Related Posts

Outsourcing Has Yielded Mixed Results So Far, Says Molson Coors CFO

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

I’m down at the Hackett Group’s best practices conference in Atlanta and just finished a video interview with Stewart Glendinning, CFO of Molson Coors, on the topic of outsourcing.

While the video won’t be up for awhile, I can report that Glendinning wowed the crowd of 250 or so finance executives in attendance this morning with a frank keynote address on the subject.

He essentially warned the audience that outsourcing is hardly the no brainer that everyone – from Wall Street analysts to third-party service providers – makes it out to be.


While the CFO stood by Molson Coors’ decision to outsource most if not all of its information technology, finance and HR functions in 2008, he conceded that the arrangement has yet to live up to billing.

The decision followed the merger of Molson and Coors in 2005, which was expected to produce roughly $180 million in cost savings. And while outsourcing has helped produce some of that, Glendinning – who was appointed CFO of the combined companies two years ago – acknowledged the arrangement with its vendor hasn’t been all smooth sailing. (He identified the outsourcer by name, but I’m leaving that out just to avoid starting an argument between the two.)

As a result of higher than expected turnover, largely in the vendor’s Indian and Costa Rican operations, for example, some of the labor savings that the outsourcer promised have failed to materialize. Glendinning said annual turnover in those two locations has run as high as 100 percent.

As a result, the CFO said the company was “a little shy” of the savings initially projected for the deal, due to project scope and implementation costs. He said that he would have to revisit some of these issue once the contract comes up for renegotiation in 2013. “You have to keep taking cost out,” he said.

In addition, Glendinning said that during the ramp up phase the arrangement produced higher-than-expected error rates in certain financial processes, and those produced an unwelcome payables backlog that threatened the company’s supply chain. And while he said some of the fault was that of Molson Coors, Glendinning noted that the outsourcer failed to bring it to the company’s attention, largely because of what Glendinning described as “reticence” on the part of its Indian employees to challenge their client.

While Glendinning said Molson Coors’ move to outsource was “the right decision nonetheless,” he cautioned the audience that there are a host of issues that finance executives must consider before going forward with such deals.

In particular, he noted that unlike IT or HR, more complicated, “sensitive” financial processes such as pricing and customer management probably should not be turned over to a third party.

“It’s not black and white,” he said about the decision to outsource. “There is a lot of gray in between.”

Future CFOs, Partners Best Not Check Integrity at the Door

The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight–everything you need to help you prosper and enjoy the accounting profession.

A strong moral compass can give high-potential managers a leg up the career ladder, according to the results of a recent survey.

One-third of chief financial officers (CFOs) interviewed said that, other than technical or functional expertise, integrity is what they look for most when grooming future leaders. Interpersonal and communication skills also ranked high, cited by 28 percent of respondents.

The survey was developed by Robert Half Management Resources, a provider of senior-level accounting and finance professionals on a project and interim basis. The survey was conducted by an independent research firm and includes responses from more than 1,400 CFOs from a stratified random sample of U.S. companies with 20 or more employees.


CFOs were asked, “Other than technical or functional expertise, which one of the following traits do you look for most when grooming future leaders at your organization?”

Their responses:
• Integrity – 33%
• Interpersonal/communication skills – 28%
• Initiative – 15%
• Ability to motivate others – 12%
• Business savvy – 10%
• Other/don’t know – 2%

“History has shown time and time again the importance of ethics in business – even a single lapse in judgment by one employee can significantly affect a company’s reputation and its bottom line,” said Paul McDonald, senior executive director of Robert Half Management Resources. “Leaders who are principled and forthright inspire this same behavior in their teams, creating a culture in which integrity is a core value.”

McDonald pointed out that communication skills also are requisite as executives take on greater responsibility.

“Especially during difficult periods, managers must be able to promote open, two-way communication with their teams,” McDonald said. “Executives in companies that have moved successfully through the downturn understand the importance of listening intently to feedback from employees and are always on the lookout for this skill in potential leaders.”

Charlie Gasparino Suggests That Erin Callan Should Be Shaking in Her Designer Boots

“At least part of it is focused on the March 2008 capital raise where they went out and did a preferred deal. Erin Callan made some very positive bullish statements about Lehman. About how the nature of its finances would mean that it did not need more capital and three months later Lehman Brothers needed more capital and then came the decline of the firm.”

~ The Fox Business Correspondent/Ace Reporter insists that an announcement is “imminent.” That’s what the rumor mill says anyway.