Corporate Restructuring – A Chief Financial Officer’s diary

January : I can’t believe I worked throughout the entire Christmas season so that we could close the 2010 financial accounts on time. The rest of the entire sodding management executive committee (ExCo) went on leave, leaving me to take on the roles of acting CEO, acting Human Resources Director, acting Operations Director and anything else that that was up for grabs. At least our 2010 numbers were 50% up at PBT level due to a good sales year and tight controls on variable costs including delaying the ExCo fringe benefit roll out that was supposed to kick in last year. I didn’t make too many friends as a result.

March: The words I-TOLD-YOU-SO are running around my mind like the ticker tape at the Nairobi Stock Exchange. Our worst-case scenario as positioned during our strategy meeting last August has come to pass. The competition dropped their rates and based on our scenario planning our income will take at least a 40% hit if the product prices are slashed in Q1 and 30% if the prices are slashed in Q2. It’s time to slash and burn through the fat that I’ve watched us put on over the last few “golden” years.

April: Those chaps in sales are nothing but a bunch of knuckleheads. End of March customer numbers are down by 10% but their ExCo reporting shows 5% since they are delaying to close dormant customer accounts. The CEO seems to have bought that story hook, line and sinker. At this point the CEO will buy anything, I’ve never seen a man whose head is deeper in the sand than any ostrich I know. I work on a revised annual forecast that shows my worst-case scenario numbers being achieved. I also begin working on a recovery plan that requires a culling of the head count. I play really good squash this month as my mind is on overdrive. There’s something delightful about smashing a ball hard against a wall that somehow gets my creative juices flowing.

May: The Ostrich can’t seem to make up his mind about what needs to be done to ensure our profits don’t take a dip this year. The answer is really in two words: CUT COSTS. I know a good Enterprise Resource Planning system that we can take on which cuts down our inefficiencies by half thus reducing our back office headcount needs. I table this to the Ostrich. He actually looked like he was going to be sick. I now know why ostriches don’t fly.

June: The Ostrich is obsessed with some inane price war, which in my view, we simply can’t win. Why won’t he see that the answer is really in two words: CUT COSTS. The Chairman of the Board pulls me aside for a quiet word. I’m the frontrunner in the succession planning for the CEO. He asks me to keep this quiet, as they don’t want the Ostrich to know that they are looking for a possible replacement. My squash game is getting better this month. I found that if I imagine the ball is the Ostrich’s head, I’m able to hit it better.

July: My analysts generated the numbers I needed to convince the Human Resources Director – HRD – that our headcount was generating a lag on the company’s performance. I showed her that Revenue per Employee has reduced by 20% when the truth of the matter is that it has reduced only by 10% and I was using the Revised Annual Forecast numbers rather than actual June 2011 numbers. If I don’t pad up the numbers no one will listen to me. I use the HRD to help push my agenda, as Ostrich has some inexplicable confidence in anything she says. I came up with the brainwave of the sale and leaseback of our office building to the pension fund to finance the major retrenchment we need to get our numbers on track for the five-year strategic plan. The Ostrich mumbles something about Board approval and I notice him wiping his limp, sweaty palms on his trousers.

August: The Ostrich is a lily-livered milksop. I had carefully walked him through the presentation that I would make to the Board on how we should reduce headcount by at least three hundred staff or 30% of total employees. The Board was livid with Milksop and myself for letting things come to this point and I didn’t even hear a whimper of support for the retrenchment plan from him. I had the foresight to produce a presentation I did three years ago where I had predicted that if we carried on our excessive hiring policy it would eventually hurt our bottom line. Some people call it covering your backside. I call it insurance. Milksop was not even paying attention by this time and had bolted out of the boardroom holding his hand to his mouth. I caught the Chairman giving Don Corleone (he-who-represents-principal-shareholder-and-must-be-worshipped) a strange look. I smile inwardly and buy a new squash racquet as a treat to myself.

September: Milksop doesn’t know how to handle drama and takes off on a mysterious business trip as retrenchment letters are handed out. He appoints me as acting CEO. As if anyone else can act in that position anyway. I steal into his office when his personal assistant steps out for lunch and try his seat on for size. Hmm, with a few adjustments I can get used to this office.

December: I’m the only ExCo member at work this month. Again. The Chairman and Don Corleone have told me that my ability to predict trends, cut costs and make tough decisions made me the obvious successor early in the year. Though he doesn’t know it, next month Milksop will be asked to take on another role within the larger group, what we refer to as putting out to pasture. Dice it or slice it, a pretty good year for me!

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