Advisor insights from the field

Archive for October, 2011

Talent by the Slice

Monday, October 31st, 2011 by Troy Schrock

In our current business environment, businesses face mounting pressure to master a broad range of specialized knowledge in order to succeed.  Such knowledge is not limited to the specific technical areas in which they deliver their services; it also covers the administrative and management functions – financial, strategic, talent management, back office technology, legal, etc. 

Most small and midsize organizations cannot afford to master all of these areas of specialized knowledge with internal staff – at least not full-time.  Not only is the initial cost of training high, but the ongoing investment required to keep all those different resources up to speed in their particular area of specialized knowledge is cost-prohibitive for most organizations.  Therefore, it’s not surprising to see a proliferation in outsourced services, including payroll, benefits administration, staffing, IT, etc.  Many companies have grown quite large by providing these specialized services to other businesses. 

No less surprising is the increase in organizations buying talent by the slice – hiring consultants or advisors.  Some areas of specialized expertise do not require high volumes of repetitive activities or transactions (such as payroll or benefits processing).  Into these areas step veteran knowledge workers who prefer to work independently, spread their expertise over more than one organization, and networks with other individuals who possess similar or complementary expertise.  By hiring such an advisor on an as-needed basis, a small to midsize organization can afford a level of expertise that they could not afford full-time. 

This “talent by the slice” trend is likely to continue for three reasons:

  1. The competitive pressure on organizations continues to increase.
  2. The fragmentation and specialization of knowledge continues to increase, and the rapid advancement of this knowledge requires a great deal of continuous learning. 
  3. The number of qualified individuals who want to work independently is increasing.  This is largely fueled by the Baby Boomer demographic.  They want to remain engaged in business with greater time flexibility, they have years of expertise that can benefit others, and in many cases, their personal financial situations require them to continue generating income.  Serving clients as advisors is a way for them to fill each of these needs. 
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3 Financial Management Objectives for CFOs

Saturday, October 8th, 2011 by Troy Schrock

3 Financial Management Objectives for CFOs

3 objectives for the CFOs of entrepreneurial and mid-market companies:

  1. Integrity in Financial Reporting: Implement the proper personnel and processes for reliable financial data.  Financial reporting is historical; it tells “what happened.” 
  2. Sound Financial Analysis and Synthesis: With solid financial reporting disciplines in place, CFOs can focus on what it means.  But they must not stop there.  CFOs also need to synthesize the information and help the organization’s decision-makers think about the future.  How do the financial results affect strategic and operating decisions, and vice versa.
  3. Tight Financial Management (Budget and Cost Control):  The budget (or the financial forecast, which is more flexible and preferred by some) paints the future financial picture for the organization’s leaders.  First, it connects current decisions to expected results.  Then, actual results can be measured and compared to expectations.  This calibrates the assumptions of the decision makers.  Because it requires an understanding of the key value drivers of the business, this discipline also enables CFOs to identify specific areas of cost control that need addressed (which can be anything from a line item to an entire process).

The CFO must ensure that the first objective is achieved, but second and third objectives are where CFOs add the greatest value to a business.  Therefore, those are the objectives on which he should focus his time.