The realm of financial management extends far beyond numerical analysis. It has exceeded its traditional role of closing books. A successful CFO must now juggle operational efficiency, business strategy, and the satisfaction of customers and employees. Achieving this balance is key to overall success. To help us with everything related to balancing the books, we turn to the expertise of Derrek Gafford.
Derrek has served as the Executive Vice President and Chief Financial Officer of Trueblue since 2006, where he is responsible for the company's strategy, corporate finance, FP&A, accounting, order-to-cash, risk management, and internal audit functions. Before joining Trueblue, Derrek was the CFO of Metropolitan Market and held various management positions with Deloitte & Touche LLP and Albertsons.
Welcome back to CFO Weekly, where we're talking with financial leaders about how to build efficiency in their teams, create time for strategy, and ultimately get results. With your host, Megan Weis, let's jump right in.
Megan - 00:00:31: Today, my guest is Derrek Gafford. Derrek has served as Trueblue's Executive Vice President and Chief Financial Officer since 2006. After serving as Vice President and Chief Financial Officer since 2005, Derrek is a certified public accountant and joined Trueblue in 2002. Derrek is a Director of Heritage Distilling Company. Prior to joining Trueblue, Derrek served as Chief Financial Officer for Metropolitan Markets, a grocery retailer, and held various management positions with Deloitte & Touche LLP and Albertsons Inc.. Derrek, thank you very much for joining me on today's episode of CFO Weekly.
Derrek - 00:01:10: Thanks, Megan. It's great to be here with you.
Megan - 00:01:12: Yeah, I'm excited to have you on the show. Today we'll be talking about a variety of topics, including your journey to become a CFO, employment trends, financial measurement, and the CFO/CHRO relationship. I'm really looking forward to this discussion, so let's jump right in. First and as always, let's start with you and how it is that you got to where you are today.
Derrek - 00:01:35: Well, I could give you kind of a play-by-play through my career, but I think when it really comes down to it, there were a couple of moments in my career where somebody took a chance on me. And I think if you get down to the essence of most people where they've had some success, you'll find similar stories. So my first CFO role was out of a privately held grocery retailer and I, by all common measurements, was totally unqualified for that job and somebody took a chance on me. And when I became a CFO here, I was, that was back 18 years ago, I was 35 at the time, and someone else took a chance on me. So I'm really appreciative of people doing that for me and it's something that I continue to remember through my career as we're trying to find the right talent for roles.
Megan - 00:02:25: And as you just mentioned, you've been at Trueblue for almost two decades now. So can you tell us a little bit about your journey with them?
Derrek - 00:02:33: Well, sure. I guess at the heart of it, that's a story about why I'm still here. The big reason for it is why I started here. At the time I started with Trueblue, it was a general labor staffing company. We're much more than that now, but at the time, I didn't even really know what staffing was. So I knew the CFO at the time, who's now the CEO, we worked together and he said, would you be interested in this job we have here? And I said, well, maybe, but I don't really know what you do. So I went and spent some time. I've spent a week out in our branches at the time. And wow, I just came back and I had no idea. I worked in retail, business-to-consumer relationships, our products were sold. And I just saw some really beautiful stories in our branches about getting people connected with work, people that were down on the lock at certain times. That energy and excitement of the social good we do really is what caused me to take the job. And it's really the thing that's kept me here ever since.
Megan - 00:03:36: And talk to me a bit about Trueblue and what kind of workforce solutions they offer.
Derrek - 00:03:42: Yeah, so we are publicly traded on the New York Stock Exchange. We would call ourselves a workforce solutions company. But when you peel that back and say, OK, but what do you really do? There are two main things that we do. One is we provide contented employees in industrial settings. So carpenters, electricians, people in manufacturing, people in distribution operations. And so we're helping our customers. be agile with their workforce. So one of the key value propositions that we provide to customers is workforce flexibility, to be able to staff up and to staff down, to meet volatile business needs. So that's a big part of our businesses on the staffing side. We also have another business that's called Recruitment Process Outsourcing, services, and industries of all types. This is where a customer comes to us and really outsources the recruiting bunch to us. So we go and we've sourced and screened the applicants, turn two, three, maybe four qualified applicants over to a hiring manager. He or she makes a hiring selection and then that's what we get paid for. Different by the way, than headhunting or recruiting where people are doing one-off positions. This is where a full process is outsourced to us.
Megan - 00:04:54: And you helped Trueblue grow from $850 million to $2.4 billion. So what key financial decisions, if any, do you attribute that success to?
Derrek - 00:05:05: Well, a big piece of the growth was through acquisitions. So since I've been here, we've done over 20 acquisitions. And really where that came from was the founding part of the company was a general labor company. And so out of the staffing market, we had a small piece of that and we were taking market share, but the market was only so big. And so we found ourselves saying, well, how could we find more growth opportunities? And how can we keep our customers happier? We had customers asking us, hey, we like the services you provide, but can you provide these additional services? So the acquisitions really helped fill out our workforce solutions portfolio to provide more services to meet more customer needs. And so at the end of the day, that's really what that aspect of the growth strategy was about. Our current growth strategy is less acquisitive and more organic-driven. So a big part of our strategy right now is focused on digitally transforming the business and doing more through technology. But doing it, this is really important for our industry because it's business to business, and relationships really matter. Both with the employees we're putting to work and with the customers that we're serving. So doing more through digital, but the key part is without losing the human connection with those folks and those two groups.
Megan - 00:06:27: And talk to me about your approach to financial measurement and what is it that makes it unique.
Derrek - 00:06:33: I guess others can be the judge of the uniqueness of it. My approach to financial measurement is to really try to get down to the underlying activities that are driving a certain part of the business. So for example, every business is focused on revenue. It really is the main thing. So if we're trying to understand why revenue is going up or whether it's going down or whether it's on the long-term trajectory of what we want, I think it's important to get down underneath it. There are supporting metrics behind revenue that are more of operational excellence types of things. So, how many customers or potential customers are we visiting, how many of those are we converting into new customers, important operational metrics. But even deeper than that, and that's where I like to spend a good portion of my time are more strategic measurements. So how are our products and services matching up to the competition? How satisfied are our customers with our products, and even the different geographies that we operate in? I think one of the best ways to have great revenue trends is to have great products that are easy for salespeople to sell. So I'm trying to get down to those underlying metrics that we can rally around, and get people aligned on and use those as more of a pull technique where people are pulling these measurements forward versus some of the more top-level metrics and us trying to push people to do better at those metrics.
Megan - 00:07:59: And do you have any tools that you're using or hoping to implement that allow you to kind of dig into those underlying levels of detail?
Derrek - 00:08:11: Well, there's a lot of technology strategies for us. A big part for us in finance is once upon a time, not too long ago, we had over 20 separate different HR and financial applications. And that was really getting in our way of getting to some of these underlying metrics because we were spending all of our time just trying to keep the lights on. At 20 different applications, one of them seemed like it was always down. Some of them were on-premise solutions, so it seemed like we were always doing an installation. And then getting them to talk together in a way that we wanted was very, very challenging. And so for us, we implemented Oracle Cloud in our back office. That was really big for us because then everything started working the way we wanted to. And when things started working the way that we wanted to, that gave us much more time to innovate. While we were getting innovation through Oracle's product, on continuing to deliver new functionality and innovation within that product. But in addition to that, while that product was running, now running and continues to run really smoothly for us, it's allowed us to get into other technologies to either drive more automation and quality in our processes as well as different applications when it comes to the financial analysis side of things to provide new insight.
Megan - 00:09:32: And you may have already answered this, but you have a passion for personal fitness and health. So how have those metrics influenced your approach to financial measurement?
Derrek - 00:09:42: Well, I think there's some commonalities between those two things. If you wanna talk about your person's health and fitness, success comes through some consistency. I could go do, I guess, a 10-hour workout today, but I'm pretty confident that I wouldn't get as much benefit out of it as if I did 10 workouts over two weeks. So I think consistency and how I eat, how I maintain a healthy lifestyle, that translates over into business too, because some of the things that are the most important, it's really easy for them to get crowded out. There are a lot of emergencies that pop up daily. And so if we're not careful and intentional about it, we may not be spending enough time on the things that really matter. How are we gonna innovate? How are we gonna grow our people? How are we gonna take better care of our customers? That big email box can really distract us from a lot of other things. So when it comes to health and fitness, consistent focus on it a little bit each day, and business focusing on it consistently a little bit each day and then keeping the metrics simple. For me, there are some other things I focus on, but at the end of the day, fitness-wise, it's how big is my waistline and how much I weigh. If my waistline is going up, and my weight is going down, that's not a good relationship. I'm putting on more weight around my good section, I'm losing some muscle, and that's not where I wanna be. And so I think when it comes over to the business side too, having some simple metrics that really matter so you don't get lost in a sea of them helps provide a lot of focus in the business environment as well.
Megan - 00:11:19: And employee satisfaction is not always something that a CFO is focused on, but how is it that you measure and prioritize this aspect of your company's performance I know it's important to you.
Derrek - 00:11:32: Well, we really feel like, and I personally feel like, if we can win with people, we can win at anything. So you're either in on that thought or not. And, then if you, I'll put it this way, one thing that really grabbed my attention was a few years ago, Ian, maybe I grabbed onto this because I believe in it so much, Harvard did a study of all of their MBAs over a number of decades and said, why is it that some of our MBAs go on to have such great business success and some don't? And while there were a lot of stories and a lot of things that went into that, one of the most underlying things that they found was that the most successful people had a way of making things simple and easy to understand. And I think that's really important in business. So to answer your question about employee satisfaction, you can kind of back right into it because, at the end of the day, we're here to deliver a good return for our shareholders. Total shareholder returns at the end of the day is really the main thing. So we wanna have happy shareholders. It's really important that we have happy customers. I don't know how you have happy shareholders with happy customers. They're the ones buying your products and in the long run, that's what drives value. And it's hard for me to see how you have happy customers without happy employees. I mean, this is where it all happens. They're the one that makes it happen. They're the one that delivers on it every day. They're the ones that are innovating with us. And it's important, I think it's really important to create an environment where employees want, they're working hard for you because they want to, not because they have to. And I think when you can get that dialed into an aspect of your culture, there's a lot of magical things that happen from a business value perspective in relation to the plans you've built, but then employees find new things you haven't even thought of. And great things happen there too.
Megan - 00:13:26: And I know staffing's become difficult for many companies over the last few years in particular, but talk to me a little bit about how you can help make an environment a happier place for an employee.
Derrek - 00:13:40: Well, I think there are. But boy, there's a lot we could talk about here. I think if you boil it down to this as if you're the type of person that feels like you're on this earth for a reason, then you got to ask yourself at the company you're at and the job that you're at, what's my purpose here? And employees, they want to know that. Sometimes they don't think about it, but sometimes they might need a little help. And it's our job as leaders to help them find that. Part of our job as leaders is to serve employees. And if you start having that mindset and you start talking about it, that's really a first step. And so oftentimes we're focused so much on what needs to happen, how it needs to happen when it's going to happen, that we forget to talk about the why. So talking about why this is important as an executive team and with your employees is really important. And then you've got to go put some practices in place. For example, in our finance group, all of our managers are their bonuses linked to employee satisfaction. So that's putting the incentives where you believe it to be. And everybody has an employee engagement score. It's our number one metric. We've spent a lot of time on it. Everybody knows we're going to. So it starts becoming part of the culture. And then there's practical things you can do. We have a fun club page on our team's website where people post fun stories about their personal life. We have recognition events. We do a lot of celebrating. We just put in place some things around psychological safety standards. We want our employees to feel like it's OK to take risks in the pursuit of innovation. So I think it's a sprinkling of these things that you're integrating regularly throughout the year to help build a culture where everybody believes that this is a really important thing to business success and for doing good in employees' lives, which I think is an inspiring thing.
Megan - 00:15:38: And besides employee satisfaction, what other financial metrics do you consider critical in your role as a CFO?
Derrek - 00:15:45: Well, the next one on the list would be customer satisfaction. It's really important, you know, because if we want to be driving higher levels of revenue, and we say that. That's really key to total shareholder return over the long run, it's really important that we understand how our customers are feeling about our products. And while that's interesting, somewhat academically at a higher level for a business in its totality, I think where it really drives value is when it starts getting down to the individual levels. So what's my customer satisfaction score in the area that I'm operating? How does that compare back to the average for this particular location, even in a branch? What's our customer satisfaction rating? Because at the end of the day, to try these ratings up, you can only do so much by working harder and having nice interactions with your customers. To really drive it up successively over a sustained amount of time, you have to innovate. And so getting yourself centered on customer satisfaction, making it a working metric down at the management level that's interacting with customers and having ownership there, I think is a really important metric to have to drive long-term success and innovation, which is really going to drive the revenue and the investor returns over time.
Megan - 00:17:10: And switching gears a bit. So oftentimes HR and finance are running on separate systems. But I know you and your CHRO went through a project integrating into one system. Talk to me a little bit about what you guys did and the challenges that you faced. with aligning finance and HR metrics.
Derrek - 00:17:34: Well, earlier we talked about a process that we went through with consolidating systems, so moving to a cloud-based ERP system for our back office. So that started with getting alignment between finance and HR on the need to move to it. And our HR partners were really great because our HR partners had another technology application that was really especially suited to the human resource function. And as we were looking at moving to a common platform, that's something that they needed to bring to life. And so is getting alignment on why we're going to a common platform. There are some cons to them. There are some pros. was really the best step in the relationship because we were making the decision together. It wasn't something that was forced on them. We talked through it. We got their input. And so as we moved to a common system, we were really in it together from that point forward. And that has made a really big difference just in how we work together, because before we had finance systems, accounting systems, and we had HR systems. And they weren't really being run around a process. They were really being ran around the department's objectives. So as we put that in place, that really gave us common oversight with a common set of processes, procedures, and commitment to the quality of the process. So let's just call it the onboarding process to the pay cycle. finance and HR have different pieces of ownership in that cycle. But moving on to a common system really put us on a common page on wanting systems to succeed together. So that's been a really important foundation for us. And then we can talk more about some metrics, too, if you'd like.
Megan - 00:19:21: Sure. I'd love to hear about metrics and the benefits that you guys were able to achieve by doing that.
Derrek - 00:19:27: Overall, moving on to a common system for us, these are back-office systems too, which are, they're not revenue-generating systems. So getting a favorable return on investment in a measurable way can be a bit challenging. But our move on to the platform that we're on right now, the Oracle platform, it's generated a return on investment of 40%.
Megan - 00:19:48: Wow.
Derrek - 00:19:49: And so we're really pleased with that. and some of the benefits that it provided in additional financial things, by just focusing on the employee experience. Now, employees, they're not going into one system and another to do this and another to do this around the areas that are important to outbound. It's one system for them. It's very easy to access. We even put chatbots in place to help people do the tasks that they need to do. So what we want people to do is be able to use the system and access it in a way that takes the least amount of time possible. That's why we're helping employees be more productive with that system. It's also brought us together, of course, in a common set of metrics. And finance and HR partnered in on that because at the end of the day, I mean, the people metrics are super important for us. What's our turnover like? Lagging indicator. What are our engagement scores like? Leading indicator. How productive is revenue per employee? It also gives us a lot of opportunities to go in, do an analysis on the characteristics of the type of employees we have and their longevity, and correlate that with business performance to show how important some of these HR metrics are in driving overall company success metrics.
Megan - 00:21:11: And switching gears a bit again, other than the CHRO, what executives in the C-suite or stakeholders in the company do you feel it's most important for the CFO to foster relationships with?
Derrek - 00:21:24: Well, I guess for every role, you got to start with your boss. That one's a given, important relationship with the CEO. In the CEO and CFO relationship, there's a level of intimacy in that type of relationship, a partnership. So there's definitely both individuals need to be competent in their roles, but they need to have, I think, complementary work styles. And sometimes the complementary means that one's strong in one area where another's weak. And having some opposite skill sets between that and that partnership, I think aids in the complementary nature of it. Certainly got to have it with the board. We all know how important that is. But when you get down into the business, I think one of the outside of the CHRO, one of those spots that's really important for a CFO is to have really strong partnerships with the people running the business units. There's a partnership aspect there that comes through trust and relationship on both individuals being able to lean on each other, understand where the vulnerabilities are in the business, where the strengths are, being able to talk about those, and kind of having a joint interest and a joint level of trust to trying to make those better. And it really needs to have a complementary relationship there. And I think that's really important to get value out of a company and out of the CFO role itself.
Megan - 00:22:44: And in your opinion, what's the biggest misconception that people have about the role of the CFO?
Derrek - 00:22:49: Well, it might be summarized. I've heard statements before like, Cal, is this really just all about the numbers? That title, Chief Financial Officer, has financial in it. So it's got numbers in the title. And I think that's a big misconception because the numbers are just a measurement of what's really going on in the company. It's not about the numbers. The numbers are just giving you some suggestions about where things might be on track or off track. So the numbers are important. And then there are other numbers down below that aren't financial numbers that are really important. And we've talked about a few of those. So I think that's probably the biggest misconception. And CFOs own some of that, because if that's all that you're talking about are the financial statement numbers, that's exactly what people walk away with that. That's the most important thing, and there's so much good that can be done deeper in the organization that drives those top-level metrics. It's important that we're spending time there and talking to our employees and customers about why we're spending time out there. Again, getting back to the why. we're spending time in an area or why a number is important is I think a key thing that CFOs could do to make an impact on that misconception.
Megan - 00:24:08: And as we wrap up, what's the final piece of advice you'd like to offer fellow CFOs seeking to make a significant impact on their business?
Derrek - 00:24:17: Well, I don't know if I'm necessarily in a spot to say I've got it all figured out. I could probably learn just as much or more from other CFOs, but I can speak for myself. At the end of the day, it really comes down to customers and employees. Focusing on customers and employees, if we're going to make a difference over the long term, focusing on those two groups, how to meet the needs of those two groups, I think is really the key to long-term success for a CFO and for a company in meeting the needs of its shareholders.
Megan - 00:24:53: That's great advice. So last question, what is it that's keeping you up at night these days?
Derrek - 00:24:59: Right. I would suspect on the minds of most executives is the current economic environment, where we stand, recession, no recession, when will we get to higher levels of growth. But, you know, recessions are going to come and go. They're just a natural part of the economic cycle. They're going to come and go. And for me, it's about how are we innovating. How are we moving to innovate our services to make a noticeable difference to our customers? And for us, our services are people. They're the people that choose to come to workforce that we end up deploying to our clients. So we kind of got two customer groups there that are really important. So our industry is in the middle of digital transformation. And what keeps me up at night is are we staying at pace? Not just to keep up, but to do enough to stay ahead of things. To further digitalize our business, make our products or services more differentiated in both of those groups, customers and employees. And do so in a way without losing a connection to both of those groups. So there's some science in that, and there's a little bit of art in that. And that's what we're working on, and I think is what probably keeps most of us up at night at our company and in our industry.
Megan - 00:26:16: Derrek, thank you so much for being my guest today.
Derrek - 00:26:19: Yeah, my pleasure. Thanks for having me, Megan.
Megan - 00:26:21: Yeah, I really enjoyed speaking with you, and thank you for finding the time to be here with us today to share your experience and knowledge. I wish you and Trueblue all the best.
Derrek - 00:26:30: Thank you, all the best to you as well.
Megan - 00:26:31: And to all of our listeners, please tune in next week, and until then, take care.
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In this episode, we discuss:
Employment trends and financial measurement
Aligning finance and HR metrics
Customer satisfaction as a critical financial metric
Driving growth through acquisitions and digital transformation
From Acquisitions to Digital Transformation
Derrek was pivotal in driving Trueblue's value from 850 million to an impressive 2.4 billion dollars, largely fueled by strategic acquisitions. With twenty acquisitions under his watch, seeking broader growth opportunities and enhancing client satisfaction. Trueblue's current focus is on digitally transforming the business. In an industry where B2B relationships reign supreme, the company values human connection with its deployed workforce and clients.
“The acquisitions helped fill out our workforce solutions portfolio to provide more services to meet more customer needs”. Gafford said. - 04:54 - 06:26
Derrek's Innovative Financial Metrics Approach
Derrek's distinct financial approach delves deep into the core business activities. While revenue remains critical, his method seeks to uncover the driving forces behind its changes, which then extends to examining alignment with long-term objectives. While most businesses look at customer engagement and conversion to drive operational brilliance, Derrek also acknowledges the importance of strategic measurements. These encompass product-market synchronization and customer contentment across regions.
“My approach to financial measurement is to try to get down to the underlying activities that are deriving a certain part of the business”. Gafford said. - 06:28 - 07:59
Elevating Employee Satisfaction & Balancing the Books the Right Way
While many CFOs might not prioritize employee satisfaction, Derrek stands out by making it a cornerstone of Trueblue's performance strategy. He firmly believes that succeeding with people leads to success in all aspects of business. Employees form the bedrock of operations, driving daily tasks and innovation. Fostering an environment where genuine dedication, not mere obligation, is crucial. Addressing employee satisfaction's significance goes down to tracing its impact.
“I feel like if we can win with people, we can win at anything”. Gafford said. - 11:19 - 13:25
How Balancing the Books Achieves Customer Satisfaction
Besides employee satisfaction, another critical financial metric for Derrek is customer satisfaction. Understanding customer feelings about your products is vital to drive higher revenue levels. But the real value emerges at the individual level. Even at a branch level, assessing your customer satisfaction rate holds significant importance for long-term success, innovation, revenue growth, and investor returns.
“If we want to be driving higher levels of revenue, it's really important that we understand how our customers feel about our products”. Gafford said. - 15:38 - 17:10
The Synergy Between Finance and HR
Frequently, HR and finance departments operate on separate systems. However, a notable achievement took place when Trueblue transitioned to a cloud-based Enterprise Resource Planning (ERP) system for its back office, originating from a mutual consensus between the finance and HR divisions.
This endeavor delivered a favorable return on investment through improved financials and an emphasis on employee experience. Finance, HR, and communication teams established a cohesive set of metrics, acknowledging the significance of people metrics. This approach also enables insightful analysis of employee traits and responsibilities, linking them to business performance.
“Moving on to a common system generated a return on investment of 40%”. Gafford said. - 17:10 - 21:11
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