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Friday, 15 May 2015 13:20

Balancing risk and reward proves mission critical for award-winning CFOs

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This year's CFO of the Year Award winners from left to right: Eric Lambert (Mill Steel), Julie Towner (Rockford Construction) and Don Jakel (Grand Rapids Public Library) This year's CFO of the Year Award winners from left to right: Eric Lambert (Mill Steel), Julie Towner (Rockford Construction) and Don Jakel (Grand Rapids Public Library) PHOTO: Katy Batdorff

While financial executives must remain focused on their fiduciary responsibilities, the best CFOs are unafraid to dig into every part of their companies’ operations.

That’s according to the three financial executives who participated in a best practices panel discussion this week as part of the CFO of the Year Awards hosted by MiBiz in cooperation with the Western Michigan chapter of Financial Executives International (FEI).

Regardless of their industry, the CFO honorees said they need to be in a position to help their companies balance risk-taking and risk-mitigation.

“I think CFOs sit in a very unique role,” said Eric Lambert, the CFO of Mill Steel Co., the winner in the large company category. “They touch all aspects of the business.”

With their combined decades of experience, albeit in vastly different industries, Lambert and the other winners — Julie Towner of Rockford Construction Co. and Don Jakel of the Grand Rapids Public Library — reiterated that while crunching the numbers is important, their focus on the broader operations is mission critical to helping their organizations navigate through periods of growth and contraction alike.

For both of the private sector CFOs, that means relying heavily on financial reporting systems to closely monitor how day-to-day activities are impacting the bottom line. While Lambert inherited a system at Mill Steel that was “ahead of the curve” and started in the 1980s, Towner leveraged Rockford Construction’s investment in its I.T. team to develop a system of its own over the last couple of years. The financial management software gives executives access to real-time information they can use to inform their decision-making, Towner said.

In Jakel’s case, he ran financial scenarios that helped the library board and the other executives understand the impacts of their decisions last year when the city department was faced with a $1 million budget deficit. The trouble stemmed from falling property values, which led to less revenue for the library — all at a time when the organization was faced with higher costs to maintaining its aging facilities.

Ultimately, the library’s board said cutting services and closing branches were both off the table as options, Jakel told the crowd. Rather, the library opted to cut its full-time staff through layoffs, attrition and exit incentives. These moves, coupled with special transition funding from the city budget, put the library on a path for long-term sustainability, he said.

Another best practice discussed by the panelists focused on constant communication with suppliers, vendors and subcontractors. Whether in the steel business for Lambert or the construction industry for Towner, the executives said they are on the phone daily with vendors, ensuring that their suppliers’ businesses are stable and able to support their organizations through the current periods of growth.

For Towner, that means she needs to be in the thick of long-term planning for the company even when she’s tasked with filing 75 tax returns — as she was this year.

“With a CFO, it’s supposed to be all about the numbers,” Towner said. “You gather all the facts and we know how to analyze and we don’t want to overanalyze anything.”
Oftentimes, it also pays when a veteran financial executive trusts his or her gut feeling, she added.

“(T)here’s just this feeling where you say, ‘Yeah. It’s time to solve (a problem),’” she said, referring to decisions to buy or sell properties for Rockford. “You say it’s time to make this purchase and it may not be something that is going to bring dollars to the bottom line today, but what’s the long run here: Is it going to create those relationships and create profit for the future?”

Read 14576 times Last modified on Friday, 15 May 2015 16:01