“Silent But Deadly” Issues in Finance and Human Resources

By Shaylene Keiner, president, Headhunters NW

The SAO’s March 2007 Finance and Human Capital Forum offered a panel of local executives who discussed their top-down vantage point on the issues of predictability and performance tools, compression management and benefits accommodation.

The panel consisted of John Cimral, former CEO of ProSight (acquired by Primavera), Bart Tichelman, CEO and president of Serveron Corporation, and Paul Wilde, CFO of Corillian Corporation (acquired by CheckFree Corporation).

The moderator was David Silverman, former vice president of corporate finance at Primavera Systems, Inc. The moderator focused on “colorful and pithy recollections” covering three issues: predictability and performance tools, compression management and benefits accommodation.

David Silverman: How do you view predictability and performance tools with respect to employee performance and corporate performance?

John Cimral: Avoid doing the wrong thing well. If you don’t have the proper strategy in place, it is a death trap. Many companies struggle while doing the wrong things; by contrast, we checked ourselves with one benchmark: “Are our customers being successful?” We have a “disagree and commit” culture. We also measure ourselves throughout the organization by the same critical success factors. We use a “monthly win list” to measure what is important now. Everyone could help achieving goals.

Bart Tichelman: I couldn’t agree more. Critical revenue goals, key metric revenue: every employee has a small income objective tied to revenue generation. Each month we have a company meeting to talk about how we are doing, and we have two objectives: revenue and cash. All employees have a personal reward.

Paul Wilde: Strategic plans need to have caution, and you have to be careful if the process becomes more important than key objectives. We need to be a bit more fleet of foot and not get too tied to the process put in place.

John Cimral: Make money and have fun. Leading indicators may not be as easily quantifiable as financial ones that tend to lag.

Silverman: How do you or should you blend the strong personalities within your company? What if you have a sales person who is aggressively selling, but a strong inventory person who is doing his or her job and keeping inventory low. How do you balance the push and pull of those individuals?

BT: You have to deal with it. Goals of the executive team are shared. All employees are there to deliver company objectives. Be wary of strong behavior, coach when needed, and someone if uncoachable, you need to deal with it. It can be tough to do.

PW: All people will not mesh. If I have a talented, producing gunslinger, I don’t want them to turn off, rather, I’ll help them try to get along. I want cooperation, but I also want them to do well at what they do, and I’ll manage the friction around the edges.

JC: I’d rather have the people who make things happen and deal with problems than deal with mediocrity. Stars are going to believe they can do the job better than anyone. It is back to the “disagree and commit” concept; at a certain point people need the opportunity to vent, but once we decide where we are going we all need to go in that direction. As far as weaknesses, I may be more tolerant than most if there are great strengths.

Silverman: How do goals differ or compare at a level below executive level?

PW: You can’t have misalignment, you can’t have sales sell something you can’t deliver. Trying to get your HR to match revenue-generation objectives can be a real match. Try not to so rigidly align.

JC: Be clear about the goals and benchmarks at all levels. For example, if they have good collections, they are doing a good job on that benchmark. Customers either calling or not calling may indicate problems and only customer support can judge. The sales account executive’s job transcends the deal. Great sales people have tapped into what they can do to help the customer. Bottom line: Are you listening to your customers’ success?

BT: Revenue and cash you want aligned. Sales people need to be focused on sales, and inventory focused on keeping inventory low. Are they both serviced? Before October we go through strategic planning, then board approval, and then to the managers for their planning, then back to the board.

Silverman: Compression management can also mean different things to different people. How do you view compression management with respect to position requirements and job responsibilities? Often, as companies grow or during acquisitions, people with broad job responsibilities have the scope of their work narrowed and simultaneously need to have a greater depth of knowledge. How do you manage this evolution?

PW: This doesn’t always work. Career objectives may be different. I give the first choice to people who have the talent. I give them buy-in and invest in them. You have to be willing to let some go. Recently, we had someone whose talent was rusty in an area and we invested in them to get them current and it was a great investment.

JC: You have to help people visualize. Be clear so they can see what needs to be done. Most people are good corporate citizens if you explain to them why it’s important to business, versus expecting them to fill in the blanks.

BT: I agree with John. My challenge dealing with significant growth (either M&A or organic growth) is that people may not be ideally suited for goals, and this is very tough. We as hiring managers sometimes chicken out. If we put people in the wrong roles, others view it as political and then ultimately the company is not as successful as it should be. I took one company that was at $20-50 million, with 99-200 people, with five acquisitions in six months, IPO one year after that, and all of the sudden there were six vice presidents when we needed only a few. We had to go through dramatic process for six weeks to figure out who should stay and who should go and all this was done very openly. Often, people say yes to working in a different role, but you need then to monitor performance. They may need to find another role or leave the company. It is tough.

JC: Taking care of people who are leaving. An organization that is truly outstanding will do everything they can to help the employees. If the reputation of a business is good even in hard times, then employees will come back. Besides, it’s just the right thing to do to help the people you are letting go.

PW: Acquired company people who stay will watch carefully the people who are leaving. I couldn’t endorse that more.

BT: I agree.

Silverman: Compensation: Along with position compression, managing cash compensation can also be more difficult. With more people often comes more structure in compensation practices. How do you manage “migrating” old compensation structures and how do you allow for “taking care of” superstars?

JC: We were a start-up, profitable only for the last six quarters of eight years. We were at a 70 percent pay level, but then had to freeze. Even then we protected our employees from increasing medical costs. We couldn’t give pay raises so we had to make a choice. We publicly explained our decisions.

BT: We take a minimalistic approach. We have a 401-K, but we don’t contribute to it; every employee gets stock options and annual bonus; benefits are good, not great: everyone has the same plan, no perks, no company cars, anyone who joins, joins what we already have: 60 percent salary, 40 percent bonus, and any pay adjustments go to the bonus. Everyone has the same risk and reward: someone who joined us recently wanted five weeks of vacation, but everyone else has three weeks, so he got the same. If you are behind in plan you’re not going to be taking the three weeks; if you are ahead of plan, then take five weeks.

PW: Retain the talent that is appropriate. A big company often means less risk takers, and a small company often means more risk takers. Know where your business is, and where you need the key talent. We make no exceptions if we need to change it, then we change it wholesale for everyone.

JC: With every M&A there are two sides of reality. Above all put yourself in the employee’s shoes. Think carefully about the messages you are sending to the employees.

Question from the audience: Regarding consistency and tenure, how do you match up the two? How do you communicate that to everyone in a positive way?

BT: Communication: At one point we acquired six companies in three countries. We went through an exhaustive effort to tailor our pitch to each operation.

PW: Unless it is a merger of equals, the acquired corporation needs to review and be comfortable and be sure you are going to be able to live with it. There is a way to communicate the differences; very rich plan versus not-very-rich plan.

JC: If you are on the acquired side it is your fundamental responsibility to still be a leader. Give it six months.

Silverman: Are there times when you have to be silent?

PW: Yes, there some regulatory reasons you have to be silent. Information out of context may be worse, though. Be honest and you should work with them. Brutally honest is not always best.

BT: Silence is never right; the rumor mill and uncertainty are worse. We had an executive change last year and things needed to be discussed.

PW: I agree.

JC: I like private companies because you can over-communicate.

Question from the audience: Can you discuss equity issues?

PW: Much ado about nothing. Is equity important to attract the right people? I think it depends on the company and situation.

JC: How does it fit into the overall plan? The day of lotto tickets for salary are largely gone. It has been somewhat manipulated. Those who don’t understand options shouldn’t get them, so that would stop mostly at the director level.

PW: I support that may be the director level, but may be a level lower.

BT: I disagree. Every employee gets some compensation to own a piece of the company.

PW: At Corillian, every employee gets stock options and at Check Free, none of them get any.

About the panel:
Paul Wilde is chief financial officer of Corillian Corporation. Wilde has more than 25 years of experience in executive roles in finance, strategic planning and business operations. Wilde most recently served as CEO of Spear Technologies, an enterprise resource planning software company. Prior to his tenure at Spear Technologies, Wilde served as chief financial officer and vice president of Asia Pacific/Latin America Operations at Synon Corporation, an international software applications development company. Wilde has also held chief financial officer positions at Viasoft, Inc., Candle Corp. and Informatics General Corp. Wilde has a B.S. in accounting from Brigham Young University and is a certified public accountant (CPA).

John Cimral is an industry expert on managing IT for business value. He is also a serial entrepreneur. In his home state of Oregon, Cimral was a 2004 finalist for Oregon Entrepreneur of the Year. Cimral was the CEO of ProSight since its earliest days in 1998, establishing the vision, driving company strategy and evangelizing the benefits of IT portfolio management. In addition to ProSight, Cimral was the general manager of Symantec’s anti-virus and security business, general manager of Intersolv’s software configuration management business and head of R&D at Bachman Information Systems and Datalogix. Cimral is a graduate of the United States Military Academy at West Point. He also holds an M.S. in computer science from MIT. He has been awarded 10 software patents. He serves on the board of the Software Association of Oregon.

As president and CEO of Serveron Corporation, Bart Tichelman brings extensive functional experience in sales, marketing, operations and general management in the computer, telecommunications and beverage industries. Prior to joining Serveron, Tichelman was COO of Xantrex Technology Inc., CEO of Statpower Technologies Corporation, and of Cott Corporation in Atlanta. As a partner in Paradigm Consulting Ltd., he assisted clients that were undergoing dramatic change. Tichelman spent several years in the telecommunications industry with Unitel Communications, as vice president of the general business market, vice president of network operations and other positions. He was introduced to the computer industry in 1978 as a marketing representative for IBM Canada where he held several positions including branch manager. Tichelman holds a B.S. from the University of British Columbia.

About the author
Shaylene Keiner has been a successful recruiter in the Pacific Northwest since 1997, specializing in accounting and finance. She is the founder and president of HeadHunters NW, founded in 2004, which provides high-quality expertise on a referral-only basis. The expectations of board members and shareholders have never been higher, and HeadHunters NW is exceeding such expectations by identifying, recruiting and securing top talent for bottom-line profits. For more information on HeadHunters NW, visit www.headhuntersnw.com. To contact Keiner, e-mail shaylene@headhuntersnw.com.