Deon Fredericks, Group Financial Director (FD) of Famous Brands Ltd on leading through change.
This Visionary CFO Series interview is proudly brought to you by A2X.
Deon grew up in Kuilsrivier, just outside Cape Town, and attended high school in the disadvantaged community of Elsies Rivier in Cape Town where examples of professional success weren’t many and mentoring and career-grooming opportunities were few.
He wanted to be a CA because any activity in the organisation has a financial impact. “We say ‘Cash is King’ because the numbers are so integral to business success,” he says.
On the back of a successful Visionary CFO Series in 2021 and 2022, A2X has once again partnered with CFO South Africa to bring you a series of interviews highlighting South Africa’s best and brightest CFOs, their insights and challenges. Find out how they help lead some of South Africa’s most successful companies in this bi-weekly interview series.
Building a great career
He became the youngest senior manager at Telkom in 1993, an experience he says was daunting, but was also a springboard for his future success.
He says that a big opportunity was participating in Telkom’s huge transformation, which was set in motion to establish the financial stability and sustainability of the Company. Under the leadership of Sipho Maseko, he was part of the finance team that helped Telkom transform from being a monopoly into being a company that can successfully compete against formidable rivals.
“It was very challenging,” he recalls, adding that, “The experience came with many successes and learnings, one of the key takeaways is that culture change is critical, because if you keep doing the same thing, you get the same result. It was important to make sure everyone is on board, aligned and working towards the same goal. He says that a paradigm shift is key to being successful and says that at Telkom it started off with changes such as being cost conscious and prudent about all cost efficiencies (even the small ones), before scaling into bigger shifts and changes.” In addition to this, managing your greatest resource, people, is important as success is achieved through people. A company is only as good as the cohesive management and support team it creates to drive the strategy.
He says when embarking on a major business change, leaders need to establish clarity from the start and set the example. Tone at the top is critical especially in relation to Ethics. He explains, “We had push back from management and employees but made a case until people bought in and understood the reality of the company’s situation, the benefits and the non-negotiables. It was fulfilling to be able to reinvent the company and, in the process, yourself, to achieve something special.” The good work was recognised by the industry in Telkom’s 2016 Annual report, which was rated most improved and moved from Good to Excellent and in 2017 the school of accounting part of SAICA development rated them number one for creating best opportunities for young talent, all of which confirmed the investments were right.
Helping to enable SAA
Having helped Telkom become lean enough to compete with fast growing phone operators such as MTN and Vodacom, he was seconded to SAA to step in as interim Chief Financial Officer for a 12-month period. “I saw it as an opportunity to give back to the country. It was fulfilling and I had to understand how business works in public sector and adapt accordingly to achieve our objectives. Furthermore, to attract talent was very difficult and you had to bring the best available resources under the circumstances to assist the entity.”
Following a hiatus after the secondment, in August 2021 he came out of semi-retirement when he was requested to step in as Group FD of Famous Brands on a 2-year contract with the mandate to establish a high performing finance team and enable the placement of a new FD. He sees his role more as a mentor than that of FD. Famous Brands has started out as a family business which grew into a big corporate entity. The people were used to operating in a certain way that brought them success and yet, when transitioning to a bigger, listed entity, it is critical to improve controls and systems, and people need to buy into the journey. It’s important that employees understand their overall role, the process and procedures put in place to support them, and they need to be on board about doing business differently, as a listed company.
He says that, in his experience, it's essential to create an environment where people can make mistakes and learn from them, however you need to be clear about certain non-negotiables such as timelines and delivery.
Current focus - Creating growth through people
Deon says that when organisations are in challenging times, they try to do fancy things. He is currently rolling out a strategy which he has coined ‘Back to basics’ which is about making finance much easier specifically in the current difficult operating and regulatory environments ensuring that finance embrace the changes. He explains that “We are implementing a consolidation tool, which will make year-end reporting, management accounting, cashflows and projections easier. We are currently very excel driven, but that lack of automation creates significant risks and complexity. Our goal is to have an ecosystem that people can easily download reports and information from and where all our financial records, with all the businesses and subsidiaries, are integrated in one place.”
He says Famous Brands grew from a family business into a listed corporate entity and his team is busy with upgrading internal controls. “We are refining and mapping the critical controls taking into account the rapidly changing operating and regulatory environments and making sure that risk control metrics are right”, he says.
Deon also points out that it’s important to reflect on the learnings of Covid-19 and be sure that your organisation is fit for the purpose. “You want to make sure you have the right in-house skills and, looking forward, proper succession planning for the different skill sets including the appropriate training. If you don’t pay attention to that it can, in the long term, be expensive in today’s world where people are flexible and move between employment quite easily”. The experience of Covid – 19 clearly illustrates that one must be ready for anything and have sufficient flexibility and depth to adapt.
He notes that, in building a high impact team, leaders often find silos in businesses. Deon says he is committed to creating links between areas such as operations – allow them flexibility to do business and at the same time align with finance so that they understand and appreciate each other’s roles. “Make sure you have the right people in the right seats, align expectations with requirements and support it with the required investment,” he advises. Make the difficult decisions upfront, including moving people into right positions, providing relevant training, and exiting people where required.
Deon feels strongly about mentorship and building up the next generation of finance professionals. He has been chief judge in the CFO Case Study Competition, which is run by CharterQuest Institute South Africa. The initiative aims to groom high school and university students for the finance profession. Deon says the objective of the competition is to grow the next crop of financial talent including CFO’s and business leaders, equipping them with “beyond number counting skills” such as being entrepreneurial, analytical, critical, creative, and having emotional intelligence.