For finance chiefs with designs on the chief executive’s chair, serving a stint in operations is often a prerequisite. But the lack of an important quality may be blocking many CFOs from successfully doing so, in the view of one former CFO-turned-CEO.
That quality is empathy for customers, and for the employees who serve them, says Cary McMillan, a onetime Sara Lee CFO who now runs tax-advisory firm True Partners. While it’s become a cliché for CEOs to say they want a finance leader who can act as a business partner, failing to understand customer behavior and wishes may be a significant handicap in performing that role, he says.
Finance chiefs “tend to be supersmart people who don’t always help solve problems,” asserts McMillan, who left his CFO post in 2002 to become CEO of Sara Lee’s then-huge apparel business. And when it comes to being a business partner, he adds, problem solving is “a million times more valuable than being technically correct on every finance issue.”
Putting the highest priority on always being right from a technical standpoint is a habit that’s difficult for CFOs to kick, McMillan acknowledges, since that’s how they’re trained. But in the end, he says, that is a “me” mind-set, whereas a “we” mentality is what pushes companies forward.
McMillan developed an appreciation for the “we” approach during 19 years at Arthur Andersen, where he rose to become head of the firm’s audit practice and managing partner of the Chicago headquarters office. “I was one of the few line partners who were actually interested in how the firm was run,” he recalls. “Almost everybody else — because this is how we trained them — was interested only in their own activities. I got involved in management by throwing myself in there.”
That facility for stepping out of the box clinched Sara Lee’s decision to offer him the CFO job, says McMillan. “They could see me as more than just a client-service provider; as somebody who was interested in working on the entire entity, not just one part of it.”
It was a heady role for a career audit-firm partner, with Sara Lee sometimes mentioned in the same breath as such finance-professional incubators as PepsiCo, General Electric, Kraft, and Johnson & Johnson. The conglomerate’s highly decentralized structure put finance executives in the spotlight, says McMillan, with sales, marketing, purchasing, and supply-chain functions all pushed out to the many business units.
Indeed, he took the job worrying whether he was qualified to be CFO. He had never had to deal with treasury matters or investor relations, for example. “I thought I only had about half the experience I really needed,” he says. “But I found that the half I had, in accounting and internal controls, was helpful with the other side.”
He earned some treasury chops by helping to arrange hedges on the company’s receivables with Kmart in advance of the retail giant’s bankruptcy. Although Sara Lee Branded Apparel was one of Kmart’s largest creditors, “we didn’t lose a penny,” says McMillan. And the passage of Regulation FD during his first year on the job turned out to be blessedly timed, because everyone was in the same boat grappling with the transition to a new mandate for disclosure to investors.
Still, McMillan says taking on the CFO job was a bigger adjustment for him than his next assignment as head of Sara Lee’s apparel business, where his long experience as a line partner at Arthur Andersen came into play. Sara Lee had been among a number of large accounts, including Northern Trust, RR Donnelley, and the Chicago Sun-Times, for which he had been responsible. His comfort in dealing with big customers greatly informed his new job, which involved heavy interaction with the many supersized retailers — such as Wal-Mart, Kmart, Target, and Costco — for which Sara Lee was a key supplier.
McMillan left Sara Lee in 2004, two years before the apparel division was spun off to shareholders as a new company, Hanesbrands. He spent some time working on acquisitions with private-equity firms before some former Arthur Andersen tax partners asked him to lead the new enterprise that became True Partners. Although he didn’t have a tax background, Waud Capital, the firm’s private-equity backer, insisted on hiring a business leader with strong experience dealing with customer and people issues.
The firm, which has about $40 million in annual billings, has almost no turnover, McMillan says, leading to a strong customer-retention rate. “In our culture, no matter how good you are at generating business, if you’re a jerk, you’re gone,” he says.
In addition to empathizing with customers, CFOs should “take ownership” of their company’s top executives if they want to move up, says McMillan, who also sits on the boards of McDonald’s, Hewitt Associates, and American Eagle Outfitters. “You need to go to bat for them and make sure they get recognized and rewarded,” he says, “because that’s who you’re going to run with.”