From the October 2007 issue of Treasury & Risk magazine

Sometimes It Helps to Get Your Hands Dirty

Had you asked Fred Sutherland a couple of decades ago--when he was toiling away in treasury--what he wanted to be when he grew up, he probably would have said CFO. And he was well on his way, moving up steadily at $11.6 billion Aramark--first as assistant treasurer, then treasurer, then vice president of corporate finance and development and, finally, senior vice president of finance.

Along the way, he had picked up responsibility for the tax, planning, risk management and controller function. But 14 years ago, he took what many in finance would consider a sidestep--a move that was clearly a promotion, but one that could easily take him out of finance forever. Sutherland took over as the president of Aramark's $1 billion uniform and career apparel group. "It certainly was a challenge," he reflects. "I had to interact with managers at all levels--sales managers, HR managers, IT managers, procurement managers. I had to set an overall strategy and see that others understood and executed it, so that our group performed and achieved results. You have to learn what makes each business line tick, what its market strengths and weaknesses are, how to make that business evolve so that it stays a winner in a changing, competitive marketplace. That takes business judgment beyond anything required in finance."

In other words, he reveled in his new position, reorganizing the entire sales force of the unit early on in his new posting. At fortysomething, he could have spent the rest of his career in operations, running divisions and maybe eventually working his way to CEO. But four years after taking the plunge, he returned to his original vision and became Aramark's CFO. Even though he might have made that jump without the detour--maybe even on a faster timetable--Sutherland contends today he wouldn't have wanted to. "If the CFO is to be the keeper of the integrity of financial statements, someone who raises capital when it is needed and looks out for the interests of shareholders, someone who keeps the company out of financial and accounting trouble, then direct operations experience is nice, but not essential. You need a shortstop, so you hire a shortstop," he observes. "But if the CFO's role is to help the CEO run the company, it really helps a lot if he or she has had experience running business operations. It just depends on which kind of CFO you want to be."
Although it still remains relatively uncommon, a growing number of companies are beginning to see the value of immersing their finance stars in the trials and tribulations of running a business.

"Only a short list of companies are doing it, but they are best-in-class companies, and they are preparing their most promising people for larger roles," reports Kevin Ford, senior client partner at executive recruiter Korn Ferry. He lists "phenomenal" companies like Johnson Controls, PPG, 3M and Avery Dennison as among the pioneers. "The aim is not to take them out of finance, but to make them more rounded when they return."

Russell Boyle, head of the U.S. financial officers practice at executive search firm Egon Zehnder, notes that among Fortune 250 companies, it is becoming less of a rarity to see CFOs who have run a business unit with P&L responsibility. The experience particularly becomes key for CFOs with CEO aspirations, or for companies that would like to put their CFOs on that track.

Here, Aramark is again a good example since its CEO Joseph Neubauer had been CFO with operations experience before moving to CEO in 1983, having spent earlier years at PepsiCo Inc. as the company's treasurer and the senior vice president in charge of the Wilson Sporting Goods division. And not surprisingly, it was Neubauer who tapped Sutherland for the move.

With fewer and fewer pure chief operating officers around, CFOs are increasingly being asked to take on the title and responsibilities. And having the operational experience, in this case, is a big plus. This is particularly true at middle market companies. "The CFO role has evolved into more of a COO role at many mid-cap and small companies," observes James Haddad, vice president of finance at Cadence Design Systems, San Jose, Calif. "I expect this trend to continue."

Another standout executive to make the commute between finance and operations is Brent Callinicos, treasurer of Google Inc. since January. In 2004, the door to operations opened for Callinicos when Microsoft Inc. moved him from being its treasurer to vice president for worldwide pricing and licensing. "It gave me a much broader context for making business decisions and a better appreciation of where others are coming from," he says. "I have a penchant for data-based decisions, and managing worldwide licensing and pricing for Microsoft involved looking at a whole lot of data. In treasury, it's pretty easy to get [relatively] good numbers. In operations, you pull together all the data you can get and study them. And then you make a leap of faith. The data are rarely as conclusive as they are in treasury."

But he admits he missed treasury, so when Google came calling with a challenge to "build a world-class treasury," Callinicos--who was then the CFO of Microsoft's server division--couldn't refuse. "It felt really good to be back," he concedes. But he returns with a new sense of what it takes to run a business and a broader perspective on treasury's role.

Making these kinds of moves does not come without risk for both company and executive. "Moving someone from finance to operations requires a huge investment by the corporation in that individual," notes consultant Craig Jeffery, managing director of Strategic Treasurer LLC in Atlanta. "It's usually done only for people with high enough potential to justify that investment. When a finance person shows up at a non-financial job site, his or her new staff often has to train the boss."

It can even mean a temporary loss of productivity. "It pushes you out of your comfort zone," says Francois Delepine, who left his post as vice president of finance to become vice president of global business operations at Hyperion Solutions Corp. in 2005. "It means that both you and the company decide to take a new kind of risk. I would hear people say in staff meetings, 'It's good to hear a finance guy talk about revenue.' We carry that finance sticker on our foreheads for months, but gradually you establish yourself and earn acceptance. I think my experience would make me a better CFO and, ultimately, a CEO-- which is even more appealing. Finance is a very process-oriented activity and you become very good at blocking and tackling. Business operations is very goal-oriented. You have to figure out how to score the touchdowns."

For some finance executives, that becomes more fun. Take Liza Cartmell. In 1994, as assistant treasurer at Aramark, she walked through that door to help the sports and entertainment business swing a complex stadium financing deal that required more corporate finance experience than the business had on staff. She stayed to become CFO of that business group and, in 1999, became president. And now that she's running a $1-billion-plus business, Cartmell, 50 and a lifelong sports fan, says she probably isn't coming back. "Operations is more fun," she insists.

In her job, she needs to step into the shoes of her clients--the stadiums--and into the shoes of their clients--the fans--to be effective. "We have to understand everything that creates a fan's experience--to be in touch with our clients' brand promise, as well as what the sophisticated fans of today expect. Our expertise is knowing which levers we can pull to deliver the experience that will bring fans and visitors back," she notes.

As president, she brings something special to her unit's clients--an understanding of how tough it is to manage cash flows and working capital. "Because of revenue sharing, our cash flow is their cash flow, our forecasts affect their forecasts. It really takes teamwork," she says.

Therein lies a risk for companies who let executives get a taste of operations; they don't want to go back. Worse still, a finance pro being groomed for bigger things is, of course, also a prime target for a headhunter. Take Hyperion's Delepine. He left Hyperion less than two years after making the switch out of finance to become Google's vice president of financial planning. "That's no reason not to do it," Aramark's Sutherland insists. "You don't keep your people mediocre so they'll stay."


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