Sticking with a top-tier accounting firm for decades before walking into a CFO post is hardly an unheard-of career arc, but it’s not what you’d call common. Most young accountants at such firms get a few years of audit experience under their belts before venturing into the corporate world, while many of those who work their way up to partner opt to stay put permanently.
CFO recently told the story of one later-career adventurer, Carl Berquist, who the left the professional services arena after 28 years for Marriott International in 2002. In that case, it’s unknown whether Berquist would have stayed on had he been employed by a firm other than Arthur Andersen, which famously crashed and burned along with its client, Enron.
For Beth Schiavo, who began a CFO job this month following 23 years with Ernst & Young, the move was a more personal decision that required deep introspection.
Two weeks into her new post at North Highland, a management consulting firm with current annual revenue of about $350 million, Schiavo thinks she’s where she’s supposed to be.
“Everyone gets to a certain stage of their career where they should try to understand themselves better than they did in their 20s,” she tells CFO. “You need to be honest with yourself about the things you are good at and the things that make you excited to go to work in the morning. That seems somewhat obvious, but it’s amazing how many people do not do it. It’s because in their minds they’ve defined success as being externally driven.”
Schiavo’s self-appraisal gathered force as she neared her 10th anniversary of making partner at EY. Was she staying for the wrong reasons? “It was very important for me that I became more open about whether someplace else could be a better fit for me,” she says.
After becoming a partner, in addition to expanding her auditing experience across a broad range of client types, Schiavo took on some operational and business-development oversight of other partners, in the role of assurance services leader for the Atlanta market. She found that while auditing was something she “had an affinity for and an interest in,” helping to run the business “spoke to where [her] passions were.”
Ever since she’d started with EY, her auditing work was, to her, about more than auditing. She relished the opportunity to work with different types and sizes of businesses and learn what worked and what didn’t, how they made decisions, and act as a business adviser rather than just an auditor.
Her job at North Highland — which has 1,000-plus consultants in the United States plus a wholly owned London office and is a founding member of a global management consulting partnership, Cordence Worldwide — will allow her to focus on what she’s “good at,” Schiavo says.
“I’m by nature a collaborator,” she says. “I like to say that if I’m the smartest person in the room, I don’t have the right people in the room and need to diversify who I’m talking to. Collaboration gives me a great sense of enjoyment in adding value. I’m good at finding ways to add value, but pride of ownership is not an issue for me. I want to find the best people that can help inform decisions.”
Schiavo says she’s experienced less culture shock during her first days at North Highland than she expected, and certainly her experience in the client-service field will serve her well there. But it’s not like there won’t be new challenges.
For example, the firm is owned by an employee stock ownership plan (ESOP). While she’s had some experience in accounting for ESOPs, certain realities of actually managing the plan will stretch her.
For example, there are regulatory reporting requirements that are unique to ESOPS, resulting in complex recordkeeping tasks. Also, the plan must allow for a participant to sell stock back to the company upon leaving it, which poses cash-management implications: projecting the potential cash liability and the potential timing of those payments can have a more volatile effect on cash than stock-based compensation that the employee liquidates through a third-party market.
Perhaps most significant is the need to assess the motivational impact of the ESOP. As with any stock-based reward, the incentives are most effective when the company is experiencing significant growth and employees can lock in a number of shares at a low value. That is the case with North Highland now.
On the other hand, ESOP ownership can be less meaningful to a younger work force — and North Highland’s is trending younger than it historically was — that either has a higher need for disposable income or doesn’t realize the potential for wealth accumulation than an ESOP can provide.
“There will definitely be some on-the-job learning” with regard to the ESOP, Schiavo says.
Another challenge will be managing the firm’s continuing growth. From the beginning it’s had a “local market” business model, which means locating consultants in client companies’ markets. North Highland is intent on maintaining that model — “there are so many more opportunities to build meaningful relationships this way, versus the model of flying in on Monday and back out on a Thursday,” Schiavo says — but that’s harder to do with very large, multinational client companies. With the firm’s growth, it now serves 26% of Fortune 500 companies.
“We’re looking at our growth very strategically, around how we can best serve these large clients and future ones in a local model,” Schiavo says. “If a certain client has a set of operations in a certain city, we might either open an office there or be acquisitive, which we have done in the past.”
Also, North Highland is amid a phase of change, marked by new leaders, the departure of a number of longtime consultants, and a new compensation model. Recent reviews of the firm on Glassdoor.com by existing and former employees suggest some unrest.
Schiavo will have to manage through the change, but owing to her newness she defers comment to Jennifer Marsh, a spokesperson for the firm.
“Essentially, career-pathing at North Highland had not been reviewed and updated since we were a $2 million firm,” Marsh says. “Traditionally we’d hired people with over 15 years’ experience, so that wasn’t necessarily something they were looking for.”
But because of its significant growth in recent years, the firm has evolved to hiring consultants with 5 to 10 years’ experience. “They’re millennials who are looking for career progression and want to know what they’re going to be held accountable for,” says Marsh. “A lot of the changes we’ve made reflect updates to career pathing, guidelines, and expectations for where things are headed. An unfortunate fallout from that is that some people who had been here for a long time decided to part ways with the firm.”
For her part, Schiavo says that for consultants change management is “in the blood.” But managing change so that people are comfortable with the decisions being made “always creates a challenge, because it hits people from an emotional perspective. For me personally, I will define success as getting from where we are now to where I think we need to be in a manner that makes everyone comfortable with and excited about that change.”
Her first order of business will be to continue developing performance measurements for holding people — both the consultants and those in the functions that report to her, which include not only finance but IT, business management, and legal — accountable.
“It’s about how we work together enable those who are in the field to be more successful through more efficient, value-added global services,” Schiavo says. “A good part of what I’ll be doing [for the next couple of months] is assessing those business requirements and making sure they’re getting what they need. And if they’re not, [I’ll be finding out] what we need to do from a process and people perspective to make sure that improves.”