In many companies today, the controller is playing an increasingly important role – or should be. The A players have moved beyond reporting and compliance issues to serve as a resource to C-suite executives and operational managers across the enterprise to help inform decisions that make a business more competitive and profitable.
For private equity firms and their portfolio companies, having -- or finding -- an A player controller is critical to transforming a business that is struggling or taking a reasonably healthy business to the next level.
Just as chief financial officers have evolved over the last 10 years from functional heads overseeing a company’s finances to playing strategic and operational business leadership role, controllers must make a similar leap. In the best run companies, the CFO is now a partner of the CEO and a trusted advisor to other senior leaders. Controllers need to get out of the back office and join this team. GAAP is important, but there is a lot more to creating value in a business than making sure the accounting is compliant.
At CMF, we have identified the top 10 critical performance categories for controllers in 2016 and beyond. In brief, controllers must expand their horizons, knowledge and relationships. In addition to solidifying relationships with auditors, tax providers, insurers and the lending community, they must strengthen their relationships with senior executives and operational managers across the enterprise. By doing so, they will gain a more in-depth knowledge of the business that will enable them to bring more to the table.
As Jim Kessler, chief operating officer and chief financial officer of vRide, a TPG Growth portfolio company, put it, “To truly be a business partner to the CEO, a CFO must have a business-oriented controller who provides leadership to the team – both the accounting team and the company management team. I’ve had that controller on my team, which allowed me to also assume the COO role in my company.”
Top 10 Critical Performance Categories
At CMF, we have identified the top 10 critical performance categories for controllers, and companies should look for candidates who:
• Strengthen relationships with compliance and risk community
• Develop an in-depth knowledge of the business
• Understand technology platforms and tools
• Maintain a process orientation of work
• Work the details and the big picture concurrently
• Develop a strong relationship with the CFO
• Excel with interpersonal skills
• Identify and develops talent
• Manage treasury, cash and working capital accurately
• Maintain a first class control environment
Controllers must have a strong understanding of technology platforms and appreciate system interactions and interdependencies, and develop and maintain reliable financial reporting technologies and processes. They also must create and manage work-through processes, designed at the appropriate level of detail, which means including data that is mission critical while avoiding data overload. In addition, controllers should be willing and able to span the level of work from a bank rec (recquisition?) to the board room.
Controllers should have a high degree of mutual respect with the CFO -- and his or her complete trust and confidence. Strong interpersonal skills in dealing with all senior leaders and department heads are also important, particularly when delivering information that some may not want to hear, but need to hear to make more informed business decisions. Within his or her own department, the controller must have the ability to recognize talent, see the potential of each individual, and coach and mentor each team member accordingly.
Finally, the controller’s office should manage working capital and produce forecasts and reports on the company’s cash position quickly, accurately and clearly to ensure lender reporting is correct and timely. And as the keeper of the company’s books, ensure that controls are maintained and and that financial reporting is accurate.
How to know if you have an A player or A player candidate
So how do you determine if you have an A player controller, or, if you are in the market for a Controller, how do you know the person sitting across the desk is right for the firm or portfolio company?
Based on CMF’s Top 10 critical performance categories, we have identified five questions firms and portfolio companies should ask prospective Controllers.
1. Can you describe a time you rolled out a new technology to your team? While in the past we may have asked about which accounting packages they worked with, today’s controller must be technology savvy and able to identify and implement new systems and processes that not only can help streamline reporting and compliance, but help the business grow. Controllers do not have to be technology experts, but they should have experience partnering with the IT department to make the right technology choices for their company.
2. What is one of the best working relationships you have had with a co-worker and what is one of the most challenging relationships you have had? Ask the candidate to describe each situation in detail with an eye toward determining their interpersonal skills. The controller’s office is no longer a back office function, and strong interpersonal skills are key. As noted above, controllers must establish strong working relationships with a variety of internal and external stakeholders to be effective in their day-to-day work and to win the confidence of the CFO and CEO.
3. Does an accounting and reporting team need A players or are B players good enough? The answer to this question should seem obvious, but in our recruiting practice we have seen candidates who believe not everyone on the team needs to be an A player. We believe A level controllers should be supported by the best possible team to meet the growing demands on the controller’s office. The ability to identify top talent – or help B players up their game – is a key attribute companies should look for in controller candidates.
4. What is the most difficult news you have had to share with a CFO or CEO and how did you handle that? No one likes to be the bearer of bad news, but bad news can be a reality in the business world. A candidate who can demonstrate the integrity and communications skills to deliver bad news, along with possible solutions to the problem, is the type of person you want on your team.
5. Above the basics, what financial information do you believe is important for operations in your industry to be best in class? Listen to this answer carefully. As noted at the beginning of this article, today’s controller must go beyond the basics of financial reporting and compliance and serve as a resource to C-suite executives and operational managers across the enterprise. This is critical to getting the most out of the controller function, and companies should look candidates that can see the big picture.
You will be surprised at how much you can learn about your controller or controller candidate by asking these five questions.
Kathryn Kehoe is a managing director at CMF Associates, leading the firm’s executive search and recruiting practice.