BEFORE I became a finance director and CFO, I remember a December board meeting, when the chairman asked the CEO and CFO: “What do you need in order to achieve your annual results target?”, the CFO answered: “Thirteen months.” He was soon fired. That set the tone for my tenure as FD and CFO and, although I knew that every Christmas would be stressful, I did not anticipate the full extent.
I promised myself that when I became FD, and therefore in charge, I would stress-bust the manic year-end process, but new systems and increasing demands have quashed my efforts on this mission. I do not understand why everything has to happen at the last moment. As we approach year-end, everyone becomes more animated.
The CEO is now in panic, of course. He does not know if he will achieve his mega bonus, and the FD is in charge of his destiny. Suddenly, his interest in the financials reaches a level not seen since last December. Obviously, I have kept something in reserve and he knows it, but his advice to use P&L tricks and to abuse the middle column is unwelcome. He is, suddenly, a nuisance to his business partner – ie, me.
The chairman, age 93, wants to see strong year-end results for his own reputation and the non-executive directors (NEDs) become more active in December. Usually the NEDs are fully engaged during board meetings for the diary sessions when they debate future events, work avoidance, other companys’ board meetings and clashes of more important occasions. I wonder how we cram all their egos into our boardroom the size of a small aircraft hangar.
We have Dr Tony, who knows everything about everything, talks incessantly and is very important and extremely busy. Then we have Mervin representing the largest investor who is scared but keen to ensure that no one thinks he has screwed up. Angus is a civil servant who rarely turns up but challenges everything proposed by email. New-age Margaret is out of her depth, John behaves like a clergyman and George is clever but too young to be allowed by the others to influence the board with his valid opinions. Ted has been on the board too long, has no friends and is lonely but always has a clash; for example, “having a button sewn onto a shirt on that day”. Fortunately, in Nick we have a very effective independent senior director (names changed to protect the guilty).
Then there is the usual last-minute December bombshell – the one that hits when everyone else has skived off for Christmas.
Last year, I was faced with an urgent decision on the disposal of a subsidiary, which we had been working on for months. The preparation had been done, but we needed formal confirmation from the acquirer, which was expected after the December holidays. Wrong! The call came late. I was keen for uncertainty to be averted over the Christmas period, the terms were exactly as expected, nobody on the board was available, so I agreed the deal.
Then it hit me. A temporary and unrelated downward share price blip had, on that day, caught this deal as a Class 1 Transaction. This called for an unplanned major piece of work and, crucially, shareholder approval, with serious timescale implications.
We did sort this out, of course, but not until after a worrying Christmas. I remain convinced that last-minute year-end issues ruin many an FD’s Christmas.
As many parents who are up late on Christmas Eve wrapping gifts would agree, the Japanese JIT system can be stressful, and Christmas can become such a just-in-time event for the FD’s year-end.
So, if you cannot change your board or change your CEO, maybe you can change your year-end from December. ?