As the founder of CEFO Advisors and over 25 years of experience in financial management, my career has spanned roles from controller to CFO and then to CEO, giving me a comprehensive view of the challenges in our field. One of the most common yet difficult situations is when a controller’s role outgrows their capabilities. This not only affects the individual but also the entire organization. It’s essential for a management team to trust and collaborate in finding the right solution, whether it’s transitioning the individual to a better-suited role or supporting their departure. My journey has taught me valuable lessons in making these tough decisions.
Loyalty and Its Complexities
Controllers become trusted confidants and become the keepers of the historical knowledge of systems, processes, and the various “bones” that may be buried over the years. Their loyalty is often unquestionable. However, as companies grow, the controller’s skills may remain stagnant or are no longer able to meet the needs of the changes in the company dynamics. The challenge for CEO’s and Management teams alike, become blurred between acknowledging the controller’s past contributions but also about making a decision that would benefit the company’s future.
Historical knowledge is a rare asset. However, when faced with modern financial challenges, this knowledge alone isn’t enough. A controller must adapt and grow with the company and in many cases a controller who is comfortable with keeping things as they are will be resistant to new financial software and analytic tools needed to keep the financial information moving forward.
Outdated systems and processes often result in inaccurate financial reporting. These inaccuracies will directly affect the company’s future. We often read about publicly held companies who must restate prior year financial statements due to material errors in past financial reporting. This leads to a loss of investor confidence but also legal repercussions. This is not only an issue for larger, publicly traded companies, but can also be true for small to mid-sized companies. It’s a stark reminder of the importance of accuracy and the costly implications of failing to maintain it.
Addressing Poor Behavior
Behavior impacts more than just the individual; it affects the entire team. We often hear about situations where a controller’s negative attitude created a toxic work environment. Despite the controller’s technical expertise, the team’s morale and productivity plummeted, forcing the company to make the difficult decision to make a change. This also affects the morale of all other areas of the company as they too need to deal directly this the controller. Working together to define the underlying reasons for the poor behavior is of utmost importance. The controller may realize they are in over their head, and they are nervous about how that will impact their position. This alone would weigh heavily on that controller and their sense of confidence.
Facing the Fear of Letting Go
Letting go of a key financial employee is daunting. The fear of a knowledge vacuum and operational disruption is real. However, in my experience, turning to fractional and outsourced financial services can be a lifesaver. These services provide not just a stop-gap but also an opportunity to bring in fresh perspectives and skills that might be lacking internally.
Making the Decision: Performance vs. Potential
Balancing current performance with the potential for improvement is crucial. I recall mentoring a struggling controller, and providing training and support. While we saw some improvement, it wasn’t enough to keep pace with the company’s growth, leading to the difficult decision to let them go. Companies with a solid succession plan build in the inevitability of change. They spend time reviewing the performance of the controller and others and can often find another position for them that makes good sense. It doesn’t have to mean the end of their career with the company.
The Termination Process
Terminating an employee should always be handled with dignity and respect. In these situations, the controller should not be surprised as regular conversations should be occurring. They may even be relieved that they can finally move on. Facilitating a smooth termination where the company provides support in their transition helps to show the company’s appreciation for the controller’s years of service.
Every termination is an opportunity to learn and improve. Reflecting on these situations has continually shaped my approach to hiring and talent development, emphasizing the need for adaptability and ongoing training.
Conclusion
Deciding to let go of a controller for poor performance is complex, requiring a balance between compassion and practicality. My experiences across different roles have highlighted the importance of these decisions for the health and sustainability of the organization. It’s never an easy decision, but sometimes, it is the most responsible course of action for all involved.
Additional Resources
The books noted below offer a blend of practical advice, strategic insight, and broader management principles that can be extremely helpful in understanding the complexities of a controller’s role and how to evaluate their success or failure effectively.
“Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean” by Karen Berman and Joe Knight
This book is an excellent resource for understanding the nuances of financial reporting and analysis. It offers clear explanations of financial metrics and how to interpret them, which is crucial for assessing a controller’s performance. The authors also provide practical advice on how to use this financial understanding to make better business decisions.
“The Effective Controller: 10 Easy Ways to Increase Profitability and Cash Flow” by Stephen A. Arbaugh
Arbaugh’s book focuses specifically on the role of the controller, offering insights into how to improve efficiency and effectiveness in this position. It outlines key strategies and best practices for controllers, which can be used as benchmarks for success. This book is particularly useful for understanding what distinguishes a high-performing controller from an underperforming one.
“Good to Great: Why Some Companies Make the Leap…And Others Don’t” by Jim Collins
While not specifically about the role of a controller, “Good to Great” provides valuable lessons on leadership and management that can be applied to any role, including that of a controller. Collins’ research into what makes companies successful over the long term can offer insights into how to define and measure success in key positions, including the role of a controller.
CEFO Advisors is often called to help clients assess people, processes, and systems within an organization. We provide valuable guidance in working with CEOs and Management Teams in evaluating the overall strength of their people within the finance function. This is often an opportunity to assist in training the controller to become more effective or adding the CEFO staff to assist with the monthly duties to help keep the controller in place. For more information, please visit www.cefoadvisors.com or reach out to the office at 518.698.4264.
