What Works: Building a Strong Finance Team

How do you build a strong finance department? Motivate, stimulate, and innovate.

Companies often pause to digest a giant merger. But after Kraft Foods North America combined its cheeses with Nabisco’s crackers in December 2000, the company realized that internal reporting needed an antacid.

“It was overload,” says Greg Oster, vice president of Kraft’s cheese, meals, and enhancers division, which is responsible for such products as Velveeta, Stove Top Stuffing, and Miracle Whip. Regular monthly reports had swollen to 20 single-spaced pages, and in preparing for divisional reviews, he says, “we were spending all our time trying to consolidate information to be shared in a 50-minute meeting.”

Enter a Kraft “work elimination team,” one of five small groups of employees assembled by Ralph Nicoletti, CFO and senior vice president of finance. Their mandate: to simplify the processes of all finance staffers in the wake of the Kraft-Nabisco combination. One four-person squad, for example, analyzed “the gymnastics the organization has to go through to prepare monthly updates and estimates,” says Oster. After intensive analysis and recommendations, the team pared these updates to seven pages, supplemented by three more of system-generated data, “with key messages distilled down to the areas of greatest importance.”

Other work-saving projects have improved productivity elsewhere within the $21 billion-a-year unit of Kraft Foods Inc. By streamlining the planning and budgeting process for new-product introductions, for example, the Northfield, Illinois, company shortened the time it takes to stock new items on store shelves.

Such victories over inefficiency explain why Kraft North America has been recognized — along with Chicago-based CNA Financial Corp. and The Vanguard Group of Malvern, Pennsylvania — for overall performance in the 2002 Best Workplaces for Finance Professionals program.

Now in its second year, the Best Workplaces program, a joint effort of the Association for Financial Professionals (AFP), The Hackett Group, and CFO magazine, helps companies uncover strengths and weaknesses in their workplace management by letting them benchmark themselves against other finance departments.

At the same time, the program identifies companies with well-managed finance functions, and the best practices they employ. Mutual-fund giant Vanguard, for instance, surveys finance (and other) staffers regularly, then acts on the issues revealed. And CNA’s focus on job mobility and flexible work arrangements has helped it reverse years of organizational rigidity while allowing younger employees to advance.

Further, the companies identified share a strong conviction that investing in finance talent eventually yields bottom-line results. CNA executive vice president and CFO Robert Deutsch, whose mandate in recent years has been to help lead a financial turnaround, says that “driving change in financial results means creating an environment that supports being smart insurance people, and handling claims right. They really go together.” And Kraft’s Nicoletti points out that in any company, “poor processes, difficult systems, and a lack of training” often inhibit finance progress. By fixing those problems, he says, the “finance organization can focus on what is valuable to the company as a whole.”

Productivity Matters

Such viewpoints transform the old philosophy that “human capital management” means warm and fuzzy things like pleasing workspace interiors or giving workers their birthdays off. Today, leading finance departments don’t overlook the amenities. But the overriding goal is to increase productivity and profitability.

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