Disastrous Controller

Your patience and commitment to giving this person the opportunity to change are admirable. It appears as if the controller is a huge inherent barrier to your success. The culture of change starts from the top. The owners need to convey to every one that it is time to change, and that you have their full support in doing what it takes to change. Some people just will not change, and it seems as if the controller may longer be the right fit for your company. I would have an honest conversation with her, maybe even with an owner present, and tell her what you need from him or her. If they will not commit to it, then it is time for this person to go so you can get to the hard work ahead of you.

I agree with Ernie. It is truly amazing how every company I've been with has at least one "Dr. No". The answer is always in the negative to change, whether their reasoning is valid (and they are right) or wrong (or may have been right years ago, but today isn't years ago).

I have found its very difficult to change many of these Dr. No's. Those you can turn to from the dark side can be a great ally.

Try making them part of a change team; putting him/her in charge of a change team with an edict that they must accomplish the task, with a time/budget limit. Add a carrot and threaten the stick.

As a change agent, I have learned that your first approach is to be diplomatic or democratic. However, I have also learned that there are times when you MUST put your foot down! At the end of the day, the question you will be asking yourself would be......Are you willing to have this one person hinder the achievement of your goals?

I would have a one-on-one with her and tell her your goals (that are non-negotiable). You can tell her that you would like her to be on-board and ask her for recommendations on how she can help in the attainment of those goals. If not, you can ask her in what other capacity within the company she would be interested to be in. I would emphasize that "firing" is not the first option and the organization still values her service and loyalty and would love to retain her.

You are giving her the decision.

This is an awesome opportunity to provide some coaching. Maybe she doesn't understand your goals and the whys behind what you are doing. If you share them with her, get her buy in as to the new direction of the company / department. If she still isn't on board then it's time for a self discovery. At that point you need to seek to understand her apprehension to wanting to assist you in moving the direction of your department and if she just isn't interested then the choice becomes her's to make. She can choose to stay on the ship and by making that choice she has to commit to helping you and doing what you need her to do. Or she can choose to get off at the next port at which point offer to assist her in finding a more suitable position within the company as Emerson suggests or something external that she may be happy doing by sharing her resume with colleagues.

Take your time, line up a compelling case, with options.

1. Do your outside accountants and bankers really think your 30-45 day close cycle is a sign of a well run company? How can they help you here?

2. How is your relationship with the owners? Perhaps they need to realize what has gotten off track and understand your intentions. Can you get them to buy in to the change? Then explain what you need to do and what risks you expect.

3. In the end, I like Emmerson's comments - you are the CFO, you decide, you lead. Give her the chance to be part of the solution AND to realize that if she does not become part of the solution, her options will become self evident.

Definitely the lady carries a wealth of experience as a controller and as you said' can be trusted with company money'. However, she needs to change the way she works. 45-60 day month-end close is not good enough in an economy which is full of uncertainities and timely action is what can save the company.

She has to change. A one-to-one without the owners would be the option I would go with initially and then getting the owners to step in.

Finally as one of the comments said ' you are the CFO. You lead. You decide.'

Would certainly like to know what happened next :)

Sometimes you have to make a change in personnel. It's never pleasant, but look at where you'd be in 6 months with a team player as opposed to doing the same thing.

Her tenure may be a result of her hard work and loyalty. Yet, it appears the company is positioning itself for future growth and it appears changes may be needed. I am assuming, both your CFO position and you are relatively new there, and if there is a 25 year record of management accepting the 30 to 60 day close cycle, there are challenges to your position that you have not yet begun to uncover. What are owners’ expectation of you? What do the owners think is broken? How supportive are the owners of you in the new role?

I realize you have provided some details as background, but, in the read, it gives me a feeling close to that of my children arguing. I see stubbornness, defiance, pride, and rehashed attacks on capabilities. I understand, that, in the moment, these were your feelings, but, you may also be exhibiting these same behaviors rather than solid leadership behaviors in the heat of the discussions with each other. In order for someone to follow, they need to learn to appreciate and respect the leader.

If you have the hands on experience, ask her to explain the how and why so you can build the better mousetrap. I would suggest not attacking any of the how or why, but, just asking, so as not to have heels dug in and a shutdown of the information flow. When you fully understand, work side by side to provide the guidance you suggest she needs.

It sounds as if you will be starting from a less than perfect foundation for a new relationship, but, you can still recover. A key to your success, and a key to the success of your new role at the company will be garnering the respect of the other employees and the owners, as well. Time can heal the rough beginnings.

Remember... Progress, NOT perfection!

Sounds like it is time to sit down and set expectations. At the same time, make sure that she has the tools and resources to meet them at a reasonable cost to the company. As her boss, you are going to need to determine how much time you want to invest in making things work. There may be some understandable reasons for the positions she has taken. You have to ask yourself if it is worthwhile to invest your valuable time to understand them. And, you need to consider the impact on the balance of your staff.

I joined this company just under a year ago and entered a similar situation. A Controller who was incredibly resistant to change, would drag feet on any task. Where you experienced 45 days to close a month - our company had not closed a month in the system in almost a year. Worse, I learned this person was a major player in the back office gossip, perpetuating a culture of "old guard vs. new" (President, myself, and head of sales were all newer to the company).
I spent 6 months trying to coach, setting expectations - even developed a co-signed work and development plan, but to no avail. A few months ago I terminated this employee.
Two interesting things happened - first, the culture of our small-medium company changed overnight. It turned out this employee was a source of company-wide negativity I could not have imagined. Second, I saw an immediate elevation in the level of output and ambition of other team members; not out of fear, but seemingly because they were now out of the shadow. I was able to interview and eventually promote another team member to the role of Controller, and she has proved immensely valuable, to the point that our team produces 2x the quality work, with fewer headcount, in a timely manner.
I'm the last person to suggest that you should jump to fire people - but in our case, the role / person / company / culture was such a dramatic mismatch, that everyone is now better off.

You pretty much have all the answers from everyone who have spoken and the only thing I would add is that the errors you found did they involve any issues with the bank and breaking any banking covenants. Errors that cause banks to temporarily reduce your credit line in my past have usually been met by pretty harsh reactions by calm owners and put people on notice that it's not acceptable.

If you document and speak to the owners about those errors and effect it had on company performance you might be able to gain their trust and see that you're making all the right moves to better train your controller they'll eventually look to you as their trusted advisor instead of the controller.

Have a look at your org structure and see if other people within your group can take on some of those key tasks to mitigate those errors and conflicts to show to ownership you have thought out of the box to help him and the company's y along.

Good luck, this comes up more often than not for private companies experiencing growth in all areas of the business. More often than not, probably due to these incumbents lack of desire to change they end up leaving the company because they can't handle the job anymore.

Prepare a separation agreement and begin the documentation process of lack of quality work. Have a one and one and put her on a 60 day PIP. You have very solid examples of failure to perform to expectations. Pay her a good sum to separate and hire a Director of Finance to indicate that you are hiring up. Hire a good attorney to draft the letter. It will likely cost you 3-4 month of her salary to terminate her, but if you feel that it is worth it, I would start the process.

Sounds like this controller is protected by the owners and you can't ultimately fire her/him. If so, you are not really the person in control. I have a similar situation, but we are closing in 8 working days with a pretty significant consolidation. Good luck.

Tough one...you say the owners won't let the controller go. From what I gather, the controller may have some issues with confidence. Many times a lack of delegation stems from wanting to feel valuable, and quite possible the most valuable employee. If they do everything, it makes them look like the star employee. Of course it's also possible they don't have confidence in others to do things right, but it sounds like you want the team to have more tasks so I'm assuming they're competent.

Then, when you come in and say you've been at companies where the month-end close can be done in 10 days, the lack of confidence led the controller to quip "well, we don't have 50 people". I think the pieces fit. Your best approach may be to involve the controller in your changes. As some people have suggested, ask for opinions from the controller, show you value him/her, help them feel secure. I bet the criticisms will slow down and you'll see your plans start to work.

The unwillingness of this Controller to delegate and the extremely long time it takes for the financial statements to be completed makes me wonder if there are any internal controls in place. If the company has internal controls, then I wonder if they've broken down for convenience. Not knowing the full situation there, I think I would put the Controller in charge of updating and enforcing the internal controls with advice from an outside accountant for perspective. This would hopefully achieve many of the goals you have for change and provide an outside expert the Controller can turn to for help/mentoring.

I have been in this exact same position with an accounting manager before, whom actually I was given permission to fire, but instead I coached her, and everything worked out great. Because she's been there so long, she doesn't see the need for change, doesn't see the impact it can have. She has no frame of reference. So, you just have to give clear instructions to MAKE the change happen in the way you know it needs to, to reduce the close. Identify the processes that need to change, then make SURE the change happens, in the order or highest priority. It may feel like micro-managing at first, but you have to step in to make sure the changes take place. Over the course of several months, as the changes are instituted, and her life actually gets EASIER because she doesn't have to put in so many hours, and she's learning something for the first time in a very long time, you very well can get buy-in from her and turn the tide. My first few months on the job with the accounting manager I got snarky comments and passive-aggressive resistance, but over time the changes happened, the accounting manager became much happier, and we even became great friends. She eventually thanked me for making her life easier and teaching her so much. It CAN be done.

Anon,

Working for a private firm and having many friends who work for family businesses I understand where you are coming from after hearing you say this person is like family.

With that being said the conversations I have been involved in concerning family operated business is you can try your best to speak openly with the person to gain some buy in and help, but if this person refuses the only real option is to go back to the people who hired you to "clean it up" and be honest about your hurdles. You will be unable to clean anything up with this person standing in your way. At that point the owners will need to make a decision about the person or your success. Just be prepared they may choose the person.

I have multiple years of peer counseling sessions with family owned company employee's and would be happy to share anything I can to help.

There are many good comments made about this issue.
In my 30 years experience with very similar situation, there is only one way that works:
Give that job holder 21 calendar days to change along with a written notice to cancel her / his employment with the company. If the job holder does change to an acceptable degree, than you can extend the initial 21 days for another 21 days. Try this for 3 times and then make a final decision. Chances are that you will fire the job holder sooner than later.

This thread is great-it has nothing to do with accounting technical skills and everything about being able to display communication and interpersonal skills. Anyone can hire a goofball with a degree.

How about explaining to the person:
1. you want them to come up with their own proposal/action plan to reduce the close to 10 days
2. the status quo will not be permitted to remain beyond x days.

You will then be ready to evaluate their plan and decide if they are up to the job.

Couple of points here
first it isn't the cheques that necessarily matter it is the invoices they are paying.
second maybe you need a reading list before you do anything, can i suggest
Who moved my cheese? all about change
One minute manager - all about quick fixes
Snakes in Suits - all about psychopaths at work...

By the sound of things the last one may be most relevant :)

I will try and address your points i the following:

1. I have a controller who has been the top accounting person for 25+ years. She is very loyal, hardworking and most of the time detail oriented and yet she is an absolute disaster:

Ans – we can stop right there and answer your problem very easily. I wouldn’t give a crap for a loyal hardworking and mostly detailed hindrance to the business. I’ve met many of these types during my 25 years in accounting and more so in the last eight as a consultant; let’s call this person what she really is, a bookkeeper. A bookkeeper is an individual who performs specific tasks in a limited resource environment. A controller should be the person identifying how to add value, not creating the reasons for value to be added.

2. She refuses to delegate anything to our team. The role of controller of a $125 million company is different than that of a $10 million company but she hasn't changed.

Ans – this is someone who is literally afraid to share knowledge as it would lessen her importance in the organization. Leaders delegate, pure and simple; to be effective you cannot hold control over everything and expect to be efficient. That is another sign of a bookkeeper; she cannot let go of the pre-conceived definition she has been operating under in an unchanged way for the two decades of her career.

3. I can trust her with the owners' money but not to be a team player. She likes pointing out the errors of others, from me the CFO down to the brand new clerk. But she is the only one who has made $4.5 million and $1.6 million errors.

Ans – I think this speaks for itself, she is clearly attempting to deflect attention away from her inadequacies and redirect toward others. The fact that she calls out errors in the CFO demonstrates more than a lack of respect, it demonstrates a common sense and professionalism.

4. Month-end closes take between 30 and 45 days unless there is a systems problem and then it can take 60+ days. When I point out that I have worked for companies that close the books in 10 days she points out that she doesn't have a staff of 50 people. But I have also closed the books in 3 or 4 days for companies with 2 accounting staff.

Ans – That is not a scalable solution for any organization. Her comment that she, “…doesn't have a staff of 50 people…” to justify why she cannot close the books in a reasonable amount of time is a reflexive defensive argument. In other words, she doesn’t really understand why it takes so long to close the books, only that if she had more people she could do a better job. Typical response from a non-professional accountant to approach an accounting centric problem…..like Wayne Spivak, I too have seen this too many times to recount. Again, more of a response I would expect from a bookkeeper than a controller.

5. She was pursuing a CPA years ago but dropped it when she got a "C". She has never gotten a CPA or CMA or been mentored by a qualified accountant.

Ans – it is a misconception that a controller needs to be a CPA. The only circumstance where a controller would need the CPA is SEC Reporting or other high profile technical area of accounting. The CPA exam gives conceptual testing scenarios or evaluates the ability to memorize; it does not impart a skill or expertise nor is it a tangible tool that can be used in a dynamic environment. Being a CPA doesn’t teach you how to manage a close process, being an accountant with management experience easily qualifies a person for that task. A CPA license opens doors; it does not keep them open…experience and value add keeps the door(s) open.

6. The owners hired me to come in and fix what is broken but there is a great deal of resistance to change. I have been looking at classes on how to transition from being an accounting manager / director to a true controller to no avail. I really think the right thing is to get her a strong mentor. She is resistant to taking advice from me, her boss, but I am hopeful I can find a way for her to get the proper advice.

Ans – If she is unwilling to adapt or accept change get rid of her. She is a hindrance not only to the organization but to your ability t to be an effective leader. It is ultimately your responsibility for the execution of the goals given to you by powers that guide the company. Are you really going to let this person jeopardize that?

My reasons may sound harsh and they should; I do not offer these suggestions from emotion or a reactionary view. These suggestions come from experience and having been the person making the changes and seeing first hand why removing the obstacle was the only solution.

Recently, I developed a Human Clinical Trial Accounting methodology for a $10.2M FDA clinical trial bio tech. The controller failed to grasp the basic concept of accrual accounting in addition to the consistency, comparability, relevance and reliability standards. Rather than accept the model I had created as an accrual automation and its acceptance by Deloitte as the external auditors, she rejected it in favor of their current process which was to wait for the invoice. Classic signs of a bookeeper vs controller....

The controller was a glorified bookkeeper and only there part time. Within the first week of being on site I found over $350K in material errors of a non-technical nature on the company’s books. You could literally see the point at which the person joined the company…it was eerie.

I hope this helps, happy to discuss the issue further.

Lots of excellent advice. Thank you.