California Society of CPAs

1. California Society of CPAs Lead Your Firm to Profitability Joan Alleckson President, Profit Solutions Network & Dan Hammang Tatum CFO

4. CFO/Controller: “The Profit Guru” • Understand financials • See the whole organization • Work with each team to plan their next years • Credible, trusted advisors No one else has your birds eye view!

5. CFO Profit & Organizational Leadership • Building a “Great Team” • Performance Metrics • Motivation – WIIFM • Consultants • Outsourcing • Technology

6. Build a Great Team Good to Great by Jim Collins Good-to-Great Leaders began the transformation by first getting the right people on the bus (and the wrong people off the bus) and then figured out where to drive it. “Good-to-Great Leaders were rigorous, not ruthless, in people decisions. They did not rely on layoffs and restructurings as a primary strategy for improving profits.”

7. Build a Great Team “If you have the right people on the bus, the problem of how to motivate and manage people largely goes away. The right people don’t need to be tightly managed or fired up; they will be self-motivated by the inner drive to produce the best results and to be part of creating something great” Good to Great by Jim Collins

8. Build a Great Team People are not your most important asset. Theright people are. “We hire five, work them like ten, and pay them like eight.” Good-to-great firms put greater weight on character attributes than on specific educational background, practical skills, specialized knowledge, or work experience.

9. Build a Great Team Good-to-Great: Rigorous People Decisions • When in doubt, don’t hire – keep looking. • When you know you need to make a change, act. • Put your best people on your biggest opportunities, not your biggest problems.

10. CFO Profit & Organizational Leadership • Building a “Great Team” • Performance Metrics • Motivation – WIIFM • Consultants • Outsourcing • Technology

11. Performance Metrics

12. Performance Measurements • Trends – what worked, what didn’t • SWOT Analysis • Key trends • Key measurements beyond financials • Sales – Customer contact • Productivity – Sales / Employee • Throughput • Quality – warranty, defects • Safety – Lost time accidents • Innovation • Customer Satisfaction

13. CFO Profit & Organizational Leadership • Building a “Great Team” • Performance Metrics • Motivation – WIIFM • Consultants • Outsourcing • Technology

15. Reward the Right Behaviors W I I F M What’s in it for me?

16. WIIFM Success Stories Barney and Barney Provides insurance and employee benefit programs Profit Sharing Plan for all employees Incentives and Support – Others join the team Flexible work environment • Increased revenues by 19% • Increased profits by 69% • ALL employees in profit sharing after 1 year • Average profit sharing is 4% of base salary

17. WIIFM Success Stories High-tech manufacturer Separate repair and service department Incentives for profitable repairs NOT reducing overall firm costs

18. WIIFM Success Stories Workers Compensation Tripled • Consultant Developed an Action Plan • Safety Committee • Measurements – • Outstanding Claims – Reviewed Each Month • Lost Time Accidents • Reportable Injuries • Safety BINGO Reduced Workers Comp Cost by 60%

19. WIIFM Stories Goal: Increase cash discounts Plan: Take all cash discounts and “work with purchasing” to get more Purchasing Department’s MBO’s were on Delivery, Quality and Price. Problem: Price Measurement was based on PPV, excluding any cash discounts

20. CFO Profit & Organizational Leadership • Building a “Great Team” • Performance Metrics • Motivation – WIIFM • Consultants • Outsourcing • Technology

21. Is this how you view consultants?

22. The workforce is changing. Are you? Workforce Demographics: 45% of California’s Adult Population has been in their current job less than 2 years. 47% of Workers currently looking for a job

23. Baby Boomers as Free Agents Self-employment rate among people between fifty-five and sixty-four is two and a half times greater than among those between twenty-five and thirty-four One in five 65-69 year olds work today 80% of Baby Boomers expect to work during retirement ON THEIR OWN TERMS 76 Million Baby Boomers vs. 41 Million Generation X

24. Leveraging the Demographics Integrate flexible work arrangements, consultants and free agents for increased profitability: • Free Idea Generation • Free Referrals • Decrease costs – only pay for what you need • Infuse non-biased decision making into tough areas • Performance Based Contracts • Training and Mentoring your team • Cultural fit is as important with consultants as it is with employees Tatum CFO is a perfect example…

25. CFO Profit & Organizational Leadership • Building a “Great Team” • Performance Metrics • Motivation – WIIFM • Consultants • Outsourcing • Technology

27. Evolution of Outsourcing Virtual Companies Product Development/ Design Finance Functions Manufacturing Information Systems Marketing Distribution Perceived Proximity to “Core” Library Transportation Photocopying Messengers Security Catering Janitorial Vertically/Horizontally Integrated Companies Time Source: The Economist IQ California CPA Business and Industry Conference – 27 –

28. Outsourcing in Finance Functions Controller Managerial Accounting/Budgeting Fiscal Accounting Internal Audit Tax Perceived Proximity to “Core” Accounts Payable/Receivable Pension/Benefits Administration Information Systems Payroll Time Source: The Economist IQ California CPA Business and Industry Conference – 28 –

29. Outsourcing is Growing • An estimated 90% of the Fortune 500 outsource at least one function • Gartner Group estimates that the use of Business Process Outsourcing (BPO) services is growing by 10% per year and will reach over $173 Billion by 2007 • 49% of companies outsource payroll • CFO Magazine: Of those who currently outsource offshore, 64% plan to expand their outsourcing in the next two years IQ California CPA Business and Industry Conference – 29 –

30. CFO Magazine – Outsourcing Factors Please rank the top factors you would consider when deciding whether or not to outsource offshore. Rank 1. Need to remain competitive 2. Desire to improve profit margins 3. The impact on workers who will be displaced 4. Desire to reallocate resources to new opportunities 5. The impact on morale of remaining employees 6. Risk of negative publicity

31. Hourly Wage Comparison to India

32. Labor Force Demographics

33. Outsourcing Savings Typically expect to save 25-50% Outsourcing may be necessary to compete General Electric is reported to have saved $340 Million from their Indian Service Options* IQ BackOffice: Outsourced Accounting and Accounts Payable Processing Leverage technology and low cost labor Flexible Solutions • Source: Yale Center for Globalization

34. CFO Profit & Organizational Leadership • Building a “Great Team” • Performance Metrics • Motivation – WIIFM • Consultants • Outsourcing • Technology

35. Utilize Technology & Internet • Customer Surveys • Survey Monkey & Zoomerang • Save travel through On-Line Conferencing • IPX Connect – PowerPoint Presentations Getipnexus.com - Access Code JDM • Marketing - Website and Digital Campaign • Macromedia Contribute 3 • Internet Voicemail and Conferencing • PB Next – Small Business Phone – 3 cents/min.

36. Favorite Internet Resources • Hoovers.com • Unclaimed.org – Unclaimed Property • Taxhomme.com – State & Local Taxes • Priceline & BiddingforTravel.com • Odci.gov/cia/publications/factbook/ (CIA World Fact Book) • Nacha.org – Electronic Payments Organization • Willyancey.com

38. Stay Current – It’s a good investment in time Google employees spend one day a week working on “pet projects” • Internal Brainstorming • Incentives – Reward System • Conferences & Seminars • Networking

39. Organizations • CalCPA • IMA • FEI • FENG • Association for Corporate Growth • Corporate Directors Forum • CFO Roundtable • San Diego World Trade Organization • Trade & Industry Organizations

40. Contact Information Joan Alleckson 858-576-1172 Jalleckson@profit-solutions.net www.profit-solutions.net Presentation available at Profit-solutions.net/CalCPA.htm