Situation:

Cadre was invited to assist a specialty construction contractor who had experienced excellent revenue growth, but less impressive profitability growth.   One of the key challenges was to instill focus on profitability at lower levels in the organization.

Business Challenge:

Cadre spent time with key players and learned that the drivers behind profitability were not shared within the organization and often were nothing more than “an experienced gut feel,” which was substituted for clarity informed by data. The company’s CFO had been a long-standing confidante of the CEO.  The CFO worked part time and was more focused on managing payroll, closing the monthly accounting statements and daily payables rather than on more strategic initiatives.

Solution:

Upon the direction of the company’s owner, Cadre worked with the CFO to establish performance measurements. While the CFO played an important role in this process, he did not wish, nor did he have the “bandwidth” to help operating executives and project managers use these performance tools to improve the management of profitability.  The CFO proposed a program that lacked both training and accountability.

Cadre realized that the CFO lacked the interests and the skills to lead this program, but he still could play an important role in other managerial and accounting functions.   Given the longstanding relationship with the owner and the high level of trust, it was a delicate issue.  Cadre crafted a reorganization of the financial management which gave the CFO an important portfolio of responsibilities but strategically assigned performance management to another professional. Further, the implementation of this plan was purposely divided into phases so as not disturb the function of the organization.

Results:

Because the business owner and Cadre defined metrics of success, evaluating this strategy proved to be more straightforward. It enabled the CFO to continue and excel in areas which gave the business owner comfort.  It instilled a higher level of accountability and a more focused concern on profitability among those who actually managed project profits.