The culture of a business emanates directly from its primary leader(s)—the business owner, CEO, or leadership team.

In my work with a variety of companies, I help provide an atmosphere for high performance primarily through improving financial and operating plans, performance driver tracking and accountability. Even though I bring in my own system for making these improvements, my framework needs to fit into the overall culture of the company. I also personally choose to not work for businesses that don’t have a positive, trustworthy and “desire-to-improve” culture.  Beyond those core principles though, I find that companies have cultures that vary.

Two distinct cultures I have noticed are what I call “Trustworthy Open Book” cultures and “Trustworthy Discretion” cultures.

The Trustworthy Discretion Culture

One of my longest-running clients sold her business last year (which turned out to be perfect timing.) She’d been very successful running it, and enjoyed the satisfaction of selling it at a premium.  Her approach to culture was “trustworthy discretion.”

She was very protective of the company’s numbers, even with the top leaders.  The company was primarily blue-collar with a strong family culture.  Everyone trusted her as owner to do what was best for everyone.  When she pulled me in to help (which provided the discretion of a third-party non-employee working with the numbers) we were able to double the size of the company.  It grew to roughtly $80mm with strong EBITDA, thus commanding a premium selling price.

The Trustworthy Open-Book Culture

I have another client who has gone to an open-book format. All numbers are discussed with the teams and we hold a monthly all-hands meeting to discuss monthly results whether they be good, bad, or ugly.  Everyone is seeing everything and all oars are in the water rowing the same direction. Sales and profits are at an all-time high.

Does that mean either culture can work? Yes, provided three things are in play:

1. The top leader/leaders set the bar of being completely trustworthy.  In both examples above, the leaders were trusted. One for how she ran the company, the other for how open he has been about the state of the company.  Both built trusting relationships with the people who work for them.
2. The culture remains consistent.  Inconsistencies lead to lack of trust, even if they aren’t intentional. If you have an open-book culture, then shift slowly OR suddenly to hiding more and more information, you are going to break trust with your team. Alternatively, if you suddenly open up, your team may take a while to feel comfortable with the approach or even feel unsettled that there are going to be other major changes to navigate.  Whatever you choose, be consistent.
3.  The approach is relevant to the type of business.  Some industries lend themselves to open-book more easily than others. If you are manufacturing a proprietary product, your discretion with bookkeeping may be crucial, too.  If you are non-profit needing donations, being transparent about what the money goes for—a more open-book approach— may be appropriate.

Culture is dependent on the CEO and the leadership team. Trust, no matter which type of culture you choose, is the KEY.

All CEOs, business owners, and finance execs (CFOs, VP Finance, and controllers) hire and manage outside experts.  Auditors, lawyers, turnaround consultants, IT consultants, HR experts, sales consultants, business consultants, executive coaches and virtual assistants are just some of the roles being filled by independent contractors.  Our current world is opening the door more and more to this type of “gig economy” and the building of virtual teams, some members of which may not be your employees.

In fact, I’m one of those “outside experts” brought in to improve the company’s overall performance. I’ve also worked with hundreds of experts over the years, and I know the importance of working effectively with independent contractors.  For me, it’s all about setting proper expectations and communication – and in today’s world, both are more important than ever.

Having been on all sides, both being hired and doing the hiring for a wide range of projects, I’ve had mostly good experiences, but also a few bumpy ones.

On the good side, an internal control evaluation project I was managing proceeded extremely well.  The project came in on budget, on time and right on scope.  It was a pleasure working with the expert I hired to help with the project.  He was professional, showed up on time, handled the company’s employees well, and delivered a final product that made me look good.

On the bad side, there have been occasions where the professionals I hired didn’t perform anywhere close to where I expected. In one case, they embarrassed me in front of my client’s leadership team.  Then they gave me a bill that blew my socks of, for an incomplete project not even close to what I expected!

I discovered that the most important element for successful projects is clear communication.  I now ensure I have crystal clear objectives with weekly status meetings to ensure everyone is on the same page.  I also continually re-evaluate the situation.  Here are some practical tips to help you navigate your relationship with your outside experts (or manage your relationships with your clients) well:

1. Start with a clear engagement letter, statement of objectives, or memo of understanding.
2. Define expectations on all sides so everyone is on the same page.
3. Conduct a regular review of past, present, future, and future priorities.
4. Establish a timely invoicing structure. Some outside pros are famous for billing delays which lead to large “lump billings” which can shock a client. (It shouldn’t, but that’s another topic, and even so large billings months later are not best practice.)
5. Evaluate regularly to make sure the contractor is still adding value, or that you are continuing to add value to the client.  For me, I try to show 10x my fee in better profits for the client. For the virtual executive assistance I contract, we meet almost weekly to discuss objectives and ideas, and she is willing to mention if I’m not making use of a routine service her team is doing for me.  Ensure both sides determine the value and the results and make changes accordingly.

If you’re an outsourced pro, you need to make doing business with you easy and pleasant. You’d want the same from a pro you hire.  Clear expectations and procedures help both sides.

Bonus – since so many of us are working virtually, here are a few additional tips for the human side of communication.

• Invest time to get to know them your outsourced pro. Start meetings with a bit of chit-chat about how things are in their world.
• Make them feel part of the team. Ask advice. Include them in team meetings if appropriate.
• Give feedback on performance – positive or negative, on a regular basis.
• Understand their other projects. Most outsource pros have more than one client they are serving. Don’t be afraid to show interest and respect to them as a business owner.
• Pay them market or better – don’t skimp on paying what they’re worth.  You get what you pay for.

You can have extremely successful relationships with outsourced professionals (like me!) if you handle communication intentionally and regularly.

Do you need outsourced CFO help? Contact me!

2020 is half over.

For many, it’s a “Don’t let the door hit you on the way out” attitude. Filled with so many unexpected, and primarily negative things happening in our country and world, it’s no wonder many of us would like a do-over.  Technically, we DO get a “do-over” multiple times per year. The halfway point of the year (no matter how good or bad it’s been) is a good time to evaluate and reset ourselves in goals, priorities, and values.  Sometimes, it’s particularly helpful to have a mentor involved in that process (or be one.)

I have felt incredibly inspired lately to be able to be a mentor and coach in some capacity to several of my client controllers and finance team members.  It’s our responsibility as leaders and experts to provide a trusting, enthusiastic and continually developing work environment to the new generation.  I’ve enjoyed passing along my experience and ideas to them, hoping to help them avoid mistakes and make decisions with wisdom and trustworthy information.

But you can’t just immediately jump into a mentor/mentee relationship without developing trust. It’s a process that goes both directions – me with them, them with me. It involves doing what you say, being transparent and honest, delivering results, and confronting some harsh realities.  You have to be willing to establish clear expectations and hold each other accountable. Sometimes that involves having difficult conversations.

I have set weekly meetings with several of my key client controllers to insure I set clear expectations for the immediate,  and quarterly meetings to focus more on the long-term.  The quarterly meetings are where we dive deeper and I provide bi-lateral candid feedback, using a simple checklist to help me help them review both theirs—and MY leadership and management.  The process is remarkably effective to build trust and accountabilty. I’m also working on my listening skills so I can better understand the other person’s perspective.

Mentoring and coaching is about leadership and guidance.  I find sometimes the teacher becomes the student and I’m loving it.

How about you? As you make a halftime report to yourself, can you consider getting involved in a mentor/mentee relationship to help you grow in your leadership skills the second half of 2020?