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CFOs, CAOs, IT, HR . . . and Consultants
Jack and Suzy



Jack and Suzy Welch

Q I work for a manufacturing company where the IT department reports to the head of finance. He never has time to evaluate IT projects, so it ends up that IT, which has no representation at board level, gets attention only when there is a burning issue. This is a problem, isn't it?

Name withheld, Harare, Zimbabwe

A It sure is. In fact, that sound you hear is the collective groan of hordes of people, just like you, who have watched this dysfunctional dynamic play out in their own organizations.

And we're not just talking about IT getting buried where it shouldn't, and neglected until a crisis strikes . . . although that's bad enough. We're talking about the bigger and more onerous problem your letter suggests: the Rasputin-like dominance of the chief financial officer in too many companies. OK, maybe invoking Rasputin is a bit extreme. But it's not going too far to say that the CFO can, and very often does, wield too much influence within companies. And if not the CFO, it's the so-called 'chief administrative officer' who gets this type of excessive power, overseeing finance itself, human resources, and any number of other staff departments. Now, sometimes the chief administrative officer is the former CFO. Sometimes he or she is the former general counsel. Regardless, this extra management layer spawns bureaucracy at its worst.

The person holding the CFO or chief administrative officer title inevitably becomes the company's mandatory 'go-to guy'. They are bodyguards through whom every question and decision must pass before finally making it to the CEO . . . or not. Their jobs become catch-all bins for projects, people, or whole departments that the 'overburdened' CEO, with just too many direct reports, is said to be too busy to deal with. It's just wrong. So why does it happen?

With IT, the explanation is easy: It's a historical hangover. Initially, IT was mainly seen as good for lowering the costs and increasing the efficiency of payroll operations. In those days, decades ago, there was some logic to having IT report to the CFO. Most good companies, however, took IT out of finance when its broad strategic utility became obvious. But some . . .

apparently including your company . . . have not.

As for HR reporting to a chief administrative officer, there actually can be no good explanation. With its critical role in hiring, appraising and developing people, HR is so central to the success of a company it's practically criminal if it doesn't report directly to the CEO. When it doesn't, you can only assume it's because the CEO doesn't get the people thing or someone else is actually running the place, or both.

Which brings us to the consequences of this whole dynamic.

The first is that front-line IT and HR managers, who usually have among the most relevant ideas and information in the company, do not get heard high enough up in a timely way. Any insights they might have get filtered before making it to the CEO or the board, sometimes by the cost-sensitive CFO, of all people. Second, companies where the CFO or chief administrative officer reigns supreme have a much harder time attracting good people to top HR and IT jobs. The best and brightest in these fields will always choose to work where they have a seat at the table equal to the CFO. Why shouldn't they? The best companies recognize their value and reward them with pay and prestige.

So, to your question then . . . absolutely, IT shouldn't be reporting to the CFO. Nor, for that matter, should any key function report to a bureaucratic layer. Your painfully common problem is a case in point.

Q Are consultants good or bad? Under what circumstances would you bring them in? And what does bringing them in say about the skills of your own people?

. . .Kendra Stringfellow, Albany, NY A Your question is sort of like asking, "Are doctors good or bad?" The answer is: Some are good and some are bad. But either way, you want to spend as little time with them as you can. Look, the problem with consultants is they're fundamentally (if surreptitiously) at loggerheads with the managers they want to work for.

Consultants want to come into a company, solve its mess, and then hang around finding and solving other messes . . . forever. Managers want consultants to come in, solve their specific problem fast, and get out . . . also forever. The tension between these conflicting goals is what makes the use of consultants intractably problematical.

There are, of course, situations when consultants are useful. Sometimes a company needs fresh eyes to a an old strategy or a new product. Sometimes a company simply does not have the in-house skills needed to make an informed decision. Private equity firms today, for example, use consultants very effectively to quickly evaluate the markets and industries of potential acquisitions. But the best bywords to keep in mind when considering hiring consultants are: 'Be careful'.

Before you know it, they could be doing the ongoing work of your business. After all, that's what they want, even if you don't.

Jack and Suzy Welch are the authors of the international best-seller, Winning. They are eager to hear about your career dilemmas and challenges at work, and look forward to answering your questions in future columns.

You can e-mail them questions at Winning@nytimes. com Please include your name, occupation, city and country.




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