CFO Awards winners prove their value to their companies
If people inside or outside the business community didn’t understand the importance of chief financial officers before the accounting scandals of the 2000s or the financial meltdown of 2008-09, they certainly do now.
In many respects, CFOs serve as a corporate SOB Squad, as in save our bacon, because the really good ones not only know how to peer into the future, they are also adept at keeping business organizations, especially ones operating in heavily regulated industries, away from trouble.
Indeed, the smarter companies give their CFOs a place at the table and make them an integral part of the management team. “If you are going to be an effective CFO, you should be the strategic right-hand advisor to the CEO,” says John Hecht, president of WPS Bank in Madison, who served as a judge in this year’s awards program. “It’s so vital that any truly leading organization needs to have their top financial executive sitting at that table, with a voice. It’s important to the success of any company.”
Surprisingly, not every business organization feels this way, and so IB launched its CFO Awards program in 2013 to recognize the contributions of the men and women whose fiduciary judgment can make or break a business. Inside these pages, you’ll not only meet our 2014 award winners, you’ll also learn why they are so important to the success of their respective organizations.
This year’s winners include CFO of the Year Tim Stadelman, J.H. Findorff & Son Inc.; Bruce Berndt, Berndt CPA LLC; Marla Frank, Frank Productions; Joyce Behrend, Independent Living Inc.; and Steve Hetzel of the University of Wisconsin Extension’s Continuing Education, Outreach, and E-Learning Division.
We’d be remiss if we didn’t extend special thanks to our panel of judges. In addition to Hecht, they include Michael Carr, CFO of Naviant Inc., and Shauna Gnorski, senior vice president and chief administrative officer of First Business Financial Services.
CFO of the Year & Large Business CFO
Tim Stadelman • CFO, J.H. Findorff & Son Inc.
For brilliantly managing both the finances and risks of J.H. Findorff & Son, a longstanding company operating in an industry that is inherently cyclical, Tim Stadelman is IB’s 2014 CFO of the Year.
In construction, risk is inherent in everything from soliciting bids to negotiating contracts to managing projects. For that reason, fiduciary matters are not just the financial department’s responsibility, but also a concern of the entire operation. That reality sunk in following the Enron and other accounting scandals of the early 2000s. It was reinforced during the financial meltdown of 2008-09, and for Findorff, it was cemented during the company’s ensuing rebound.
“Certainly, the CFO is integral to that, ensuring that everything is in bounds,” Stadelman said of the growing importance of his role. “The accounting side of the business sometimes is blocking and tackling because it’s the structure that ensures everything else can happen. But you’ve got to have in place the [internal] controls to manage the dollars so you can go about your business. It’s about having checks and balances.”
Identified by President Dave Beck-Engel as a critical member of the Findorff executive team, Stadelman has been with the company for 25 years, including five eventful years as CFO. They have been eventful because of Stadelman’s contributions in this economically challenging period, which presented existential threats to some commercial builders. Indeed, it was Stadelman’s work during this difficult period that most impressed our CFO Award judges. “Findorff, in general, has a lot going on in the Madison community, and I can only imagine what that means for making everything work behind the scenes in the CFO capacity,” noted one judge.
“It really took somebody with a lot of conviction and foresight to first understand how to survive, but then going beyond that, how to thrive afterwards,” remarked another judge.
For starters, Stadelman was aggressive in reducing overhead by more than 13% when construction markets, and revenues, declined in 2009 and 2010, but it wasn’t all about the budget axe. He was instrumental in the company’s decision to continue investing in technology and staff. As a result, Findorff hired new employees when other builders were downsizing and conducted training when the staff’s workload was light. And by taking advantage of the slower times to update processes and technology tools, Findorff became better and more efficient when opportunities resurfaced.
What struck judges about Findorff was that it was conservative enough to remain fiscally viable but also continued to invest money in the right places. Those places included an enterprise resource planning system that is reducing duplication and driving greater efficiency, and a spinoff technology business, the already profitable TURIS Systems, which provides opportunities for Findorff to continue serving companies it has erected buildings for. TURIS is not only continuing to develop business information modeling software, or BIM, it also has a number of business systems under development, including facilities management software that should produce a strong revenue stream.
By spinning the technology function off into a separate company, TURIS was given the autonomy to be creative, and Findorff, an employee-owned company with $404.5 million in annual revenue, was able to protect its assets.
For one judge, TURIS is an innovative example of how CFOs can monetize different assets. “What Tim was doing was living that out and making sure that they had the right people for what they correctly saw as opportunities that were going to arise when the dust settled,” he said.
Twenty-five years ago, Stadelman left accounting to take on a decision-making role, and he’s never looked back. “Good organizations look at the CFO as one of the important pieces to making good leadership decisions, good long-term decisions, for the company,” Stadelman said. “Every organization views the finance part of the operation in different ways. I’ve been fortunate that Findorff has always looked at the CFO role as integral to its long-term success.”
Small Business CFO
Bruce Berndt • Owner, Berndt CPA LLC
Bruce Berndt readily acknowledges that he gave his CPA firm a makeover, and his style of makeover madness could well be the latest example of a disruptive business model as it spreads to the entire accounting industry, or at least the small business segment.
That makeover began with a strategic decision to abandon the audit-review function and focus on an interactive, cloud-based accounting service known as BOSS, or Back Office Support System. Berndt had seen how technological advances enabled firms to serve clients in real time; he saw the leading IT providers moving from the desktop to the cloud, and he realized his firm had to move along with them.
Selling the idea to existing clients was not that difficult, especially when he could promise to provide information quicker, faster, and cheaper and continually interact with them with the help of mobile apps. “Setting up the BOSS model allows us to work with our entrepreneurial clients and get information to them to make business decisions much quicker than the traditional model,” he explained. “It’s actually been a great transition with existing clients but also with new entrepreneurial clients because so many run their business from an iPad or an iPhone. They don’t have a traditional desk, so that allows us to interact with them in real time with current information.”
One judge remarked, and Berndt agreed, that BOSS permits Berndt CPA to serve as a virtual CFO for small business clients that cannot afford to have an internal person handle accounting duties, and it also enables the firm to serve as a 24/7 business advisor to clients. Revenues have tripled with this forward-looking approach, and Berndt believes no CPA firms will be able to serve small business clients without their own version of BOSS.
“It’s a decision for CPA firms that have anywhere from five and 20 employees, because if you’re going to do audits and financial reviews, then that [traditional] model is the one you have to follow,” he said. “This new model is all-in, and we’re going to be cloud-based when serving clients, and so it’s turning the process 180 degrees.
“CPA firms are either going to have to do this or not be involved with small business clients.”
Another judge, who was a CPA in a past business life, lauded the way Berndt embraced not just a new cloud-based service model but also the more intense client advising and partnering that comes with it. “Moving to the cloud-based model and putting financial information at the fingertips of his clients whenever and wherever they need it, that was very impressive.”
Medium Business CFO
Marla Frank • CFO, Frank Productions
“Who would’ve thought Madison had a concert-promotion company with almost $40 million in revenue.”
Marla Frank and her family of co-workers at Frank Productions are accustomed to flying under the radar, even with impressive business growth over the past decade. The above comment, made by one of the judges in our CFO Awards program, doesn’t surprise her because the family-owned company has traditionally done a lot of work outside of Madison. Without owning a local entertainment venue, there is no reason to market the promoter, so the company markets the shows.
Given Frank’s involvement in an effort to develop and finance a 2,500-capacity music venue in the 1000 block of East Washington Avenue, that could all be changing. A 2,500-capacity space is being pursued because the Madison market doesn’t have a venue where Frank Productions can place bands that can sell that many tickets. “As a result, those bands are going to other markets like Milwaukee and Chicago and Minneapolis,” she explained. “They are bypassing Madison.”
She’s also the bandleader when it comes to managing company finances and mitigating risks associated with artist and venue contracts. As a result, Frank Productions has gone from a single entity with about $1 million in annual revenue to a multi-unit company with $37 million in revenue — and growing. There is Yellow Silo Business Management, a financial management subsidiary that manages the financial affairs of performing artists, including Baraboo’s own PHOX. There is the Nashville-based ABI LLC, a sister company that manages the careers of performing artists, including the likes of guitarist Tommy Emmanuel and the rock band SIMO. Then there is National Shows 2, a concert promotion division also located in Nashville.
None of this would have been possible without strong financial management, and that’s where Frank comes in. She is credited with designing and implementing the financial management structure that made this surge possible and is responsible for a contract review system that has given Frank Productions the lowest premium rates in the nation for concert liability insurance. This insurance accounts for approximately 1.7% of the company’s concert costs, well below what competitors are forced to pay.
Program judges noted that Frank’s contributions are crucial from both a financial and strategic perspective. “It’s very apparent that Frank has been key to that family business,” noted one judge. “For them to have the success they’ve had and for the period of time they’ve had it, it’s inspiring to see.”
Nonprofit Organization CFO
Joyce Behrend • Independent Living Inc.
In Joyce Behrend’s line of work, peering into the future is essential. Behrend is the financial “what if” person whose exacting standards steer Independent Living away from trouble, yet she’s enough of a team player to champion projects, too. She’s the person entrusted with financially visualizing projects, and she does it for an organization that has several moving parts.
Independent Living, a local nonprofit organization that serves seniors and adults with disabilities, is not your typical nonprofit. It has seven corporations in three core business areas: skilled services such as personal care and Meals on Wheels; independent home health care (Medicare-certified); and a housing division. She therefore has layers of increasingly complex regulatory compliance and reporting to attend to.
One CFO judge said the organization’s healthy reserves and cash flows, and recent strong growth and clean audits, inspire confidence with investors and others who donate gifts and other services. “She’s a very strong CFO in terms of [internal] control,” said one judge. “It’s important to forecast in her business, where the demographics lean hard toward people living longer or wanting to maintain independent living for as long as they can.”
While the judges cited her financially conservative good judgment, not every hard decision involves cutting programs. A perfect example is when the recession hit and Independent Living had to take a hard look at programming. The knee-jerk reaction would have been to automatically cut or eliminate small programs that aren’t generating much revenue, but Behrend prefers to step back and look at what programs, even loss leaders, are actually contributing to the organization.
Independent Living’s transportation program is small and doesn’t generate much revenue, but it serves as a gateway for bringing people to the organization. “It may be small and it may be a loss leader, but you can’t necessarily pull the plug on it,” she explained.
Sometimes, Behrend feels compelled to champion new ideas. Independent Living is in the process of developing Tennyson Senior Living Community, which would be its first memory care/assisted living facility for people with dementia who need a higher level of care. While enthusiastic about meeting this community need, Behrend occasionally has to send people back to the drawing board when the numbers don’t make sense.
“My role here is to not only be involved in knowing what’s going on day to day,” she said, “but also to be able to look toward the future.”
Public Organization CFO
Steve Hetzel • CFO and assistant dean of business services, UW Extension’s Continuing Education, Outreach, and E-Learning division
When it comes to handicapping, Steve Hetzel is hard to top. Hetzel, CFO and assistant dean of business services for the University of Wisconsin Extension’s Continuing Education, Outreach, and E-Learning division, might be CEOEL’s secret weapon because of his expertise in predictive financial modeling.
The division’s purpose is to advocate for adult and nontraditional learners and work with the 26 UW System campuses to offer online bachelor’s and master’s degree programs. Hetzel’s expertise in predictive financial modeling — he helped develop a bachelor’s degree program on the subject — has become the foundation for key strategic decisions, especially in program development and capital investment.
He has helped leverage more than $8.2 million in the development of 27 online programs that have attracted more than 50,000 enrollments and $57.4 million in university revenues. Whether it’s the bachelor’s degree programs in organizational leadership, nursing, or health information management, Hetzel has played a key role in forecasting whether they had a snowball’s chance of long-term success.
With 180,000 lifelong learners enrolled, it’s important to get it right. “We use financial modeling to guide us in making decisions as we work with the campuses to develop programs,” he explained. “There is a financial component to that.”
The models are based on assumptions about enrollments, what people are willing to pay in tuition, and projected break-even points. On average, it takes between three and five years to reach the break-even point, even with effective marketing and outreach. When the programs become profitable, revenues are shared with the campuses.
CEOEL uses its financial models as working models to track actual results, and those models are updated to improve future assumptions. Some programs have a certain shelf life, while others, like the bachelor’s in nursing program, continue to grow because of their ongoing societal value.
Predictive modeling has evolved with better data, but CEOEL drives improvement by emphasizing financial knowledge throughout the organization. That should help new online efforts like the UW Flexible Option, a self-paced program for adults that consists of competency-based degree and certificate programs in health care, technology, and business.
“We’re seeing a substantial amount of interest in the program, but keep in mind it’s a different format than your traditional face-to-face or even online program,” Hetzel said, noting it puts additional responsibility on students to master content. “It takes time to build steam, but students seem to be adjusting nicely to the program and its structure.”
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