Who leads a Finance Transformation?

Interview with Jonathan Bradbury, former Regional Head Business Analysis, AIA Group Limited

BH: Jon, you’re speaking at our Finance & Accounting End-to-End Transformation event running in Kuala Lumpur in July, and you’ll be discussing – among other topics – the advantages of internal promotion versus new hires to lead finance transformation. Can you expand on this for our readers?

JB: Sure. Whenever an organisation comes to the conclusion that it needs to undertake a finance transformation, there’s a need to step back a little and understand the circumstances that are driving it. If we take a simple situation, say there’s an upgrade going on in the organisation – a demand for more information – there’s obviously an implication that this is something the organisation wasn’t doing previously.

The transformation can be driven either by the dynamics of the company itself, or maybe the senior management team had not been investing in the people or the processes etc. It doesn’t mean that you don’t have, within your own organisation, people capable of managing that change.

As a CFO with 20 years experience, I have learnt that whenever you effect change, it’s a great opportunity to take the people that you’ve been mentoring and move up a level. It gets them involved and presents good exposure within the organisation, as well as builds their careers. Unfortunately, not everybody wants to embrace that change, or is capable of embracing change. So you need to ask yourself: Do you actually know your own organisation? And: What support do you have within the organisation in terms of understanding the capabilities of the people who work, not only directly with you, but also around you? – because financial transformation is a little bit like open heart surgery: It interacts with, and affects, all other systems of information flows.

BH: So you need to make clear the benefits from the start – right?

JB: Yes. Of course what you hope for is that the financial transformation itself is going to liberate more of that information, so that it gets onto the senior management team’s table. Then you’ll gain the backing to help the organization become more dynamic and agile, able to respond to the ever-changing business environment around it.

In the past, when I’ve put SAP into a few countries, or when I’ve changed general ledgers, this has literally opened the eyes of senior management, who just hadn’t seen, or recognized, the real-time impact of what was going on in the organisation. It also helps managers understand where the company is really spending its money, because there are two aspects of the transformation: One, to help people understand what’s going on at the front-end of the business; the other part of it is what’s going on in the back office.

A finance transformation serves to liberate information, get standardisation across the organisation, and enable you to compare "apples & pears", if you like, across different organisations. And quite frankly, sometimes you find things that you didn’t expect to find.

BH: So there are really two things that you’re discussing here, Jon. One, is the transparency of the processes - as you say, the money being spent; but the other is the staffing issue, right?

JB: Yes, you could look at it this way: Each transformation programme starts with a couple of simple, core elements. First, there is the strategy for what you want to achieve; then, you need to evaluate what kind of organisational structure will best achieve that strategy.

That means determining a medium to long-term target operating model. There’s an awful lot of discussion about managing accounts receivables, accounts payables, payment processing, etc, as being standard accounting back office activities. When you do a financial transformation, it can simply mean establishing a proper table of authorities, thereby eliminating the "pass the buck" attitude. It’s really about empowering the individual to be responsible for areas that they are capable of looking after. You don’t just delegate it to anybody. You need to understand the people who are going to run the process.

BH: So it’s about building up an organisational chart to help you figure out what resources you have already, and what you need to add, correct?

JB: What you need to add, or what you actually are looking to take away, as quite often we try to take out obsolete processes.

BH: So what are the decision-making drivers for either hiring someone in from the outside or promoting someone internally? In practical terms, what are you really looking at?

JB: Part of that discussion depends on whether you are a mature, older or a younger organisation. But let’s assume you are talking about a traditional business and trying to upgrade it into the modern, 21st century.

Generally, in any given finance function, you’ll find people who’ve been there for 15 years, five years, and five months. Newer people often act as change agents and bring with them a skill set, or a behavioural attitude, of being able to accept change more easily. Someone who has been working in finance for, say, 5-10 years might, on the other hand, appear a candidate for management – but they don’t necessarily want to become that manager. So you really have to understand how the organisation works.

BH: Back to the question about internal vs external hire – how would you sum up your advice?

JB: One of the things that I am looking at is: the right people, the right job, at the right time. And within the change process, we’re focusing specifically on the leader at this point in time.

From my own personal point of view, if you’ve got a good candidate internally, even if they’re not absolutely perfect, I would always go for the internal candidate. It’s an opportunity to demonstrate reward. And not only are you dealing with the individual, but you are also setting an example to everybody else in the organisation, that it is an organisation in which you, as an individual, can grow.

When you have a substantial number of employees, say, four or five thousand, they want to see their own colleagues progressing and getting the leadership jobs. That is important to remember when one alternative might be to parachute in a new team. Organisation-wide, people are more readily going to accept somebody who they’ve worked with before. After all, a leader needs a network of people, and the ability to work with various stakeholders. That’s a skill set, again.

However, looking at individual countries presents a different picture, again. Asia is obviously a growing market for most organizations. Now, in the past it was generally difficult to find local, Asian staff that wanted and knew what to takes to be a manager in a multi-national firm. They were traditionally followers, rather than leaders. Today, that is changing, because education in Asia has become more global, and now you can find really good Asian leaders.

BH: What has brought about this change?

JB: I am based in Hong Kong, and if you look at pre-1997, there was a brain drain from Hong Kong. A lot of those kids were moved by their families and educated in Australia, the US, Canada, the UK and Europe. Then, post-1997, a lot have come back. So they’ve had that global experience, a global education; and they’ve moved away from the traditional rote learning, which frankly speaking, is blocking peoples’ creativity.

Going back to financial transformation, or any transformation, you need somebody who is a good problem solver; and that’s the one characteristic or personality trait which hasn’t been nurtured so well, historically, within the Asian environment – but as I say that is now changing.

As a result of that and other things, leaders of today have actually got a bigger melting pot of qualified people to choose from. The question is, are they currently employed within your own organisation? And how would you go about determining objectively whether this person is suitable for the role or not?

BH: Is hiring an "expat" still an issue in Asia, today?

JB: No, it’s really moved far beyond that. If you come to Hong Kong today, there are very few expat packages. My last role was localised: You get paid your money and you take your choices – where you want to live and what you want to do with it. I came out as an expat, years ago, as an international officer of a bank. You were expected to fly to Timbuktu at the drop of a hat. That was the life that you signed yourself up for. Now, I think, you’re competing in the global marketplace, as opposed to a local marketplace, because people are willing to move. It’s a global marketplace and expat living no longer plays a role.

One thing that people need to be aware of is that there are an awful lot of British-born Chinese, or American-born Chinese, who don’t actually speak Chinese. Putting these kinds of people into an Asian environment actually is not only not good for them, it’s also not good for the company at times, because they’ll find it hard to assimilate, culturally.

BH: Do you think this is something companies ought specifically to do? Put local talent, into leadership roles – whether globally educated or not?

JB: I think it is something we have to. I think any company that hasn’t done so is failing to understand the cultural nuances within the business. The issue here, though is, are you doing a financial transformation of just the local business? Or are you doing a financial transformation programme across multiple countries within Asia?

The latter option is where the expatriate – the Caucasian expatriate – has had a strong role in the past, and perhaps still has an important role to play today. You’ll generally find it difficult to move Asian leaders across countries, because often, they’re very family-orientated individuals.

You need to be culturally aware, when you work here, because sometimes Australians or Americans coming into Asia struggle, because things are not done the same way that they are back in New York or in Sydney.

Going back to the organisation, if you don’t find an appropriate candidate within your own organisation to do the job, you need to make sure that the person you hire fits your organisation. The fit is most important, because the leader of a transformation programme will be managing multiple stakeholders.

BH: In terms of characteristics, what should a CFO look for in a transformation leader?

JB: What you need to ask yourself is: What do I need within that particular role for it to be a success? What are the sorts of characteristics that you’d look for in the right leader? First and foremost, they need an outward-going nature and they need to be self-motivated – as a group CFO you don’t want to be micro-managing that person.

They also need to be able to see the big picture, share your vision of the future state, and understand that you may need to change the existing model. So ultimately, if part of the role is to downsize the local finance functions and upgrade the shared services centre, you may not want somebody from inside the company, or you may want somebody who has only been with the company say, less than five years.

This person also needs to be logical; you’re going to have multiple complex problems being presented, especially if you’re transforming across countries, so they’ve got to be able to solve complex problems – doing their Sudoku or solving, the Rubik’s Cube… things of this nature. If that’s what they do in their spare time then they’re probably well suited for the job. A 20-year local veteran, on the other hand, has sort of a nepotistic, you might say, resistance to change.

Other characteristics I look for is someone who is decision-and task-orientated, able to prioritise those areas; somebody who is achievement-driven in terms of their nature; someone who is culturally aware, with strong communication and inter-personal skills – eg, a history of having managed a team of people in the past – not micro-managing them, but managing and sharing. You want a manager who gets their reward from their own people doing well – not the CEO type, who is more of a "me, me, me" person.

It has to be somebody who is orientated towards the group as a whole. You can see this in how people manage meetings: Are they the person holding the agenda, keeping the timetable, and leading the discussions? Or are they actually bringing other people into the meeting, trying to facilitate decisions, making sure the meeting is well-structured, that you’ve gone through the agenda and you’ve also got a set of action plans. So you want somebody who is structured in their thinking, and will set up a team that not only keeps you informed, but also the other stakeholders who are outside the finance department.

It’s a little bit old hat nowadays, but what you need is something like the Myers–Briggs personality traits or SQL psychometric testing that people used to do – if your staff have been with a company for more than 10-20 years you should have this on file.

One final thought: If you do decide to hire outside the organisation, you need to make sure that the people who you will have interviewed internally understand why, because if you don’t make that connection back to the individual, and say, "Look, I’m hiring this person because they’ve got ten more years experience than you do – and you’ll learn something from them. Because, when this transformation is done they’re gone, and you will be running the show" – then you may be losing a valuable member.

BH: Jon, thanks so much for speaking with me today.