Building Your ”Kitchen Cabinet”

Here's how to develop your own circle of trusted advisors while avoiding conflicts of interest.

Your Own Circle of Experts

Recent graduates, still fresh from lively discussions inside and outside the classroom, can begin building a kitchen cabinet with schoolmates — and, if they’re fortunate, a favorite professor. Joining your alumni association can help you firm up these relationships and keep track of which classmate can provide guidance in which area.

Once finance professionals rise a few rungs on the ladder, they should expand the pool of candidates for their kitchen cabinets. Professional associations (far too many to list here) are perhaps the most common source. They’re especially helpful for executives at small companies who may otherwise find it difficult have access to a wide range of different points of view or expertise. For example, the Financial Managers Society (FMS) serves finance executives of banks and credit unions, many of them regional or local firms.

In addition to holding monthly meetings, FMS runs a “listserv” — an automated E-mail list that distributes comments, questions, and answers posted by list members across the country. When Jay Dodds — chief financial officer of First Federal Savings Bank in Twin Falls, Idaho — wanted to know how much other banks were reporting in loan costs, posting a question garnered a quick response on a just-released FAS 91 cost survey. Dodds, in turn, has shared his bank’s experiences with audit committee charters required under Sarbanes-Oxley.

Dan Mayleben also attends monthly meetings, but as part of an informal group with other like-minded colleagues. The chief financial officer of Minneapolis-based HighJump Software, a supply-chain-management subsidiary of 3M Corp., Mayleben gets together each month with area CFOs to discuss interactions with the board, or insurance, or the cost of providing benefits — whatever they decide to add to the agenda.

Senior Executive Network takes a more formal approach. At twice-yearly meetings, finance executives are grouped by industry, then divided into subgroups by revenues (but also with an eye toward separating competitors). Small breakout sessions discuss topics ranging from strategic planning to relationships with the CEO.

Not surprisingly, SEN chief executive Robert Grabill maintains that “informal advisory groups don’t work” and that only a formal association can provide an efficient, organized forum of exchange. Joni of the Cambridge International Group also suggests that formal associations can lead to deeper, kitchen-cabinet-level relationships. For example, Oak Hill’s Copher consults with other executives he has gotten to know through FMS’s tax advisory board. Dodds will be attending the annual FMS conference in June and hopes to meet some of the finance executives he’s gotten to know virtually through the listserv.

Mayleben, in addition to his informal group, is also fortunate to be joined on HighJump’s board by two other CFOs who he now considers part of his kitchen cabinet. When Mayleben left a unit of multinational Honeywell to join the much smaller Adaytum (his previous company), one CFO helped him understand the business model of a small software company. When Adaytum was acquired by Cognos in 2002, the other CFO gave Mayleben advice on structuring the deal.

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