Peter Walsh (37) is one of the youngest CFOs we have interviewed so far. He was appointed CFO of the Servest Group earlier this year. His age however doesn’t hinder his confidence in the important role that a CFO can and must play within an organisation.
Peter firmly believes that the CFO role should never be just about reporting and compliance. Adding real bottom line value that is quantifiable must be a significant determinant in the success and efficiency of a CFO. To add value an CFO must have a deep understanding of the business he is in at a strategic but, critically, also at an operational level. He must be prepared to get his hands dirty. This will not only benefit an organisation from a value creation perspective but also raises the credibility of the finance function across all disciplines in the business.
The Servest Group specialises in providing integrated outsourced facilities solutions to large and small businesses within the public and private sectors. The Group employs 32,000 staff; has over 7,000 clients; and provides cleaning, hygiene, interior solutions, landscaping, turf, security, parking, marine and strategic outsourcing to clients in South Africa and the United Kingdom.
What do you enjoy most about your job and why?
As CFO you have a platform to see and be involved in what happens across the organisation as a whole. The common perception is that anyone in a finance role, including the CFO, remains in the back office studying spreadsheets and figures. For me the role is far more than that. It's about understanding the operational requirements of the business. This means spending a significant amount of time on the ground and working with diverse teams.
How do you perceive the role of the CFO has changed in the last five to ten years?
Following the Enron debacle and the demise of Arthur Anderson, international attention was firmly focused on the accounting and finance functions. Specifically, the extent to which compliance with legislation and international accounting standards was being driven. To my mind, the reaction was excessive, particularly in South Africa. In South Africa, as finance professionals, we have very strong principles around transparency and reporting and we pride ourselves, and are recognised, as the international benchmark in this regard. More recently, sub-prime lending in the US and Europe and the resultant economic contraction has again turned attention towards the finance profession. Even though South Africa has not been affected as severely as some other countries, South African CFOs have had to again be occupied in the finer details of accounting and finance. The danger is that again the CFO is more concerned with auditing and financials; neglecting operational and strategic imperatives of their organisations.
How do you see the role of the CFO evolving in the next five to ten years?
My hope is that the success of a CFO be determined by the bottom line value he adds to an organisation. Traditional back office functions - reporting, auditing, and compliance - should happen as a matter of course. True differentiation should be the result of strategic input and value-add. Effective use of current technology will continue to be a further determinant but, unless you are in the technology space, it is important that technology is seen as a facilitator and not as a driver in the business. The CFO's integration with the management team, and his credibility as being able to bring operational and strategic value, will define success or failure.
Would you say that accurate forecasting and budgeting is still feasible for a financial department in today's tumultuous financial markets? How do you deal with the volatility?
Forecasting and budgeting remain critical to a company's strategic planning. Effective budgets set the tone for the succeeding one to three years and regular, accurate and timely forecasts are critical in giving management updated information and warning signs to allow them to change course if necessary. There is no question that volatile markets make both more challenging; but this forces finance, led by the CFO, to re-look at the way we plan and deliver to our clients (being the rest of the business). The key is to remain flexible. Be prepared to make revisions and, as far as possible, stay ahead of changes in the market. On the flip-side, it is important to maintain consistent and steady - stick to your convictions and don't make changes for the sake of it. This year the Servest Group is looking at 20 percent growth. Next year will see more of the same, excluding the growth delivered through acquisitions. This has been achieved through meticulous planning and a deep understanding of the sectors in which we operate.
What do you see as the greatest challenge for South African companies in the global economic situation and for your industry in particular?
South Africa has definitely felt the impact of the global crisis. However, compared to the failures seen internationally, in the banking sector, our banks have remained relatively stable. South Africa also boasts an exceptionally high number of world-leading chartered accountants. Both of these factors will continue to ensure that, relative to other markets, South Africa comes through unscathed.
The Servest Group has both a local and UK footprint - providing a measure of diversification. In both markets our key focus has been efficiency. We are able to offer real value to our clients; value being the inter-relation between price and quality. We may not always be the cheapest because we are not prepared to ever compromise our standards - but our clients soon discover that through us they have a partner who will bring real value to a non-core area of their business, allowing them to focus on what they do best. The long term nature of our contracts, the high percentage of contract roll-overs and our consistent net growth all bear testament to this. The companies that remain flexible within new environments will succeed.
We will continue to review our business model to ensure that we meet our clients changing requirements and circumstances. We have created a unique industry solution by providing a number of strategic services that our clients can integrate under one umbrella. This means that our clients have one point of contact for multiple services resulting in a reduction in overheads through economies of scale; whilst also allowing them to focus on their core business.
Which skill(s) do you think a finance professional should master to be most successful in his work?
Again, I need to reiterate that it is a balance. Sound technical skills and knowledge combined with a deep understanding of the company's business operationally and strategically. And, central to this is keeping up to speed with the market and global changes. I also believe that you need to be approachable and accessible - with communication and leadership abilities providing the base. At the end of the day it is about credibility. In a large and diversified group, such as Servest, this allows you to understand the big picture and how divisions integrate in such a way as to benefit both Servest and our clients. Credibility and approachability also limit surprises - others in the organisation are more likely to approach you for help before something gets out of control. If the terms policeman, watchdog, big stick are used in conjunction with finance you are doing something wrong.
Which achievement or project in your business career are you most proud of?
My appointment as Servest CFO is the achievement I am most proud of. I need to be cognisant of the fact it may also be the rope which with I hang myself (laughing). Yes, I am young, but I am focused on adding value and delivering results for the Group. My ambition, youthful enthusiasm and progressive attitude are all what being a modern CFO is about. Never forgetting that there are those older and more experienced than me who will provide the wisdom to be a success.
What is one thing that you have focused on since being appointed as CFO?
Since being appointed, my focus has been to work with the financial directors of each of the seven divisions within the Group, with the intent of building a strong, integrated and credible financial team - with all of the characteristics I have described above. This has given me key insights into the operational side of each division, which I have supplemented by spending as much time as possible outside of the office and on the ground. Ultimately my vision is to lead a group of financial directors where the whole is far greater than the sum of the parts. This forum will drive best practices across the business and review how we do business to further increase the value we offer our clients.
Who is your role model in life and why?
Mark Shuttleworth. I admire his ability to sell an idea, which he developed in his own garage, to the rest of the world. South African's often have a very limiting mind-set and Mark proved that there is no reason why we cannot be world leaders in what we do. Briefly, Mark developed the technology to allow us to safely transact online. He then sold his company, Thawte, to American VeriSign for roughly 600 million USD. He is exceptionally bright - of that there is no doubt. But to succeed as he has requires a lot more than that. Vision, dedication, single mindedness, self-belief and basic hard work are all, to my mind, prerequisites. I also respect the fact that he has remained to a large degree out of the limelight. Mark and I actually went to the same school in Cape Town - he was two years ahead of me - and having a role model with whom there is some sort of personal connection is important to me.
What vital piece of advice would you give young ambitious finance professionals?
"Don't neglect the softer skills. You need to be able to connect with people to be effective"
If you also would like to share your ideas with the CFO community, please get in touch with us to arrange an interview with you.Please contact Jurriën Morsch on [email protected].
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