Spend Matters welcomes this guest post from Nick Lazzara and Naseem Malik, of MRA Global Sourcing.
So, you’re ready for an executive role in a company’s procurement function and getting ready to razzle dazzle your future leadership, including the CPO. Yet you also notice that the CFO is one of the interviewers, and you’re eager to get the nod from this important executive and stakeholder. The savvy procurement practitioner will be cognizant of the difference between indirect and direct spend responsibilities and prepare accordingly.
For example, if the position’s purview is primarily on the indirect side, the candidate should speak about how the CFO can be a strong enabler in ensuring there aren’t any sacred cows when it comes to professional services. Strong CFO support can help overcome barriers when playing in non-traditional indirect categories (e.g., HR and compensation/benefits, marketing, legal, consulting). Expect to have a robust conversation on your experiences in working with such categories and how you successfully collaborated with internal partners.
Similarly, if you’re going into a direct category role, the CFO may have some pointed questions on how you helped release cash for the organization. Other areas of interest for them may be around your expertise on helping optimize working capital, (e.g., improving the forecasting process, reducing inventory and extending payables). In our experience, services and retail companies are more likely to have some sort of finance representation on the interviewing team than in the manufacturing industry.
Be Prepared to Explain the “How”
Some interesting insight from candidates we spoken with centered around the mechanics of the interview with finance executives. A common trait for these interviewers was the scrutiny of specific quantitative accomplishments cited on the resume. CFOs like to review bullet by bullet and understand the “how” when it comes to hitting your numbers.
Some popular questions focused on how the candidate calculated savings and whether those savings were annualized. Was it cost avoidance? Finance executives are also keen to understand how you received credit from your past organizations on savings in IT, R&D and marketing initiatives.
Another important issue for CFOs on the savings front was whether or not said savings were integrated into the next year’s budget. They also weren’t shy in asking, based on what you know thus far about their company, what you would think is a reasonable estimate for year-over-year savings if you landed the job. Bottom line: Be prepared for a robust discussion covering both macro and micro topics as they pertain to your workings with Finance.
Landing the Job: Next Steps
Now that you have landed a job with your dream company, how can you truly partner with your CFO to accelerate your results and gain buy-in from other key stakeholders?
One of the most important things to do is to speak their language. Procurement must learn and adopt the vernacular quickly and then demonstrate its results and the ensuing value the function is bringing to the organization. Once procurement has proven it can talk the talk and has sought the help of finance to validate its results, you will have found a powerful ally in getting things done. We must stress, however, that consistency and accuracy when it comes to results are imperative. Nothing will derail your relationship faster than presenting “alternative facts.”
Since procurement typically functions in a center-led and highly matrixed environment, the finance team is well aware that governance can be a major challenge. When you have to influence behavior, and sell your value proposition while appeasing multiple stakeholders, the CFO can be instrumental in prodding the business to work with procurement early and often as it embarks upon new initiatives. And of course, when it comes time to seek investment in technology or people, who better than the CFO to have in your corner to approve?
Conversely, if your company’s CFO is more of a laissez-faire type, it doesn’t mean procurement is off the hook when it comes to quantifying its results, or that practitioners should minimize their relationship with finance.
What Others Have Done
In speaking with CPOs who have been CFOs and vice versa, they are united when it comes to how this partnership can not only significantly raise the stature of Procurement but help bring more value than almost any other relationship. By having a set of metrics that are on the same page as finance, the procurement scorecard will be relevant to the CFO. Some of the more progressive CPOs aspire to have quarterly and annual reports reference procurement contribution to not just bottom line but the top line and overall margin improvement.
Another trend that we first saw with a major CPG client is having a specific supply management finance resource on the CPO’s staff who is dedicated to financial oversight and liaising with the corporate finance team. This resource can be either an internal finance person rotating into procurement or brought in from the outside and can eventually end up in the finance function. Such cross-pollination of talent and partnering also helps procurement to not just become an afterthought when it comes to tactical financial strategy.
If procurement continues to collaborate and espouse transparency, it will garner attention from finance. Procurement needs to prove it can deliver tangible value that its internal business partners can attest to. Is procurement’s engagement model with their partners strategic and are the outcomes sustainable, enhancing its reputation within the company? If the answer is yes, then chances are good that you are on your way to fostering a strong relationship with finance.