Nurturing Finance Leaders for the Future

August 10, 2023 Theresa Rex

future finance leaders of a business checking out their corporate building

Winning in finance goes beyond getting your numbers right. Businesses have to understand the value of developing and planning for the succession of finance team members. Given the finance department's essential role in strategic decision-making and maintaining financial stability, it's important to cultivate talent within the organization to ensure a smooth transition when key personnel leave or retire. To delve into the significance of talent development, succession planning, future leaders, and bench strength in finance, we discuss with Leonard Hicks.

With over twenty years of experience in business operations and financial management, Leonard has an impressive track record of leading large-scale growth and transformation at Lockheed Martin. He currently serves as the CFO of Abt Associates and is a valuable member of the executive management team. Leonard's expertise as a proven entrepreneur brings best-in-class leadership and collaborative problem-solving skills.

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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 - 00:00:30: Today my guest is Leonard Hicks. Leonard has 20-plus years of experience in business operations and financial management, including leading large-scale growth and transformation for Lockheed Martin and the Mission Essential Group. He is currently Abt Associates, Chief Financial Officer, and a member of the executive management team. He is a proven entrepreneur who brings best-in-class leadership and collaborative approaches to problem-solving. Leonard leads and manages all aspects of financial operations and contracts and procurement, as well as facilities and office services. He plays a critical role in executing the company's strategic plan, including meeting growth goals and driving mission impact for app clients. An important area of focus is developing scalable processes for long-term sustainable growth. Previously, Leonard served as Executive Vice President and CFO of the Mission Essential Group, a global professional services firm that provides intelligence analysis and operation support to the defense and intelligence communities. Prior to this, he served in several roles at Lockheed Martin, including Vice President and the CFO of the Air Mobility and Maritime Missions Group, and Vice President and CFO of the Global Training and Logistics Group, where he grew the business from slightly under a billion dollars to more than $3 billion in three years by restructuring the business model, enhancing training and aligning teams to improve collaboration. Leonard, thank you very much for joining me on today's episode of CFO Weekly.

Leonard - 00:01:59: Great to be here. Thanks for inviting me.

Megan - 00:02:02: Yeah, I'm excited to have you on the show. And today we'll be talking about talent, the development of talent, succession planning, and ultimately building bench strength. I'm really looking forward to this discussion. So let's jump right in.

Leonard - 00:02:15: Great. I mean, it's one of my favorite topics as a CFO here at Abt Associates. It's one of those things that I just don't think we get enough of or we can spend too much time talking about is talent. It is the core of what we do. The core of who we are is having good talent and making sure that we're developing the next generation of talent.

Megan - 00:02:39: Yeah, so important these days. It's such a scarce commodity. And I feel like a lot of companies are very reactive when it comes to talent rather than being proactive.

Leonard - 00:02:51: Yeah, you know, it's interesting. You said I came from a big company in the sector. And so they could put their name out in colleges and folks sort of jump at it. When you come from the middle market where I'm at today, you have to work a little bit harder. You have to talk a little bit more about what not your company is gonna do, but what you're gonna do for the talent, how you can help them develop and create themselves for the future. And I think people and kids particularly are excited about shaping their future when they know they have a leadership that's interested in them as much as they're interested in the company.

Megan - 00:03:26: So to start, can you tell us a little bit about yourself, your background, and how it is that you got to where you are today?

Leonard - 00:03:34: I'm the CFO today at Abt Associates, a federal contractor in the middle market here in Washington, D.C. Prior to that, working for Lockheed Martin, just a wonderful company and wonderful for me because I was in a talent pool where I had leadership that sort of put me in what we call the finance leadership development program early on in my career. They saw something in me that I probably didn't see in myself and really sort of drove me to want to be better, to contribute a lot more. And I feel quite honestly that energy and the desire to want to do the same, to mentor and develop more finance leaders in this business.

Megan - 00:04:15: Yeah, those programs are always so valuable for the employees that go through them. So can you talk a little bit about your priorities as a CFO at Abt Associates? What is your response?

Leonard - 00:04:27: Well, you know, if Abt Associates not only have, I'll say the accounting functions and the finance functions, FP&A, all those are actually pretty exciting. I do have corporate development that reports to me as well as the CIOs organization and of course the facilities and operations piece of the business. So I like as a CFO that we're not just looking at the balance sheet while it's important. And I tell my team all the time, we go to battle with our balance sheet. We got to make sure it's accurate. We got to make sure we've got a room on it. We know the, whether I'll say the, of the holes are, but we also go to war with looking at our strategy. And I would say that finance and particularly the CFOs role is more strategy of what we do with our balance sheet than it is just recording our balance sheet on a quarterly and a monthly basis.

Megan - 00:05:22: So let's talk a little bit about bench strength as a CFO. How would you describe the concept of building bed bench strength? What does that mean to you?

Leonard - 00:05:32: Bench strength is one of the things that keeps me awake as a CFO every night. And because in a lot of areas, I'm only one deep and I worry about that one deep and are we doing enough to develop the next generation of talent behind that one? And so for me, it's how do we take our talent and multitask it where we're not just doing FP and A that you really understand the balance sheet and you can do closing the books. And at the same time, you might be doing pricing for a proposal that's going in after associates, we do somewhere around four or 500 proposals a year. And we've had this thing called proposal season. And so what was really challenging is making sure that we have been strained to be able to handle the proposal season while we have normal strength to be able to handle the normal gap requirements. Does that make sense?

Megan - 00:06:26: Yes, it does. So it sounds like you must do a lot of cross-training amongst your team. Not necessarily that you have a bunch of extra resources, but that your team is cross-trained so that they can wear multiple hats.

Leonard - 00:06:40: Yeah, we tried out a lot to give one, some of the talent, some excitement about not just what their current job is, but how they fit in the bigger picture of the company. I find that finance people that really understand the company really enjoy their jobs a lot more than just being a finance person. And so that is why we've sort of expanded their roles to be multifaceted to handle the challenge of the business and the challenged career growth.

Megan - 00:07:10: So how do you assess the current skills gap within your finance team and what steps do you take to address those gaps effectively?

Leonard - 00:07:18: There are a lot of skill gaps. And I think those steps we take, quite honestly, are not as proactive as I would like. They're more reactive to the situation we are dealing with. When someone leaves or when we get, I'll say, growth because of a contract, we struggle, quite honestly, to fill that skills gap. And we're looking for different ways that we might outsource some of it, automate some of it. I'm excited about AI capabilities that we might be using across our business, but we're just in the infancy of that.

Megan - 00:07:54: And talk to us about the strategies and initiatives that you believe are crucial for CFOs to build bench strength within their organization, both today and in the future.

Leonard - 00:08:04: I think one of the critical skills we have to look at as CFOs is how do we simplify some of the processes that we've all inherited as CFOs. So what happens as CFOs, we take over as a CFO of a business and immediately we're thrown into having to do reports to the board, reports to the street, wherever, and we don't get a lot of time to sit back and re-engineer the process. So I think it's important right now, for example, we're going through a process or tools implementation after associate that forces me to go out and hire a separate team to work on the tools. The reason is that I can't have the team in place today, execute the business, and work on new tools and processes. So it forces me to have to come up with a new team right away, that forcing of that new tool and team actually helps me shape the future of the business because I'm looking out to not how things are done today, but how they're gonna be done in the future with this new team I'm developing parallel. And while budgets are tight, I can't afford to make this investment because I can't keep hiring more and more people. I have to get more and more efficient cost-wise and process-wise. So that's a little bit of how I sort of looked at it to try to build the team, build the process and become stronger as a company.

Megan - 00:09:31: Where do you think the profession of accounting is heading in the future? You mentioned AI and Automation. What skills do you think are going to be necessary down the line that maybe a lot of people don't yet possess?

Leonard - 00:09:45: is an interesting question because I think the answer I'm going to give you is a little bit counterintuitive. A lot of what makes accounting work easy or hard are the people that use the data. So I'll say from a balance sheet perspective in accounting, my team spends a lot of time with the program managers and program directors explaining what's there and what options we have in the business. I think where the future is going to be is when we automate the data that project management actually needs and uses, it'll free up more of our accounting team and talent to be more advisors than to be working the actual day-to-day balance sheet. Here's the information and here's what to do with it. I think the project management has to get stronger to utilize a lot of the data that we're providing. I will allow the project managers to be stronger, which will take some of the load off of accounting to be all things to all people.

Megan - 00:10:48: And you mentioned data. So how is it that you guys are using data to drive your decision-making?

Leonard - 00:10:55: Oh my gosh, it's everything. I mean, the real problem with the data is we created some initial dashboards when I got there that says, hey, what's the pipeline look like? What's the cost to go out and get new customers? What's the cost of execution? And I got to tell you, I'm pretty excited when I see the data, but the folks looking at the data were sort of, we gave them so much that I don't think they knew what to do. So my job evolved more than just providing the data, but also providing the recommendations and modeling what we thought the outcome was if we did what we said we were gonna do. What I'm excited about today is the modeling because we can now take the data and say, here are two or three probable outcomes of if we change course, if we bring on more staff, if we go with less staff, the modeling piece becomes the exciting piece of how I think the finance team of the future is gonna be able to have the impact on the financials long-term.

Megan - 00:12:00: And when you look at your talent development initiatives, what metrics or key performance indicators are you using to measure the effectiveness of those initiatives?

Leonard - 00:12:11: Wow, we just joined a program here at Abt Associates AICPA, where we really try to get our team multiple levels of instruction or multiple levels of engagement. What we really now are sort of evaluating the strength of our finance team is how many folks are very narrow-minded in how they are narrowly focused on finance versus how many can do multiple tasks and see how we connect the dots. And those that connect the dots are usually the ones that we're able to put on higher, I'll say value return items versus those that cannot connect the dots. It's not to say they aren't valuable to us, but we put them in a singular set of tasks that are more suited for them. So as an organization, as a leader, we have the responsibility to evaluate and then place people in the right places where they can add the most value to the company.

Megan - 00:13:13: That's really interesting. Is that like a survey that people take to kind of assess a personality type of thing? Or what is that?

Leonard - 00:13:22: Wow, we do that too, but it's not really based on that as much as sort of based on really trying to get them to, well, we do six-month rotations into pricing, six-month rotation into FP&A, six-month rotations into the Controller Shop for balance sheet and accounting and see which folks really adapt to multiple tasks very easily versus those that are very, I'll try to make sure we keep them in, I'll say the standard jobs where we were doing payroll versus those that were doing frontline analysis and strategy focused toward the company.

Megan - 00:14:05: That sounds like an amazing rotational program. How is it that you get your talent familiar with the underlying business operations?

Leonard - 00:14:16: Well, that's an ongoing process because I hear every day folks feel like they don't know, they haven't been involved, they don't understand the strategy. And we're pretty open about the strategy. I think part of what is happening here is the expectations of particularly, I'll say kids coming out of school today, multitasking, having social media. It is very important for them as I see it to have, I'll say the social media aspect where they have people around them that talk about the multiple functions rather than just the one function. So I think that's what we're seeing. That's what we tend to gravitate toward. We don't take folks that are just from the Ivy Leagues or take folks that are just with that 4.0, grade point average, but really take folks that we think want to understand the business of accounting, not just accounting.

Megan - 00:15:13: And in your experience, what are some of the common challenges that CFOs face when they are trying to build bench strength?

Leonard - 00:15:21: Competitors. What really happens is people get to see some of the talent, particularly our suppliers, and our competitors, see when we bring that level of talent to the room. And they're constantly recruiting, recruiting, recruiting. So one thing I, when I sat our team down and we got, I'll say this ACPA, a rotational model that we're using today to move our, those that want to become full board, CPAs, I want to get them there. Those that want to become finance people, I want to get them there. I want them to understand the difference. And so competitors, when our folks sort of walk in the room and they're able to talk to bankers or able to talk to program leaders in the way that they do, they immediately stand out. And we sort of knew when we stood up the program that our attrition rate may go up, but that was okay. We felt that those that stayed would stay longer because we had the program. And those that go were going to build their career and they can always point back to us and say, they got that at Abt Associates. And we would get a reputation in the market for being a high-caliber place for financial folks to want to come work.

Megan - 00:16:37: That's a great way to look at it. I was going to ask you, once you identify a high performer, how do you work to retain them?

Leonard - 00:16:44: Well, I don't know. This is an ever-refreshing question. Not easy. Oh, it's not. I have a few high performers today that I love. They love the business. They are, I'm worried that I'm not going to be able to rotate them fast enough that they are going to take other jobs. And I've really sort of had my leaders sit down with them, have a conversation. Then I sit down with them and say, look, I need 18 months. Give me 24 months because I can't, I don't have a backfield for you. I want to get you on the rotation faster because a lot of the kids want to move faster than what we did when I came through the process. And so I'm having to adapt and learn and panic and worry about it, quite honestly.

Megan - 00:17:32: And in these days of frequent budget cuts and companies constantly trying to do more with less, can you talk about any innovative initiatives that you've put in place for your finance teams to make sure that they have the expertise that they need?

Leonard - 00:17:48: I'm a firm believer in people, processes, and tools. What are we doing with the people to make sure that we're getting a high caliber of people, we're retaining them, and developing them? And that's why we've come up with this Revocation Program and that's the people part of the business. I try to interview as many as I can. At the same time, I really try to empower a CFO, my direct reports, and their direct reports to really hire folks that are under the ethos. Anybody above a director, obviously, anybody a director or above, I interview to make sure that the people part of it is part of the culture that we create here. The process, I'm very coming from Lockheed Martin, very process driven. And so sometimes I have to back off of that process, but I think people are comfortable when they know there's a process that we're following and we know what the results are gonna be. When I first got to Abt Associates, I would say we had a conglomerate of really good professionals with all different processes and that we fought to come together to have one what we call the app process. It's very important that we develop the app process or the company process where you're at so people know what that is. And so we've been developing the process. And when you have standard processes, I think it gets people more comfortable that they're good at their job, they know their job and they know what the outcomes are. Without that, I think they feel like they're just fighting up a yoke every day. And then the tools are the third piece of that. And innovation and tools, it's hard for me. It's not that I don't believe in innovation and I don't want innovation, but as a CFO, I like predictable, reliable results quarter after quarter. I don't like surprises. And so therefore, every time someone introduces a new thing into my ecosystem, and we have to worry about it, as a CFO, I'm nervous. Well, was it because we changed this because we changed that? I'm trying to be adaptive and innovative without adding the disruption that all the changes bring to my environment, which as a CFO, made me really uncomfortable. So I would like to say I'm as innovative as possible, even though I have the CIO organization that reports to me. One of the reasons I have that is because again, being a CFO, I'm a control freak. I wanted to control my environment to know what was coming into it.

Megan - 00:20:18: So when you look at yourself, how do you get comfortable with control versus innovation? And when something new comes in, how do you get comfortable with the fact that it's working as it's supposed to?

Leonard - 00:20:30: I came up through a generation that changed that said, you know, it's very interesting. We talked about Apollo 13 and how failure is not an option and we got to get it right and everybody's life's depending on it. To the generation that says fail fast, learn it, get in there, make sure we are evolving, and make sure we fail fast, we learn fast and we adapt to that. So how do you get comfortable with it? Fail fast. I push my team now, look, we cannot avoid this. Let's get on with it. Let's understand that if we fail, we've got to recover quickly. So the example of that is, as everybody putting in an LRP system or evolving my LRP system, I mean my ERP system, as I'm evolving that system, I'm collecting cash as quick as I can because the first thing that's going to happen is I know my team is going to come to me and say, hey, we can't get the bills out the door, which is the worst thing to happen. So I've been pushing the team to collect faster, and get my DSO down lower, as low as I possibly can. And the team is always saying to me, Leonard, we're already world-class. We're not world-class enough because we're about to make changes to the system that are going to impact us. So thinking a couple of steps ahead helps me get comfortable with some of the innovations because I know we are going to fail. And when we fail, I've got enough room to not protect the company.

Megan - 00:22:00: And it seems like the world is evolving faster and faster and technology is the same way, just so quickly evolving. How is it that you're preparing your teams for the future?

Leonard - 00:22:13: Wow. In some respects, it's really the leaders I have on my team. I have some leaders that are cowboys that want to change everything every 15 minutes. I like them. I mean, I like their ideas. I like them pushing. And then I have some leaders that are, hey, look, we will never change. This is what Gap requires. This is what the Government requires. And so it's the Leadership Team, ultimately, that you put in place that is sort of the yin and yang if you will, to try to get that balance of innovation versus risk. And you get to be the CFO, the quarterback that says, here's the way we're going to go. And so I surround myself with people that push me on both sides of the spectrum. And I like people, I always say, hire people that are smarter than you and then let and then turn them loose. Because in the end, they're going to create more value for you than if you do it by yourself.

Megan - 00:23:07: Absolutely. I would agree. I never understand why people are threatened by hiring people that are smarter than them. I think that's the only way to go.

Leonard - 00:23:18: Right. And I mean, that's probably not a high bar for them to be smarter than me.

Megan - 00:23:22: I doubt that.

Leonard - 00:23:24: But you like to be in a room with smart people. It is just phenomenal, the energy that they bring to the table and that you get to see and be a part of the magic happens.

Megan - 00:23:36: And last question, but as a CFO, and you've mentioned a couple of things already, what in general is keeping you up at night?

Leonard - 00:23:43: That's a very good question. The number one thing that keeps me up at night is we made a commitment. We made a commitment to the board or we made a commitment to the street. And so people value the CFO because they are supposed to be the voice of reason in the company, the one that they can trust no matter what, where program managers might be too aggressive or CEOs might be too conservative depending on their CEO. The CFO's role is supposed to be credibility and reliability quarter after quarter. And so the thing that keeps me up at night is obviously I don't want to do anything that threatens the credibility and reliability of the CFO's Office. What that means is I've got to have the right talent in the right seats that give the right information for me to have comfort in that job. So talent, it all comes back to talent. It is the most precious thing that I'm going to have to deal with. And yet it's the thing that keeps me up the most at night is I don't want to lose key talent. And I'm always looking for key talent because I'm always worried about losing key talent. So to me, that keeps me up at night and being able to deliver on the commitments of the company, which I take those commitments personally, as I do take everybody's careers personally, that they're looking to me to develop them and to open doors for them. And I don't want to let them down.

Megan - 00:25:10: Leonard, thank you so much for being my guest today.

Leonard - 00:25:13: Oh, thank you for inviting me. I'm so honored.

Megan - 00:25:16: Yeah, I really enjoyed speaking with you. And I thank you for finding the time to be here with us today and share your experience and knowledge. And I wish you and Abt Associates all the best.

Leonard - 00:25:28: Thank you very much.

Megan - 00:25:29: Yep. To all of our listeners, please tune in next week. And until then, take care.

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In this episode, we discuss:

  • Developing future finance leaders

  • Building bench strength in finance

  • Talent development and succession planning

  • Driving sustainable growth

  • The role of innovation in finance teams

Key Takeaways:

Building Talent Bench Strength

A strong bench of talent is essential for any forward-thinking CFO focused on nurturing the next generation. Leonard believes in developing a multi-skilled team capable of handling various tasks beyond finance, such as balance sheets, closing books, and pricing proposals.

With hundreds of proposals annually, having a well-trained bench is vital, allowing them to manage regular demands and the challenging proposal season. Understanding the company boosts job satisfaction for finance professionals, leading Leonard to expand their roles for better career growth and to meet business challenges effectively.

“I find that finance people that really understand the company enjoy their jobs a lot more than just being a finance person,” Hicks said. - 05:23 - 07:10

The Number One CFO Skill for Building Bench Strength

Quote Leonard Hicks CFO of Abt Associates

Building bench strength within their organization goes down to CFOs simplifying inherited processes to boost efficiency. Implementing new tools and forming specialized teams for execution allows them to shape the future while maintaining current operations. Investing in bench strength ensures adaptability and growth without relying solely on hiring, a process that secures the organization's success in a changing business landscape.

“One of the critical skills we have to look at as CFOs is how do we simplify some of the processes we've all inherited as CFOs?” Hicks said. - 07:53 - 09:31

How Future Finance Leaders Will Manage Accounting in the Age of Automation

Quote how future finance leaders will deal with automation

The future of the accounting profession is heading towards greater automation and AI integration. To thrive in this space, accountants will need to develop skills that allow them to become strategic advisors, focusing less on day-to-day tasks. For this, project management must also enhance its ability to use the data provided by accountants, while AI will empower them and lessen the burden on accountants, allowing them to focus on higher-value tasks.

“The future's gonna be when we automate the data that project management actually needs and uses to free up more of our accounting team and talent to be more advisors than to be working the actual day-to-day”. Hicks said. - 09:31 - 10:48

How Future Finance Leaders Will Overcome Challenges in a Competitive Market

Quote finance leaders overcoming challenges

CFOs face common challenges when building bench strength, notably competition from suppliers and rivals constantly recruiting top talent. However, Leonard states that their employees stand out, impressing others when interacting with stakeholders like bankers and program leaders. While their attrition rate may increase, Abt Associates believes that those who stay will benefit from its program, while those who leave will carry the company's reputation as a high-caliber workplace for financial professionals.

“Those that stayed would stay longer. Those that go, we're going to build their career, and they can always point back to us and say they got that at Abt Associates, and we would get a reputation in the market for being a high-caliber place for financial folks,” Hicks said. - 15:13 - 16:36

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