A good CFO maintains discipline in the organisation, says Mike Benfield of Macsteel Service Centres SA
“I want people to think logically about the business and pose questions to effect change. People must be challenged and held accountable to achieve the business’s objectives,” says Mike Benfield, Group CFO of Macsteel Service Centres South Africa.” Benfield, who has been in his post for 18 months, has enjoyed a successful and diverse career that has seen him occupy finance roles for companies including Metorex, Bateman Engineering, Norse Air, Super Group, Investec and Ster-Kinekor, after completing articles at Arthur Andersen. Having made a choice to study finance over engineering, he says he has no regrets, and believes it is those aspects of his personality that are interested in engineering and the challenges that it presents, that help him to be a better finance person: ‘It helps me move across the corridor to the operational side, and gives me more of an interest in the other areas of the business. I would be unable to add value from a finance perspective without a good operational understanding of what makes the business work.”
Tell us in brief about your current role. Is it focused more on finance or on strategy?
"As a CFO, you get involved in all aspects of a business. Finance is my background and my strength. I enjoy getting involved in the business and focus on the big picture; however, I do leave the mechanics to the accountants. I like to think of it as 50-50 because strategy merges into non-financial operational matters. I think of myself as a leader of people and processes and ensure we are getting the business to work efficiently and effectively. The reality is that finance underpins everything we do."
"The challenge in running any business is ensuring there's alignment across all levels, and that the people below you understand and believe in the ideals you're pushing for, and that you get traction and move forward successfully."
How closely do you work with the CEO and what is this relationship like?
"I'm subordinate to the CEO, Hannes, from a reporting perspective, but we're really part of a team of two. At Macsteel, we report to an executive chairman who lives outside of the country, so we interact with him over the phone and discuss direction, strategy and market. The CEO and I have clearly defined roles but we do try and spread the load and bounce things off each other. He's been at Macsteel 30 years and has much wisdom to share from an industry perspective. The relationship is a good one."
Tell me about your team. What are its strengths, what are its shortcomings and what are you doing to address these?
"I believe that you always rely on the team below you and that teams are built up over time. Macsteel has a lot of loyal staff, many of whom have been here for 25 to 30 years. It can be both a strength and a shortcoming in changing times. We have a centralised back office support system, so the team represents both head office / shared service staff and finance managers at the business unit level."
"The team's deep institutional knowledge is a strength. They know their day jobs very well. Their technical abilities are top notch. But they need to be change agents and business integrators because they have a unique position in the business. They should be raising red flags - that's the business integrator approach - and create debate at the right levels in the organisation, because they can see the impact and understand where it's coming from. They need to do more of this. They need to get out there and create relationships with the business internally and externally. Through that they can energise themselves and feel part of the wider business."
"I like to think that I encourage people to think logically about the business and pose questions to effect positive change. I want to introduce this dynamic. People must be challenged and held accountable to achieve the business's objectives. It's a soft skill and I think I do it quite well. Also, I think my manner and style allows for open and honest debate, though I am constantly reviewing the team and their roles to ensure we have the best structure and career direction for everyone who reports to me."
What is your leadership style like? What makes you a strong and successful leader?
"I am open and honest. Being approachable helps break down barriers. I believe that good communication is essential. Creating a functional working environment is a key strength of mine; one where people feel comfortable. I work hard to create alignment with everyone, so that they feel part of the process and the business. This allows people to feel energised and that they're making a difference; they need to see the results of the energy they are putting in. I get involved in a lot of things - it's what I really enjoy about the role. It's a full function role. Also, I am always clear about my thoughts as well as direction on where the company at large as well as the team is and should be heading."
Let's talk about the company's ICT strategy and digital transformation.
"In my previous three roles, I've always had IT report to me. IT is a lot about getting the infrastructure right, and getting the information systems right. Here, we are getting into a bigger business, more geographically spread, off an SAP platform. The steel business is an old one and we need to be relevant. Through interacting with service providers such as Dimension Data, EOH and BCX, they've opened up my eyes around how ICT can benefit an organisation. I'm now asking, how can we apply the 'fourth industrial revolution' (digital transformation) to our business? Some 10 percent of our business is cash sales. How can we improve that through online purchasing, through e-commerce? We need to be more productive and sell more steel per man hour, and automate as much as possible. Digital transformation and the ICT strategy is part of this. We need to consider what we can do differently tomorrow to improve our profitability because, in order to grow profitability, we have to grow market share - it's the only way we survive in a stagnant economy. ICT and digital transformation is certainly one of the big levers we can pull to help transform the business. We continue to spend a lot of money on ICT, so we need this spend to generate a return."
What does the company's risk register look like?
"It's a normal South African-looking risk register, so it includes supply disruption, labour unrest, forex volatility, economic growth and so on. If GDP is not higher than 2.5 percent, the steel industry is going backwards. That's a real concern."
"We regularly review the risks. We've built a SWOT analysis off the back of this and debate how we are moving to manage these risks and opportunities, and maximise our strengths. It creates a discussion platform to move us in the right direction. Far too often risk registers are tick-the-box exercises. We understand that we need to keep stakeholders satisfied that we are managing our risks but we need to make this relevant to the business. We achieve this by bringing it into our daily conversations. It starts a discussion that heads us in the right direction."
In your opinion, what makes a great CFO?
"Key to being a good CFO is maintaining the discipline in the organisation. You've got to be the watchdog. You have a reporting aspect to your life and you need to keep people honest and keep conversations open and transparent. You have to create an environment that facilitates the business working and moving in a positive direction; becoming more productive, efficient and profitable. Being able to pull all those strings together is what I think makes a great CFO. It's a puppet master role - pulling the strings and making them all dance correctly. If you can get that done optimally, most of your job is done."
"I've been in many industries and I've learnt a great deal in each of the businesses I've been in. I've learned, for instance, that cashflow management is key to a business's success. All these experiences have helped me operate at the level I'm operating at today. You've got to pick up different experiences and go into other industries to apply these learnings there. When I was in mining, the financial link to every decision was undisputed. The financial aspects were crucial. This taught me a great deal about how finance integrates into the business and the importance of having the right people on board."
What are some of the challenges associated with the steel industry?
"Steel touches everyone - it's in so many things, from buildings to cars, to taps in your home. It plays a crucial role in the economy, so it's important to have a well-functioning steel industry, whether it's one characterised by having a producer in-country or not. Government have been lobbied to try and protect the local steel producers, particularly Arcelor-Mittal SA, but there's a double-edged sword with government placing duties on imported Chinese steel. Creating a level playing field is so important. It's our customer base that suffers as they therefore are buying more expensive steel inputs and in turn can't compete in the export market or compete with imports of finished goods, impacting their and our business negatively. Personally, I would like to see no government intervention. Let the economics run its course and let entrepreneurs build efficient and cost-effective businesses that are successful in an international trading environment. The world has opened up dramatically, so the less government intervention and the less barriers being put up, the better."
What achievement in your current position are you most proud of?
"I would say that bringing someone new into a team of executives who had been in place for some time resulted in me really encouraging people to think differently. I think changing the dynamic, the discussion and being a sounding board has been my impact. Because I'm at an executive level, this touches many aspects of the business, and so I create many different discussion points. I'm proud of that."
"I've had a good impact on Macsteel. This is my first role in the steel industry and I'm learning every day about it. But new ears and eyes allows me to create a new dynamic."