As part of our Modern Finance series, we asked Sam Paik, CPA, CGMA, and Vice President of Finance for Luxury Brand Partners (LBP), to talk about his approach and philosophies in regards to developing talent and relationships, financial planning and processes, and the importance of technology and data analytics to achieve success in today’s busy business world.
A large cruise liner on the open sea is quite the spectacle. It can hold 3,000 people, stand 200 feet high and 1,200 feet long, and travel as fast as 25 knots. However, before a cruise liner can be set to sail it needs to be designed, and built, properly. If the proper planning and execution steps are not taken, then the cruise liner may not achieve seaworthiness – much less evolve to increase passenger loads, amenities or operational proficiency. And failure to evolve is devastating to any cruise liner looking to compete.
Businesses can be viewed similarly. When a company is cruising – no pun intended – the market admires things like the company’s share price, sales growth and expansion of footprint. But a weak infrastructure will impede the company’s ability to progress further. Smart leaders structure a company for success – they bring the right people on board, implement the right business policies and solutions that help scale the company, and encourage a culture where decisions are made with both gut intuition and supporting data.
1. Right Personnel Help Right the Ship
The character Michael Scott from the television show “The Office” had it right when he said, “A good manager doesn’t fire people. He hires and inspires people. And people will never go out of business.” In the face of tech and automation, it’s still paramount to recruit and retain the right talent who will allow the company to be dynamic and focus on business challenges. When it comes to identifying and recruiting the best team, I look for what I call the “4 C’s”: Character, Commitment, Culture and Competence.
- Character – Is this candidate someone who possesses morals? Is he or she someone you can be proud to be associated with inside and outside of work?
- Commitment – Is this candidate dedicated to his or her profession? Is he or she career-minded and does he or she strive to get better every year?
- Culture – Will this candidate fit in well with the company’s culture? For example, is his or her energy, sense of humor and mindset in sync with the company philosophies?
- Competence – Can this candidate perform the duties in the job description?
2. Effective Processes will Increase Productivity
Once the right people are in place, make it a point to review existing processes, annually, across all business functions, and pick at least one process to positively change. A positive change should meet the following four criteria:
- The change will result in better job efficiency, which leads to increased productivity.
- The change will result in a positive financial contribution to the bottom-line.
- The change will still result in meeting business objectives when the volume doubles.
- The change will not compromise internal controls designed to mitigate fraud or error.
A positive process change may result in a need to find new tools to help achieve all four requirements. For example, at LBP, one low-hanging fruit was the opportunity to streamline the expense-reporting process. When I joined the company, our sales field team was still reporting and submitting their expenses following a manual process that resulted in unnecessary financial burden on the salesperson, lost selling time due to inefficient manual processing, increased direct costs of postage and filing, and delayed financial reporting. In my past life I used Concur and knew I had to implement their time-saving business processes for our company. Concur Expense’s cloud-based submission, tracking and reporting capabilities provided the perfect solution for our remote field personnel.
Here’s what Concur Expense did for us:
- Increased employee productivity by 10%
- Cut down check processing by 99%
- Reduced postage and filing costs by 12%
- Reduced 35 days of processing to 5 days
- Made insight on expenses available weekly instead of monthly, which resulted in better management reporting and allowed us to pivot timely
Ultimately, Concur enabled our team to do the following:
- Focus efforts on selling and growing the business, rather than spending time on administrative tasks that did not result in business enhancements
- Maintain sound internal controls of review and approval
- Identify areas to control costs through in depth data and reporting.
3. Use Data to Find Hidden Opportunities
If there are sound business policies and processes already in place – which is a required focus if you want to scale your business – a business can focus all of its intelligence and effort on what is ultimately important: growing the operations.
Successful companies have one thing in common: they base their decisions on a blend of intuition and data analytics. Today, more than ever, businesses need to be tech-savvy, data minded and have the ability to find opportunities in emerging markets.
Identifying areas of opportunities and risks over the next few years is especially critical for CFOs, and data helps develop that vision. Value can be derived from most any data set – if it’s looked at with the right goggles. Take T&E for example. A company can simply choose to view T&E as a cost of service and accept it if it’s within a certain percentage of sales, or it can analyze the data to determine whether a better, more efficient plan of action should be taken. To build a successful business and brand, you need the right ingredients of people who fit the company culture, in addition to the necessary data insights and process to make the right decisions. Once we had the right people, Concur Expense provided us with solid management reports and data to find additional productivity, cost reduction opportunities to ultimately change our travel policy.
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