Controller as Business Manager

INTRODUCTION 1

• Expanding Controller Value 1
• Factors Currently Influencing Controllers 1
• The Path From Controller to Business Partner 3
• First Circle—Detail-Oriented Controller 3
• Second Circle—Controller and Business Strategy 4
• Third Circle—Industry Strategy 4
• Fourth Circle—Trends, Politics, Economy 5
• Contrast Detailed Controller With Business Partner 5
• Survey of What CEOs Want From Controllers and CFOs 5
• Themes and Structure of This Book 6

1 CONTROLLER VERSUS BUSINESS MANAGER 11

• Controller vs. Business Manager 11
• The Role of Controller 11
• The Role of Business Manager 11
• Contrast Controller With Business Manager 12
• Servant Leadership 15
• Principles of Servant Leadership 16
• Managing Versus Leading 17

2 ORIGIN OF VALUE AND PLANNING CONTINUUM 23

• The Overall Planning Model 23
• Dreams 24
• The Value and Purpose of Dreams and the Relationship to Planning 25
• Vision 26
• Mission 27
• How Do You Make a Mission Statement Come Alive in an Organisation? 28
• Goals 28
• Execution 29
• Success 30
• The Planning Continuum 30
• Dreams 31
• Vision 31
• The Business Plan 31
• The Strategic Plan 31
• The Annual Plan 31
• Three- to Five-Year Plan 32
• Risk Management 32
• Vacation Metaphor for Planning 32
• Identifying the Business Model 34
• Creating Value Through Strategic Alignment 35
• Driving Value Through an Aligned Culture 43
• Clarify Performance Expectations 43
• Define Values in Behavioural Terms 45
• Hold Leaders and Staff Accountable 46
• Getting Started with Your Own Culture Transformation 46

3 CORPORATE CULTURE AND BUSINESS PLANS 49

• Corporate Culture and Planning 49
• Corporate Culture and Its Relation to Strategic Planning 54
• McKinsey Study—Strategic Planning 57
• The Business Plan 62
• Introduction 62
• The Business Plan 62
• What Are the Benefits of Using a Business Plan? 62
• Considering the Audience for a Business Plan 63
• Business Plan Outline 64
• Cover Sheet 65
• Table of Contents 65
• Executive Summary 65
• Company Description 66
• Industry Analysis 68
• Market Analysis 69
• Competition 70
• Marketing and Sales 74
• Operations 75
• Management and Organisation 76
• Capitalisation and Structure 77
• Development and Milestones 78
• Risks and Contingencies 79
• Financial Projections 79
• Appendices (Optional) 80
• Business Plan Pitfalls 80
• The Business Plan Is Only Written to Receive Funding 81
• The Business Plan Is Written by a Consultant 81
• The Business Is Unwilling to Spend the Required Time to Create the Business Plan 81
• The Business Does Not Match Its Corporate Culture With the Same Level of Business Planning 82
• The Business Operates in Crisis Mode and Therefore Ignores the Planning Process 82
• The Plan Is Not Shared With All Levels of the Organisation 82
• Lower Level Employees Had No Input Into the Business Plan 82
• The Business Does Not Recognise the Power of a Vision or a Mission Statement 82
• Employees Do Not Know How Their Positions Relate to the Business Plan 83
• The Business Has Hidden Issues That No One Is Willing to Discuss 83
• The Business Is Unwilling to Accept That Its Business Model Is Out of Date or May Be in Jeopardy 83
• Hockey Stick Projections 83
• Underestimating Competition 83
• Underestimating Start-up Expenses 84
• Overestimating Sales Volume Ramp Up 84
• Lack of Consistency in the Plan 84
• Lack of Objective Reviewer 84
• Owner of Business Plan Is Too Enthusiastic About Derivative Possibilities 84
• Market Share Estimates That Have No Support 85
• Lack of Visual Charts and Diagrams 85
• Credibility of Board of Directors 85
• Uncontrolled Spending and Start-up 85
• Failure to Review and Include Ratios and Trend Analysis 85
• The One-Page Business Plan 86

4 STRATEGIC PLANS 87

• The Difference Between a Business Plan and a Strategic Plan 87
• Benefits of Strategic Planning 87
• Basic Overview of Various Strategic Planning Models 88
• Model One—”Basic” Strategic Planning 88
• Model Two—Issue-Based (or Goal-Based) Planning 89
• Model Three—Alignment Model 89
• Model Four—Scenario Planning 90
• Model Five—”Organic” (or Self-Organising) Planning 90
• Comparison of New Planning to Old Planning 91
• Strategic Planning Resources 91
• Software Programs 92
• Web Sites 92
• Government Resources 92
• External Consultants 92
• Coaches or Facilitators 92
• How Are Departmental Goals Influenced by Strategic Goals? 93
• Tools That Are Available to Aid the Strategic Planning Process 93
• SWOT Analysis 94
• PEST Analysis 95
• Scenario Planning 96
• Competitive Analysis 97
• Goals Grid 97
• Focus Groups 98
• STP Method 98
• Gap Analysis 99
• Start and Stop 99
• Plus Delta 99
• Balanced Scorecard 100
• Force Field Analysis 101
• Product-Market Growth Matrix 103
• Mind Mapping 104
• The 5 Whys 105
• How To Conduct Strategic Planning for Your Company 106
• One-Page Strategic Plan 108

5 LEAN MANAGEMENT, BEST PRACTICES, AND TURNING DATA INTO KNOWLEDGE 113

• Introduction 113
• Lean Management 113
• Lean Manufacturing Overview and Benefits 114
• 5S 114
• Visual Controls 115
• Value Streams 115
• Pull 116
• Mistake Proofing 116
• Quick Changeover 116
• Six Sigma 117
• Theory of Constraints 117
• Lean Concepts 118
• Value Streams and Value Stream Mapping 118
• Pull Manufacturing 120
• Kanban 122
• One Piece Flow Manufacturing 123
• Standard Work and Takt Time 124
• Takt Time 124
• Production Smoothing 125
• Kaizen 126
• Waste Identification 128
• Office Lean Management 129
• Lean Office Approach 129
• Implementing a Lean Programme in Your Business 131
• Best Practice Checklist 132
• Turning Data Into Knowledge 137
• Almanac of Business and Industrial Financial Ratios 138
• Altman’s Z-Score: A Bankruptcy Predictor 144
• Z-Score Model 1 145
• Z-Score Model 2 152
• Z-Score Model 3 152
• Publicly Traded Data 153
• Finance Yahoo Comparable Data 153
• Economic Analysis—American Association of Railroads 156
• Economic Analysis—Federal Reserve Industrial Production and Capacity 159
• Economic Analysis—Federal Reserve Data 162
• Correlation Analysis 166
• Ratio Analysis 167
• Financial Ratios 167
• Liquidity Ratios 167
• Asset Turnover Ratios 168
• Financial Leverage Ratios 169
• Profitability Ratios 170
• Dividend Payout Ratio 170
• Use and Limitations of Financial Ratios 171
• DuPont Calculation 174
• Summary Comments 175

6 ETHICAL LEADERSHIP 177

• The Committee of Sponsoring Organizations (COSO) 177
• Relationship of COSO and Ethics 179
• Internal Control Principles 179
• Internal Audit 182
• Chief Ethics Officer 182
• Fraud Reporting Process 182
• Measurement 183
• Sample Code of Ethics Policy Statement 183
• Code of Ethics and Business Conduct—ABC Co. 183
• Set Metrics and Report Results Accurately 186
• AICPA Code of Professional Conduct 188
• Members in Business and Industry—Examples of Violations 188

7 EMPLOYEES 191

• What Do Employees Want? 191
• Meaning 192
• Control 193
• Reward 193
• Recognition 195
• Balance 196
• Recruit, Retain, and Develop 196
• Personality Profiles 197
• Merrill-Reid Descriptors 200
• Merrill-Reid Implications for Working with Staff 201
• Profile Tools 202
• Myers-Briggs Profile 202
• The Caliper Profile 208
• Culture Index 210
• Performance Values Matrix 214

8 OVERSIGHT OF HUMAN RESOURCES AND INFORMATION TECHNOLOGY 217

• The Finance Function and Oversight of the Human Resources Function 217
• Trends in Strategic Human Resource Management 218
• Overview of Human Resource Management 219
• Mission Statement 219
• Environment and Trends 220
• Strategy 221
• Evaluation 221
• Leveraging Lean Understanding in the HR Function 224
• Outsourcing the HR Function 226
• How To Manage the IT Function Successfully 227
• Additional IT Duties for the Controller 229
• Creating an IT Strategic Plan 230
• IT Strategic Plan Principles 231
• Information Technology Strategic Plan Outline 231
• IT Benchmarking 239
• Opportunities To Develop Efficiencies Within an IT Department 241
• Lean IT Service Management 241
• Staffing the IT Positions and Outsourcing 242
• Staffing 242
• Outsourcing 243

9 PROJECT AND CHANGE MANAGEMENT 247

• Overview 247
• Principles of Change Management 248
• Assessing Person and Business Readiness To Change 250
• Phases of Change 251
• Why People Resist Change 252
• How To Communicate Change 254
• Words We Use 255
• Change Management for Teams and Projects 256
• The Role of Top Management 257
• Danger Signs That the Change Process Is Failing 258
• Role of Attitudes, Thoughts, Feelings and Beliefs 259
• Conclusion: Two Checklists for Managing Change in Business 260
• CHANGE Approach Checklist 260
• Prosci Change Management Planning Checklist 261

10 COMMUNICATION AND PRESENTATION SKILLS 263

• Communication Skills 263
• Failure to Communicate 263
• Purpose of Communication 264
• Types of Communication 265
• Improving Communication Skills 266
• Listening 266
• Speaking 267
• Background of Other Party 268
• Pitfalls in Communication 268
• Understanding NLP 269
• Uses of NLP 270
• Three Main Learning Styles 271
• Utilising NLP 271
• Eye Accessing Cues 271
• Body Language—Understanding the Unspoken 272
• Improving Presentation Techniques 274
• Financial Presentations Made Easy 274
• Improving PowerPoint Skills 276
• Managing Your Boss 277

11 SUMMARY 281

• Introduction—Expanding Controller Value 281
• Chapter 1—Controller vs. Business Manager 281
• Chapter 2—Origin of Value and the Planning Continuum 282
• Chapters 3 and 4—Corporate Culture, Business and Strategic Plans 282
• Chapter 5—Lean, Best Practices, Data Into Knowledge 283
• Chapter 6—Ethical Leadership 283
• Chapter 7—Employees 283
• Chapter 8—HR and IT Functions 284
• Chapter 9—Project and Change Management 284
• Chapter 10—Communication Skills 284

APPENDIX A 287

APPENDIX B 293

APPENDIX C 309

APPENDIX D 287