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

James (Jim) T. Lindell, CPA, CGMA, MBA, is the president of Thorsten Consulting Group Inc., a Wisconsin-based provider of strategic and financial consulting, professional speaking, training and executive coaching. He has an extensive background in senior management, including positions as chief financial officer, corporate controller and corporate assistant controller. Jim has worked with a variety of industries, including manufacturing health care, not for profit, distribution and food processing.