Author Archives: Tom Foster

About Tom Foster

Tom Foster spends most of his time talking with managers and business owners. The conversations are about business lives and personal lives, goals, objectives and measuring performance. In short, transforming groups of people into teams working together. Sometimes we make great strides understanding this management stuff, other times it’s measured in very short inches. But in all of this conversation, there are things that we learn. This blog is that part of the conversation I can share. Often, the names are changed to protect the guilty, but this is real life inside of real companies.

When to Add a CFO

From the Ask Tom mailbag –

Question:
Our company is thinking about adding a CFO to manage our accounting. We are growing. At what point do we need a CFO?

Response:
As companies grow, this is the normal maturation of the most important administrative function, keeping track of the money. (DROOM – Don’t ever run out of money).

When I look at levels of work in accounting, here are some of my guidelines.
S-I (1 day to 3 months timespan). This is all the transactional stuff, vouching invoices to be paid, creating invoices to customers, data entry of timecards, materials to work-in-process. This would also include reconciliation of transaction documents to transaction schedules (as entered).

S-II (3 months to 12 months timespan). These are higher order transaction functions, like payroll (especially payroll with a 401k plan). Also longer period reconciliation routines like monthly bank recs or monthly credit card reconciliations, routine journal entries. High S-II approaches that of a full charge bookkeeper.

S-III (1 year to 2 years). Emerging (low) S-III would be a full charge bookkeeper, where transaction activities have impact on the EOY (end of year) compiled financials (this requires a minimum 13 month timespan). This level also creates the transaction systems to record depreciation entries, simple inventory management, over and under billings to WIP. This would include job cost systems where project accounting likely survives a fiscal year. Hi-S-III would be a controller level.

S-IV (2 years to 5 years). This is an integration role (CFO) which would include software and accounting administration of more complex transaction activity, like bill of materials inventory management, complex work-in-process, enterprise software integration. S-IV would be accountable for modeling cash flow based on 36 month trailing stats overlaid to macro-economic trends to determine credit facilities (lines of credit, term loans) to cross periods of economic contraction. Analysis at this level would provide financial coaching to S-III department managers related to metrics of labor, materials, consumables, capital equipment, short and long term budgeting.

Conscious Thought

“But most of the time, I don’t think about what I am thinking about,” Nathan defended.

“You are right,” I responded. “Most people are not aware of their thoughts. Most people are unconscious.” Nathan was with me so far.

“Nathan, have you ever noticed people talking around the water cooler?”

“Well, yeah. It’s a popular gathering place.”

“And what do they talk about, around the water cooler?”

Nathan was quick to reply, “Oh, boy, usually it’s the juicy stuff. Fastest grapevine in the west.”

“Positive stuff, or negative stuff?” I asked.

Nathan chuckled, “Oh, negative, for sure.”

“It’s negative and it’s unconscious,” I explained. “People don’t do it on purpose, negative talk is unconscious. That is why it is so important to become conscious about your thoughts. Positive thoughts require conscious thought.

“It’s time for you to start thinking on purpose.”

Impact of Thoughts

“You’re serious,” said Nathan.

“As serious as a heart attack,” I replied.

“You want me to actually try to think about Mr. Johnston watching me whenever I have a big decision to make?”

“It’s better than allowing your worst boss into your head.”

“It’s funny,” said Nathan. “It kind of makes sense. I just don’t know why. It’s weird.”

“Here’s the thing, Nathan. You are what you think about. Only you have control over what you think about. You can think positive thoughts or you can think negative thoughts. But whichever thoughts you think will be the thoughts that influence your decisions, your problem solving. Those thoughts will ultimately define who you are.”

Face of the Boss

“So, when things get tough, in your new role as a manager, the face of your old boss appears.” I repeated, confirming what Nathan had described. Nathan nodded, so I continued.

“Management skills are often passed down that way, for better or worse. Experience teaches, our parents teach, old bosses teach. It’s just that sometimes the lessons learned are not the right lessons. A dog teaches a boy fidelity, perseverance and to turn around three times before lying down. (Credit to humorist Robert Benchley).

“So, what are the right lessons?” Nathan inquired.

“Well, we have the example of your worst boss. So, who was your best boss?”

Nathan had to think for quite a bit. I could see he was struggling. “Yes, I remember. I don’t know why I didn’t think of him. Mr. Johnston, that was his name.”

“And what were the qualities that made him such a good boss?”

“It’s funny, he never yelled, he never got upset, he was always calm. If I made a mistake, he helped me correct it. When I was about to do something stupid, he would stop me and make me think it over.”

“So, here is where we start,” I said. “We start by replacing your worst boss with Mr. Johnston. When you are faced with a management issue, and you begin to hear your worst boss in your mind, I want you to turn your head and think about Mr. Johnston watching you.”

Nathan smiled and nodded. “You mean, I need to kind of fake myself out.”

“Not at all. You already fake yourself out when you listen to your worst boss. I want you to listen to Mr. Johnston.”

Who Sits on Your Shoulder?

My mood was upbeat, but this conversation with Nathan was not lifting his spirits. His team was not on a mutiny, but they weren’t paying much attention to him.

“So, you have had a bit of difficulty getting out of the gate with your team. As you think about yourself, as a manager, who comes to mind, from your past? Who is that person sitting on your shoulder, whispering in your ear, giving you advice?”

Nathan looked stunned. “That’s weird,” he said. “As I go through my day, I have this silent conversation in my head with an old boss of mine. Whenever I have a decision to make, he pops into my head. It’s like he is watching me and I still have to do it his way. That was years ago, but he still influences me.”

“Was he a good boss?” I asked.

“No, everybody hated him. That is why it’s so weird. I think he was the worst boss I ever had and I am acting just like he did.”

“So, why do you think he has such an influence on you, today?”

“I don’t know,” Nathan said slowly.

“Would you like to be a different manager than your old boss?”

Finally, Nathan smiled. “Yes, absolutely,” he replied.

“Well, that is where we start.”

Sidelined by the Team

Nathan, a new manager, had been sidelined by his team. “What happened?” I asked.

“I don’t know. I was giving orders for the day and a couple of the guys wandered off and before you know it, I was in the room by myself.”

“What do you think happened?” I continued.

“Well, Troy had been on my case since I was first made manager. Seems he thought he was in line for the job. But the company picked me.”

“So, now, what do you think your challenge is?”

Nathan was quiet, then finally spoke, “Somehow, I have to get them to trust me.”

“Nathan, it’s a long road, to get your team to trust you, even if they have known you for a long time. Where do you think you will start?”

Nathan was still quiet. I poked my head out the door. His team hadn’t abandoned him. They were all at their workstations, doing their work, but it didn’t seem like Nathan was having his way.

“Nathan, I think your team will work okay for the rest of the day. The schedules that were posted yesterday haven’t changed that much. Let’s take a hike down to the coffee shop and talk about a new strategy. It’s tough being the new boss.”

Showing Up on Time?

“What did you learn?” I asked. Martin had finished a couple of days speaking with his team about their individual values.

“I gotta tell you,” Martin started, “I have never had this kind of conversation with my team before. I rounded them up the next morning and before we started the shift, I just floated a couple of questions.

  • When we work well together, what is it that we do to make that happen?
  • What could we do more of, to be more effective as a team?

“All of the things they talked about were heavy with value words. Not only do I have more insight into what makes my team tick, they have a better insight. They have never talked about this stuff before.”

“And, how is this going to help you, as a manager?” I asked.

“Easy,” Martin replied. “Something as simple as everyone showing up on time. No one really understood how important it was to show up at 8:00am. Up until now.”

Values in Other People

“So, let’s get back to the conversation part,” Martin insisted. “How do you get people to talk about values in a way that is helpful?”

“It is really very easy,” I said. “You simply ask them.

“I know you have tried this before and you got the lizard eye stare, but try the question differently, not about them, but about the environment around them. Often people cannot talk about themselves, but they easily see things around them. Here is how the question goes.

  • What do you value in a team member?

“When they respond to that question, they are really talking about themselves. Here are some more.”

  • What are the positive things your team members do to make this a better place to work?
  • Think about your best manager. What are the characteristics about that person that set him apart from other managers?
  • When you have a really tough problem to solve, what are the things that are really helpful to the process?

Martin was getting the picture. He excused himself from the room. He had some questions to ask his team members.

A Rose by Any Other Color

Martin was waiting in the conference room when I arrived. He had a single sheet of paper in front of him.

“That was easier than I thought,” he started. “I simply observed the way my team members dress, and it was curious how quickly I noticed the difference between my top performers and the rest of my team.”

“Observing physical characteristics can give you important clues about a person’s value system. People communicate a great deal about themselves without speaking a single word.” Now it was Martin’s turn to nod his head.

“Does this have anything to do with habits?” he asked.

“What are you thinking?” I replied. I could see the wheels turning.

“Well, the fact that my top performers dress differently, I mean neater, cleaner, more polished, is not because they consciously thought about it. It seems that is just who they are. And it comes out in their work product. A person who takes pride in their personal appearance, also takes pride in their work product.”

“Why do you think that happens?”

Martin paused. “I am beginning to see a clearer connection between values and behavior. Even if people don’t think about it, consciously, that’s why they do what they do.”

“So, how important is it, for a manager, to understand the value system of team members?”

A Book by Any Other Cover

“So, how do you find out what they want?” asked Martin. “You know, sometimes I talk to them about stuff like this. Sometimes, I ask them what their goals are. And sometimes, they don’t have a clue.

“I know it’s important to get some alignment between what I want (or what the company wants) and what they want. But sometimes, I don’t think they know.”

“You are right,” I agreed. “Often, people don’t know what they want. Think about this, though. People want what they value.

“How important is it for you, as a manager, to find out what your individual team members value?

Martin pondered a moment. “I am with you. It is important,” he replied. “But how do you find out about a person’s values when sometimes they don’t even know themselves?”

“Let’s start with the easy stuff,” I suggested. “What clues can you tell about a person simply from their appearance?”

“You mean, in terms of values?” Martin asked. He paused. “Well, you can tell some things about a person by the way they dress. Attention to detail, neatness, or sloppiness.”

“I have an exercise for you, Martin. Remember, a person’s dress is only a clue, not absolute certainty. Nonetheless, I want you to make a list of your top three team members, and simply by the way they dress, write down some words that describe their positive attributes. I will meet you here tomorrow to talk about some other ways to determine values in other people.”