Save money and create value? Property-savvy CFOs share insights and knowhow
On Tuesday evening, a small group of leading CFOs gathered for an exclusive dinner on one of the most exclusive pieces of real estate in Johannesburg: The Four Seasons Hotel, Westcliff. Given the complex relationship most large businesses have with property, it was an evening of far-ranging and sometimes unexpected conversation.
On legacies and clear strategies
Guest speaker for the evening, Kobus Gertenbach, CFO of Premier Foods, opened the discussion by sharing his own journey as CFO, and in particular, the key lessons around property. "There is an old joke about deal making that says, if you're wondering who the fool in the room is, there's a good chance it's you. This applies equally to the realm of property and I have always relied on expert insights around this core area," he said, tipping his hat to the JLL team, partners for the dinner.
When it comes to considering your property strategy as a CFO, there are some critical challenges to face: legacy property decisions, strategic versus non-strategic assets, and knowing that there is a world beyond your immediate knowledge and insight as a finance professional. Kobus was frank about the fact that as a CFO you often "inherit" property challenges. He said: "We can trace our roots as a business to a mill in Durban as far back as 1852, and as one of the leading baking and milling businesses in South Africa today, we have realised the value of core assets and worked through a number of legacy property decisions. The nature of bread is that it needs to be baked and distributed with great efficiency, and we realised we could lease practically all our property but that owning our bakeries was non-negotiable as it gave us control of upkeep, maintenance, development, and longevity."
Culture lives in the walls of a business
As businesses and the environments in which they operate change, so do their property needs. Luvuyo Masinda, CFO CIB Standard Bank, noted that banking was a hierarchical environment and the move to the highly-sophisticated Rosebank premises had, as one of its goals, to break down that natural hierarchy with more open and shared work spaces. "People were skeptical about the idea of hot desks or shared spaces and although I notice that people are clearly creatures of habit with many returning to the same work space every day, there is a much better sense of collaboration and engagement across teams and people," he said.
Many organisations carry hangovers of the past, with executive wings or dining facilities that no longer serve the culture of the organisation. "We made a change to our office space, pulling down the physical barrier between executives and the rest of the business," noted one CFO. "It was a popular cultural tenant of the 80s but we simply couldn't afford to work in the same way if we wanted to remain relevant."
IBM's Sandra Atkins-Sadler noted that the need for collaborative and effective interaction between highly skilled professionals was at the core of the IBM culture, and was very much a part of the thinking behind the development of their office space at 90 Grayston.
The future of property
"Buildings today are often smarter than their facilities managers," quipped Craig Hean, MD of JLL. The comment raised a laugh but the conversation moved swiftly to smart buildings with predictive abilities and energy-saving technology. Buildings that have the ability to geo-map employees on their journey to the office and trigger the building to open more parking, light more office space and even ensure the right coffee was being brewed on the right floor in time for the arrival of the employee who would be housed, for the day, on a floor different from yesterday, are already a reality rather than some science-fiction concept.
"You have to step back and consider the impact of technology, not just on your business but on the building itself," said Kobus. "Baking science has moved forward at light speed, allowing us to bake up to 16,000 loaves an hour in a single bakery. Very few buildings are designed around or capable of carrying this baking capacity and we are very conscious of trying to future-proof our properties."
The CFOs were generally in agreement that it is very difficult to future-proof anything. Property, because of its long lifecycle, is particularly challenging. For CFO Awards nominee and Omnia CFO Wayne Koonin, technology is one way to help your property assets working for the business. "We have our head office in a 20-year-old office park and although it works for our disparate business units, it isn't always the most efficient option. We have tried to solve this challenge with the use of great technology and it works for us now," he said.
With rapidly changing work forces, improved technology in the hands of employees, and growing pressure on the company balance sheet, the property challenge remains a very real and complex issue for CFOs. This dinner only scratched the surface of this broad subject but there is no doubt that CFOs who have spent time getting their head around the changing nature of property are adding immense value to their businesses.