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Revealing the secrets of CFOs

Revealing the secrets of CFOs

Today's CFOs are far from just numbers people.

Methven CFO Deidre Campbell

When Deidre Campbell became CFO at Methven, the bathroomware company had just been bought by a handful of its senior executives, who were driven by an ambition to turn it into a global brand. That was 2001. In the intervening decade, Methven, which began life in Dunedin in 1886 as a brass and iron foundry, has become a major exporter. It’s publicly listed, has tripled turnover to $130 million and has divisions in three countries.

And Campbell? Well, her role has grown with the company, which has been through a listing, several large acquisitions and, more recently, the global economic meltdown that severely tested Methven’s mettle. “There have definitely been a few twists and turns,” says the 46-year-old.

Before Methven, Campbell spent seven years at the Auckland Regional Council, wearing various financial and management accounting hats. She left a public entity with vast resources, where she’d been planning to 10-year horizons, for what was then a very lean private company.

Was there a culture shock?

“It wasn’t a shock, but it was very different. Probably the biggest challenge was the limited cash resources —managing debt and cashflow. Thankfully, Methven is a very profitable business.”

The biggest surprises, perhaps, have been the sheer dynamism of the CFO’s role, and the deep involvement in strategy and business decisions. It’s about constantly looking forward and providing critical facts and focus to help drive growth, “and there is a huge passion at Methven to be a world leader”, she says.

Campbell has thrived on being involved in the company’s big milestones in the last decade: the

$36 million share issue in 2004 and subsequent purchase of Methven’s Australian distributor; and the big one, the 2007 acquisition of UK distributor Deva for $59 million, which doubled the company’s size overnight. On the Deva deal, she worked closely with group CEO Rick Fala in a team of four, drawing on her specialties in financial performance and sustainable earnings in the process of due diligence.

How much more complex has her role become? Post-listing, there were compliance programmes and all sorts of new internal controls to put in place, as well as the requirements of continuous disclosure. Campbell, as the go-to person on the numbers, now deals with a whole new cast, including brokers and analysts.

“I’m obviously also keeping my eye on more than one division, and the different time zones make communication harder. It becomes really important to have the right people in the organisation. I can set parameters, but to get the performance we want we need to have good people on board.”

During the big moments in a company’s development, it’s the CFO that investors and the board look to for reassurance about the numbers. “They turn to you for comfort that there are going to be no surprises, that all the compliance and policy side is tight.”

Campbell describes herself as “an accountant at heart” and is cautious by nature, so is well suited to being the voice of reason.

“We have lots of ideas in this organisation. My job is to say, ‘hang on guys, let’s reassess this. Does this fit with our long term goals, or are we going off on a tangent again?’ And we have. We made a mistake in the US. We didn’t do our homework.” Scott Technology CFO Greg Chiles

Being a chief financial officer might not sound like the kind of job your children skite about their mum or dad having — not like fighting fires or driving police cars. But Greg Chiles, of Dunedin’s Scott Technology, doesn’t have trouble persuading his two-year-old son to visit him at the office. “He loves it. As soon as he gets here he wants to go down and see all the robots.”

Scott Technology designs and manufactures automated production systems for the world’s biggest appliance brands, including Bosch and Siemens. More recently, the company has been working with the meat industry to automate lamb boning — introducing those automatons to the repetitive, bloody process of slicing and dicing a carcass.

Chiles has been with the company for three years, and it’s his first time in a CFO’s chair after 16 years working for Deloitte in New Zealand and the UK in a variety of roles, from accounting to business advisory and corporate finance. This broad experience is fortunate, because the CFO’s job at Scott is the definition of multifaceted.

“If I went back now and looked at the job description, it only covers a small amount of the actual role,” says Chiles, who puts the eclectic nature of his job down to the relatively small scale of the company, which has a turnover of $47 million and employs 200 staff. “There is a lot of getting involved in the day-to-day business in terms of strategy and projects. It covers almost everything in the back office. You’re almost a corporate services manager in some situations, in others almost a chief operating officer. It just depends on what needs to be done.”

Chiles has also played an important role alongside CEO Chris Hopkins in recent acquisitions, the biggest of which was the 2008 purchase of mining specialist Rocklabs for $6 million in cash and $4 million in shares. Chiles had only been on board a few weeks when he was pulled into that one, but again he was able to draw on plenty of experience in due diligence and M&A work during his years at Deloitte. At Scott, he says, “because of the skills we have, we tend to do a lot of that stuff ourselves. We get a validity check from Deloitte … which gives the board some comfort”.

Chiles says his working relationship with Hopkins is close and built around mutual respect. “You become a CEO’s right-hand man and sounding board in this role. When I first started, someone sent me a link to a website article about the first year as a CFO and it said something like, ‘by the end of the first year you should be able to anticipate what your CEO’s answer to any question on business will be’. That’s the degree of closeness you need. Having said that, you can’t be a ‘yes man’.”

Given the tight relationship that tends to arise between CFOs and CEOs, and the critical importance of financial management, it’s no surprise many CFOs graduate to the top role. Hopkins, for example, was CFO before he became Scott’s boss. Does Giles see himself following that path? “I’ve got a lot to learn before I could make that next step,” he answers.

For now, he considers himself fortunate to have such a stimulating role in Dunedin, his home town, which has been largely stripped of big head offices. The fact Scott Technology is innovative is a bonus.

“There are a lot of cool boys’ toys,” he agrees, in a tone that makes you suspect he doesn’t need much persuading when his son asks to see the robots.

Seeka CFO Stuart McKinstry I’ve made the mistake of calling Stuart McKinstry on the biggest day of his year. The chief financial officer of kiwifruit giant Seeka has just presented annual results to his board at the company’s Te Puke headquarters, and as we talk he’s interrupted several times by colleagues. But where other executives might be tightly wound, McKinstry is Mr Convivial, happy to help.

Maybe it’s something to do with the view of fruit ripening on the vines in the Bay of Plenty sun. McKinstry, whose CV includes a spell in the Auckland manufacturing sector, clearly enjoys working in a heartland industry that, as he puts it, “is actually generating wealth for New Zealand”.

Seeka is certainly doing that. The country’s largest fully integrated kiwifruit supply company, it processes a quarter of the New Zealand crop, roughly 25 million trays. Its own orchards produce 10% of the national crop, some of which it exports to Australia through its developing brand Seekafresh. Turnover in the previous nine months was $122 million and its profit before tax was $12.7 million. It’s a much stronger position than he found when he arrived at Seeka in 2007. McKinstry’s part in helping to drag it out of the mire of low orchard returns illustrates just how far the modern CFO’s role has evolved from being a kind of super accountant.

Working closely with CEO Michael Franks, he did the numbers for a successful deal last year that grew Seeka into a larger entity — the $25 million investment in kiwifruit packer Huka Pak boosted market share by 20%.

“The modern CFO gets heavily involved in those kinds of things. It’s about seeing the numbers in the deal and helping to formulate a profitable financial outcome for the company, and then getting the detail right.”

Detail was once very much McKinstry’s bag. After graduating as a chartered accountant in the mid-1980s, he worked for Deloitte for several years. In 1999, he got his first taste of the kiwifruit industry when he joined Satara, the kiwifruit and avocado cooperative.

Becoming a CFO demanded an evolution of his skill set and vision. “These days financial reporting is becoming heavily technical and compliance focused. So while my team and I have a good grasp of tax and accounting, I also need to know when to bring in specialists, especially when doing a deal. And as a CFO you must have the ability to look at the big picture and to understand how others see it.”

Ultimately, he says, a company’s vision needs to be powered by the chief executive, “or it’s just not going to happen”. But the CFO also has to have a say in what that vision is going to be, otherwise you’re just providing numbers.”

In that regard, one of McKinstry’s strengths is his decade of experience in the kiwifruit business. “I bring an understanding of this industry and the complexities of how things work.”

Another is his easy-going style. People skills become important at his level. “You’re dealing with growers through to senior executives of international companies, so you need an ability to communicate with all sorts. And you have to be a generalist. You have to understand all parts of the business.”

A CFO is also in the business of projection. That would be a fraught exercise in any industry, but McKinstry works to agricultural cycles, which can throw up more imponderables than other businesses.

“Because of the kind of business that we’re in, we have to be constantly updating projections. You are thinking ‘what is the crop going to be? What are the market returns going to deliver back to our orchard business and growers?’”

Does he enjoy it? He loves it, as he does the industry. “Kiwifruit is often forgotten by people, but it needs to be cherished. It’s a very large employer, generating

$1.4 billion in export earnings so it’s part of the engine room of the economy. I find that exciting.”

How to work well with the boss

In the best companies, CFOs have a close working relationship with their CEOs, particularly in the big moments. So how do our three CFOs think they can work harmoniously and effectively not just with CEOs, but with all senior management?

Greg Chiles

  • “Don’t be a ‘yes man’. You need to give your opinion and if you feel strongly about it, stick to your guns.”
  • “You have to be multi-skilled and willing to step in if the CEO is away and make decisions.”
Stuart McKinstry
  • Inclusion and accountability. “Managers need to own their numbers.”
  • Honesty and integrity are important, as is delegation. “Be prepared to look at the big picture and pay other people to look at the detail.”
Deidre Campbell
  • “Teamwork, based on trust, honesty and open dialogue — working collectively always gets better results.”
  • “You need to be uncompromising. Set standards and don’t be tempted to cross the line.”
  • “You must have passion and commitment to the company and its product, people and vision.”

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