Did I mention that I love traveling?
To frequent readers of The Worldly CFO, this hardly comes as a surprise. My first post on this blog, How to Find the Right CFO for Your Expansion Abroad, was programmatic, and I’ve returned to the topic of cross-border finance, leadership and M&A frequently since, for example here, here and here.
Immersing yourself in a different business culture, spending time on-site, learning from the local teams - there’s no ersatz for "being there." After many years at the helm of global financial operations for a large US-based manufacturer and in my current role, I still enjoy going abroad.
However, that’s not always an option.
This makes optimizing our online communication and careful planning for the scarce in-person meetings all the more important. What are the implications following the acquisition of a business abroad? I’ll share an example below.
In the fast-moving world of international M&A, input, feedback, and guidance for the finance and accounting leads on the ground can’t wait for the head of finance to stumble off a transatlantic or transpacific flight and shake off the jet lag. As nice as "Management by Traveling Around" would be, pending the arrival of teleportation, we’ll have to make do with email, cell phone, and video conferencing.
Leading Across Borders: Remote, But Not Removed
You may recall "Management by Wandering Around", the leadership approach popularized in the 1980s by Tom Peters and Robert H. Waterman. Since they published their bestseller In Search of Excellence, the internet and smartphones have changed fundamentally what it means for international business leaders to "sync up" with their teams.
How can we achieve excellence when leading in-country teams from afar? A simple Google search unearths plenty of general advice, procedural and technical, on how to maintain momentum, immediacy, and accountability leveraging email and virtual meeting platforms. I've included three useful resources from that category at the bottom of this post. In the aftermath of cross-border mergers and acquisitions, add to the mix the challenge of managing structural changes and ownership transitions from afar.
Which brings me to the example mentioned earlier. We had bought a business in Latin America. The company had always been privately owned, with its top financial person always reporting to the owner of the business.
Following the acquisition through my employer, the seller stayed on as our General Manager, and the controller stayed on as well. Does that sound like a case study in continuity? It wasn’t.
Instead, it was eye-opening, for both the seller (now our GM) and the controller, that the controller now reported to both the GM (solid line) and me as CFO (dotted line).
I made a point of visiting both in person first, to explain the new reporting relationship, the fiduciary responsibility of the controller (to me), and to discuss how to balance the new priorities and obligations that resulted from this new setup.
From first-hand experience with more than 30 M&As, most of them involving foreign targets, I’ve learned that some people struggle with this matrix reporting structure, while others balance it well and flourish. Since we often don’t know from the outset what applies to our in-country counterparts, how can we make it work?
In this particular case, the controller had to report financial results to me, according to company guidelines and principles, and work with me to move the transaction processing functions to our shared service center. This was new for that team and put the local controller in a bind.
Binds and Balances
He suddenly had to balance the new duties with the onsite "internal" financial reporting that he did for the GM. They took up time that he otherwise would have spent on the business for the GM.
The controller now had to attend quarterly calls and annual in-person meetings with me and the controllers of other foreign subsidiaries to talk about best practices in accounting. These obligations sometimes competed with priorities set by the GM.
What I’m getting at is the importance of steering the communication during such transition phases in a way that avoids micromanaging while being accessible to provide guidance and clarification when necessary.
In the beginning, we spoke on the phone weekly. This rhythm helped both of us sort out which issues I needed to get updated on and which did not need my attention. We also scheduled quarterly in-person meetings, usually in my office at headquarters, so the controller was out of his office, could speak freely, and enjoyed "breathing space" for pondering and discussing strategy beyond the day-to-day business.
I’ve used a similar approach for most of my communication with in-country finance and accounting team leaders following acquisitions since. In more than one instance, the local controller then used the same or a similar reporting and communication cadence with the companies that were acquired by that unit.
Word spread, and when a neighboring company in an unrelated industry embarked upon an acquisition campaign, we were even asked to help set up an effective reporting structure with the companies acquired by that corporate hometown neighbor.
The time set aside for regular in-person meetings can pay off long after the transition phase has been completed. With one counterpart, we maintained the tradition of meeting annually even years later when both of us worked at other companies.
Resources: How to Manage Remote Teams
Rebecca Knight: How to Manage Remote Direct Reports (Harvard Business Review)
Dan Griffiths and Neil Amato: Keys to successful virtual teams (Financial Management)
Mark Bosma: How to Build Culture in Remote Teams (Toptal Blog)