Controlling in the Wood Products Industry

Transcription

1 Controlling in the Wood Products Industry SS 2015 Albert Sickl 1

2 Controllers have different roles in different companies How do you see the role of the controller? 2

3 The controller is not the commander of the ship that is the task of the chief executive but he may be likened to the navigator, the one who keeps the charts. He must keep the commander informed as to how far he has come, where he is, what speed he is making, resistance encountered, variations from the course, dangerous reefs which lie ahead, and where the charts indicate he should go next in order to reach the port in safety. ¹ ¹ Heckert, J.B. & Willson, J.D., 1952, Controllership The work of the Accounting Executive, New York, Roland Press, 645pp. 3

4 Controllers have different roles in different companies: In practice, people with the title controller have functions that are, at one extreme little more than bookkeeping, at the other extreme, de facto general management. ¹ Navigator, Co-Pilot, Steersman, Economical Conscience,. measurement of accomplishment of events against the standard of plans and the correction of deviations to assure attainment of objectives according to plans. ² MANAGEMENT SERVICE REPORTING & INTERNAL CONTROL ¹ Anthony, R.N.: The Management Control Function, Boston 1988 ² Richter, H.: Strukturkriterien für die Entwicklung von Controlling, Frankfurt

5 MANAGEMENT SERVICE REPORTING & INTERNAL CONTROL Anticipation, Adaptation preparation & realisation of forecasts & budget Reaction monthly / quarterly review of financial performance Decision support investments, working capital management, credit control,.. SERVICE Adherence strict accounting standards (IFRS, US GAAP,..) Audit & Self-testing Continuous check of all processes and detection of inadequacies Cooperation with all departments LEADERSHIP CUSTOMER 5

6 Characteristics of the company's environment and business Management's expectations, orientation and operating philosophy Controller's motivation, personality and interpersonal relationship with management Factors influencing controller involvement Sathe Vijay, 1982, The Controller's Role in Management 6

7 Controller's motivation, personality and interpersonal relationship with management Personal Qualities Technical Competence Communication Skills Business Acumen Customer Knowledge Interpersonal Skills Factors influencing controller involvement Sathe Vijay, 1982, The Controller's Role in Management 7

8 Controlling within the company / Expectations of the management Understanding business Model, capture, investigate, communicate cause-and-effect relationships Spanning strategy, processes, and projects Explore the consequences of different alternatives / scenarios on all levels Forecast appropriately Understand synergies (outsourcing, shared services, M&A) The confidence to select a few indicators, leave out many, many more, and still sleep at night! 8

9 Management's expectations, orientation and operating philosophy Controller's motivation, personality and interpersonal relationship with management Factors influencing controller involvement Formal or informal authority: Management has to accept controlling Controlling conciousness! Career paths of management Financial expertise of management Management by Targets Acceptance of continuous change Planning process established Sathe Vijay, 1982, The Controller's Role in Management 9

10 a Planning Process: Forces you to define clear targets (what are the targets, not how do we operate correctly) Forces you to think in interdependent systems (integrated planning versus egoisms) Triggers flexibility (continuous change requires a quickly reacting system and action plans) Forces you to take probability assumptions into account (no security in the future) Egger, Winterheller, 2007, Kurzfristige Unternehmensplanung 10

11 Controller's motivation, personality and interpersonal relationship with management Characteristics of the company's environment and business Management's expectations, orientation and operating philosophy Concern about financial reporting & internal control Level of trust of corporate executives in their managers Factors influencing controller involvement Sathe Vijay, 1982, The Controller's Role in Management 11

12 Four Types of Controller Roles: ROLE TYPE CONTROLLERS ROLE INVOLVED CONTROLLER INDEPENDENT CONTROLLER SPLIT CONTROLLER STRONG CONTROLLER High emphasis on the controller's managementservice responsibility, low emphasis on the financialreporting and internal-control responsibilities. High emphasis on the controller's financial-reporting and internal-control responsibilities, low emphasis on the management-service responsibility. Split the controller's role and assign the management-service and financial-reporting/internal control responsibilities to different individuals. Assign both management-service and financialreporting/internal-control responsibilities to one individual and place high emphasis on both of them. Sathe Vijay, 1982, The Controller's Role in Management 12

13 Four Types of Controller Roles: High SERVICE Focus on Reporting and internal control Independent Low Strong Split Involved High Focus on Management Support LEADERSHIP Sathe Vijay, 1982, The Controller's Role in Management 13

14 Business partner who can still act as critical controller! 14

15 Focus on Management Support Focus on Reporting and internal control Business partner who can still act as critical controller! 15

16 Business partner who can still act as critical controller! Deloitte Mastering Finance in Business

17 Controlling within the company / Expectations of the management What does management ask for? Business controllers who understand business Business controllers who look forward Business controllers who can communicate strategy Business controllers who can communicate at all Business controllers who act as change agents Business controllers who are not spineless! Business controllers who can act constructively in teams Business controllers who can support value creation Business controllers who can transfer knowledge Business controllers who can innovate 17

18 Controlling within the company / Expectations of the management What does management NOT ask for? Business controllers that would be cheaper Business controllers who do not know accounting Less business controllers 18

19 Controlling within the company / Expectations of the management Some recent trends in Finance More regulated environment (IFRS, SOX, ) More focus on risk management and controls More involvement in performance management More focus on future, planning and uncertainty More part of the business / management team (not just service provider) More proactiveness and reaction speed More active role as a change agent and coach More complexity and uncertainty Less resources and time per task & responsibility area 19

20 Module 1 Controlling within the company / Expectations of the management 20

21 Controlling within the company / Expectations of the management From Bean counter to Business partner Producer of reports Reporter of history Analyzer of facts Service provider: info for management Budgeter Number mgr in strategy process Holder of no-ones-tasks System and statutory oriented Interpreter & user of info & reports Analyzer of future (products, customers, risks, environment, company, competitors One of the decision makers Searcher of value-adding opportunities and challenger of strategies Change-agent, coach and communicator Business- & Customer orientation 21

22 Controlling within the company / Practical implementation How can the Controlling be implemented within a company? Example Stora Enso: CFO Karl Henrik Sundström Group Accounting BA and Group Reporting Accounting Services Group Business Controlling Marjaana Alho Pasi Kyckling Rhea Pörsti-Lackman Martin Ros Building Solutions Matti Mikkola Controlling Albert Sickl CLT Operations Johann Hochegger Northern Europe (Fin,S,N,Dk,Baltic) Janne Manninen Western Europe (F,E,P,BeNeLux,UK,Ire) Mika Kallio Central/Eastern Europe (D,A,CH,I,Cz,Sk,Pl,Slo,HR) Gernot Weiß 22

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24 Appendix Questions for the CFO Organization What is the appropriate role and boundaries of the CFO organization in relation to the business as a whole? How to efficiently cope with increasing and more complex regulation, norms, governance codes, sustainability reporting, risk management, stakeholder relations additional pressure from and to external stakeholders? How to design management control systems control models, KPIs, budgets, transfer prices, incentives etc. that are aligned with and support the business strategy both as implementation and as transformation How to help the organization to internally make better business decisions How to guard against risks and losses keep control and risk management How to design, run and develop/maintain financial processes and transactions efficiently timely and with high quality Implementation Issues in the CFO Organization How (and how far) do we standardize financial processes, reporting, language & communication etc.? How do we maintain the standards? What do we outsource, what do we centralize, what do we leave decentralized at business units? How do we make sure that the finance function understands the business (processes, strategy etc.) and that the business people understand finance (for efficient communication & decision support)? How do we make sure that the finance organization is sufficiently well and early involved in business planning and strategy development at all levels, so as to be able to effectively support and design the management control model? How do we organize the finance function as an efficient knowledge organization? What are the necessary competences, people, career paths etc.? How do we ensure that the finance function remains at the competitive edge and does not stagnate, adopting best practices and innovations as they emerge? How do we make sure that the expectations and needs from operational management / the rest of the organization are aligned and understood in the same way by everyone? 24