Last May UK power group National Grid announced CFO Andrew Bonfield was standing down to become the financial chief of Caterpillar, the world’s largest construction equipment manufacturer.
Discussing his decision to join the “iconic” company, he told Financial Director: “Maybe I’m a sucker for one last big job to do, one last different industry to learn.”
Bonfield was fully aware of the challenges of running America’s “bellwether stock”, that he described as “impacted over threats in steel, and worried where growth is coming from.” He could also have mentioned Caterpillar is active in 180 countries, to add to the size of the task ahead.
There are now plenty of growing challenges for the CFO of a multinational, says Cagri Alkaya, Director, CFO & FEX Practice – London, of search firm Stanton Chase. Along with pressure on profitability and overall slowing of profit growth in many industries, international group CFOs face challenges on transfer pricing and increasing interest of tax authorities in identifying where the profits are actually generated from. This is especially true in revenues from online channels, he says.
“As well as increasing outsourcing, there are the impacts of artificial intelligence (AI) and robotic process automation into P&Ls and balance sheets,” says Alkaya, who spent six years as group vice chairman finance of a company operating in 42 countries.
“Customers across the information economy are knowledgeable on where and how to make price comparisons and therefore managing pricing in a global market, with exchange rates fluctuating more than we are accustomed, is another challenge. To make the picture more complicated there is the possibility of trade wars or changes in trade regimes and protectionism in some cases,” he adds.
Another challenge related to the disruptive environment is that change and the response it demands won’t be the same in every geographical location. While the top priority for a CFO may be advancing data and predictive analysis capabilities in one location, it may be something totally different in another territory where the CFO has different challenges,” says Alkaya.
He points to fast-changing elements at a local level, for example in the Middle East the introduction of new tax categories in UAE, and employee localisation trends in the Gulf Co-operation Council (GCC). Alkaya says these require international CFOs to be very alert and open to learning and embracing change.
Then there is the issue of different culture. “Although the principles of finance and techniques and know-how are universal, business cultures and ways of doing things may be different, so CFOs should be culturally aware from a business perspective as well as an organisational perspective,” says Alkaya.
Lines of communication
One person who understands well the need to gather information effectively from a global organisation is Paul Venables, the finance director of international recruitment firm Hays.
Having developed his career in finance and business roles at logistics group Exel, which grew its reach from 70 to 140 countries in his time there, he says: “You need to slow down a bit, listen, and understand the different cultural differences in an organisation,” he says.
“The larger the geographic spread, you more you have to set the tone from the top. You also have to have a common culture across the business that you all buy into,” he says.
“You have to build very close relationships with all the operators around the world, and develop openness and honesty, when you’ve got operations that aren’t working well, making sure you let the regional guys know about that, let the group know about that. What you don’t do is bury it until it becomes a major issue,” says Venables. “All this requires a lot of time on the road, says Venables. “As part of my job at Exel and now my role at Hays I travel a lot. I’m on the road about 13 weeks a year,” he says.
Key to building strong relationships with staff is direct recruitment of all senior finance positions in Hays-which is in 33 countries- and the decision on any direct report they want to make, says Venables. He references the example of a country finance director the board wanted to appoint as FD of Latin America.
“I wanted to have time with her, to understand from the last time I spent with her five years ago what had changed, what her personal circumstances were, if she had the time to travel, because we’re in four countries in South America,” says Venables. “It meant I could really understand what drove her, what was in her heart, what she really wanted to achieve,” he adds.