of a boutique Management Consultancy in Dubai, United Arab Emirates. The lion’s share of his professional experience is in Executive Search with previous experience at leading firms such as Korn Ferry International, Odgers Berndtson and most recently at Stanton Chase International where he was MENA Regional Practice Leader for Financial Services.

+971 50 940 7537 | shane@tpgleadership.com | www.tpgleadership.com