THE HQ COMPANIES BLOG

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BOARD DIRECTOR: YOUR PATHWAY TO A CEO JOB

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By Kathy Graham, The HQ Companies, Inc. Founder & 2020 Women on Boards Chicago Chair

Fewer than 5% of public company CEOs being women is NOT something to celebrate, but this “decades-old problem of stagnant growth [in the number of women CEOs] may soon be turning around.”

In fact, all the work that many organizations, including 2020 Women on Boards, have been doing to break the long-standing 12-14% women on corporate boards is finally paying off because research is showing that women who are being chosen now as public company CEOs have two factors in common, namely, these women:
• Follow the traditional CEO pathway that men do in that they are COO or President of a company previously.
• Served or are serving on a public or private company board.

Women represented a record-breaking 40% of the incoming class of board directors in 2018....
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NUMBERS:
WHEN IS 750+ KPIs TOO MUCH DATA?

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The “N” in The DNA of the Future CFO stands for “Numbers” and how they change from Classic CFO to Strategic CFO to Future CFO, the Partner to the CEO. Sam Recenello will be addressing Numbers on Tuesday, October 15th at the AICPA’s Finance Transformation Conference in NYC when he facilitates a working group discussing Harnessing the VP for finance in analytics and at an INNOVATION ROUNDTABLE on Digitalization for SMEs.

“Do you remember when numbers were one dimensional, back in the era of the Classic CFO when if there was enough cash in the bank, those numbers were good numbers to have,” posits Sam. “Those days were not so long ago, now fast forward to today.”

“Technology has inundated CFOs with huge volumes of financial and nonfinancial data/numbers offering such a broad scope of insights that are moving at light speed, that it’s hard to know what to cleanse, sort, and analyze and do so quickly enough that the insights aren’t outdated.”

“Less than 25% of companies believe they can harness data insights effectively....
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THE DNA OF THE FUTURE CFO:
Classic corporate financial steward CFO, Strategic CFO, or CFO, Partner to the CEO. Who are you? How do you change? What's best for your company and your career?

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The future CFO exists today in many companies, especially those firms that have experienced a successful digital finance transformation. This future CFO replaces the prior Strategic CFO, who emerged with the Enterprise Resource Planning (ERP) era. The Strategic CFO replaced the Classic CFO of all yesterdays, the record-keeper, the corporate financial steward.

Today, all three types of CFOs exist. However, those companies who have a future CFO—a Partner to the CEO—enjoy a competitive advantage because these companies are prepared to outwit disruptions and disruptors due to their ability to pivot more quickly and accurately to changing situations than companies with Strategic CFOs or Classic CFOs.

How does a CFO evolve his/her corporation to undergo a digital finance transformation? Does a CFO need to evolve personally and professionally to become the future CFO, the Partner to the CEO?...
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TOP DOWN, BOTTOM UP & TWIST SIDEWAYS COMMUNICATION:
KATHY'S PREVIEW OF THE AICPA NYC 10/15-16/19 FINANCE TRANSFORMATION CONFERENCE

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The CFO role is being highly impacted and transmuted by digital disruptors that are using a different organizational communication structure to support their digital finance transformation successes...and this structure is far from what is common in more traditional firms.

One of the main facets leading to digital finance transformation success is changing the flow of organizational communication—and this statement is straight from Facebook’s CHRO at AICPA’s June 2019 National Conference. He said that the typical communication pattern in organizations is TOP-DOWN: the boss at the top issues directions to those below. However, in successful digital finance transformations that communication pattern needs to be TOP-DOWN AND BOTTOM-UP, all the way to the employee working directly with the consumer/client/purchaser of a company’s products or services.

If you want to “Amazon” your digital finance transformation, which means that as a consumer purchasing your product/service clicks online—or as the consumer lifts your company’s product off a shelf in a brick-and-mortar location—that purchase is automatically billed to their credit card, the sale immediately flows through and is recorded by all of the company’s departments involved in the transaction, inventory is instantaneously updated and orders to suppliers—with costs simultaneously recorded—are placed as necessary at that very moment, then there is one more change needed to an organization’s overall communication structure:

• Communication flows from TOP-DOWN and BOTTOM-UP, but the flow itself needs to “twist” from a VERTICAL TOP-DOWN/BOTTOM-UP FLOW to a HORIZONTAL TOP-DOWN/BOTTOM-UP continuing conversation...
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STRUCTURAL HOLES:
SHIFTING SANDS OF LOYALTY

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How can you trust a country, an organization, a company, or an individual who today is your ally—loyal and aligned to your interests—yet who tomorrow might be your adversary?

The answer lies in Ana Dutra’s July 8, 2019 Forbes article “The 3 Flavors of Trust in the Workplace” and also in The University of Chicago Professor Ronald S. Burt’s “structural holes” research into the ways that social networks create competitive advantage in careers, organizations, and markets.

WHY LOYALTIES SHIFT: Opportunities occur in markets and organizations where there is an opening for an idea, a different approach...and a country, an organization/company, or an individual(s) seizes that opportunity, filling the “hole” in the structural organization...
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BEST PERFORMANCE TIPS
HOW THE 1908 YERKES-DODSON LAW CAN HELP YOU TODAY

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The 111-year old Yerkes-Dodson Law is NOT a law, it’s not even statistically significant, and yet it’s really quite useful for making what you want to happen actually occur.

The Yerkes-Dodson Law is a variation on Goldilocks and The Three Bears:
  • If you have “too little” arousal/stress/engagement, you will under-perform.
  • If you have “too much” arousal/stress/engagement, you will under-perform.
  • If you have the “just right” level of arousal/stress/engagement, you will reach your best/optimal performance in whatever you are trying to achieve.

The problem with the Yerkes-Dodson Law is that “just right” varies from situation to situation, stimuli to stimuli, and individual to individual...so how do you figure out what the “just right” is for yourself in whatever you’re trying to achieve?...
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NEW TECHNOLOGIES: SUCCESS OR FAILURE?
KATHY AT THE AICPA ENGAGE CONFERENCE 2019

PODCAST: CLICK HERE TO LISTEN to the entire panel discussion from the June 2019 AICPA Conference. (MP3 file. 1 hr 15 mins.)

Would you like your finance functions to be among the over 80% who fail when implementing a digital transformation?1

A digital transformation is a term that means “creating a new business and/or shareholder value by shifting a current business to the most up-to-date technologies.” It’s the latest rage and a big valid concern for many companies facing disruptors, potential or current.

The businesses and finance functions that have succeeded in implementing digital transformations share a number of key factors in common...
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ORG DESIGN'S MISSING LINK

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“Organizational design is a step-by-step methodology which identifies dysfunctional aspects of work flow, procedures, structures and systems, realigns them to fit current business realities/goals and then develops plans to implement the new changes. The process focuses on improving both the technical and people side of the business...”

Early on, researchers operationalized the theory (despite the likelihood that Burns and Stalker intended their theory to be an abstract model) AND focused on the structural elements, giving far less attention to the employee experience...

Since the employee experience was minimized in practice and an intended abstract was used as a reality, start your organizational design with confidential qualitative interviews with employees...
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HUMAN CAPITAL FOR BOARD / CAREER / CORPORATE GROWTH

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The term “human capital” has evolved away from being a “coldly euphemistic way to mean ’labor force,’” away from being an “even colder [meaning of]” “calculating causalities of war” to mean “something broader than ‘workforce,’” according to Merriam-Webster. It is in this broader context that The HQ Companies have embraced the term in their new tag line:
“All About Human Capital for Board Growth, Career Growth, & Corporate Growth.”
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AVOIDING CORPORATE CRISES

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“This is not a pipe” says Rene Magritte’s famous painting in French under his realistic depiction of a pipe...

When companies and/or people forget that models—no matter how well they are crafted with numbers, words, and/or images—are not reality, crises occur. The Cuban Missile Crisis, the subject of my blog Your Office—The Next Cuban Missile Crisis?, describes a real incident between two governments where different government departments were using different models to take actions that could have easily led to nuclear war—and these actions were undertaken without the knowledge of the leaders of those nations...

Emanuel Derman in his recent book Models. Behaving. Badly. provides many more examples of disaster in economics, politics, social policies, movements, and finance resulting from when leaders confuse models with reality...
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YOUR OFFICE—THE NEXT CUBAN MISSILE CRISIS?

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“Information does not pass from the tentacle to the top of the organization instantaneously. Facts can be in the system without being available to the head of the organization. Information must be winnowed at every step up the organizational hierarchy…but those who decide which information the boss shall see rarely see their bosses’ problems.”

This statement in Essence of Decision: Explaining the Cuban Missile Crisis by Graham Allison and Philip Zelikow captures one of the core messages of this book that’s applicable to today’s business executives...

In the meantime, if you’re a senior executive—thinking about where and how in your organization information is not getting to you or reaching you winnowed of vital facts—reviewing your organization’s communication flows to determine how you want to manage such crises before they happen is a good first step...
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