As we discussed in our article on the five things you need to avoid on your journey from controller to CFO, controllers are great at saying “no.” Controllers are great at keeping the house in order, delivering accuracy, and making decisions that many could consider emotionally taxing.
But what if the ‘biggest thing to avoid’ on your path from controller to CFO is the key skill for a role that CFO Magazine predicts to be one of the hottest titles of the coming year? What is your ability to remove bias, push aside internal politics, and focus on making tough financial decisions were the most important skills for this hot job?
If you can do all this for the good of a company’s future, then the title of Chief Restructuring Officer could be yours.
The Sad Truth: Chief Restructuring Officer Could be The Next Big Thing
For many controllers, the last few months have been a call to greatness. Cash flow has been tight, vendors have been pushy to get paid, and it’s been on you to keep everything working. However, with many companies still struggling to stay afloat, some might need to shift their focus from staying alive to rebuilding—and that’s where the Chief Restructuring Officer comes in.
Restructuring an organization is often an expensive, political, and risky proposition, and it’s one that no company can take lightly. Enter the Chief Restructuring Officer, a person who can push aside all of the internal politics, emotions, and hierarchies to perform the job. From identifying opportunities and threats to the organization, deciding whether a company can be saved, and then taking on the challenging role of cutting, steering, and ultimately salvaging what you can, the required skillset for this position isn’t too far from your own.
The Basics: What is a Chief Restructuring Officer?
A chief restructuring officer (CRO) is a senior officer of a company given broad powers to renegotiate all aspects of a company’s finances to deal with an impending bankruptcy or to restructure a company following a bankruptcy filing. The use of CRO’s, who usually have an expertise in the field of business in which the company operates, has been increasing in popularity since the 1990s. CROs are sometimes seen as an alternative to using a Trustee in bankruptcy in a reorganization bankruptcy, because the trustees may not be knowledgeable in field of business conducted by the company.
Key Skills for CROs
According to Kibel Green, Chief Restructuring Officers are vital to distressed businesses for the following reasons:
- Credibility and Balance: Executives must resist the emotional temptation to convey an optimistic perspective that will make the near-term easier but will dramatically erode confidence if the ‘better’ results do not materialize. It’s not just painting a picture, it might require you to say that you can’t help.
- The Ability to Remain Cool under Pressure and Focus on the Science of Restructuring: The management of most companies has never been through a crisis before. From being able to buy time to stabilizing and retaining the right talent to keeping a cool head when presenting a restructuring to sources of capital, CROs need to focus on the science of restructuring.
- The Fortitude to Make Unpopular Cuts: Much like a new manager leading a sports team’s rebuild, you’re going to have to make unpopular choices. CROs need to know that there are no sacred cows, and the qualified CRO will immediately look into possibilities such as excessive inventory, high transportations costs, excessive use of space, high direct and indirect labor, and more. opportunities to reduce the fixed cost.
- Decisiveness and Agility: There is no time to waste when a company is in turmoil. CROs need to get in, make decisions, and get things on a path to normalcy. The effective time for a company in turmoil is thirty times faster than for a healthy company. Healthy companies can get by with monthly reports; the company in crisis must have daily reports. The sense of urgency must be heightened throughout the organization and there are techniques to make this happen.
- Focus and Execution: Failure is not an option – In this environment, there is only one chance to do it right. It must be properly done the first time. Therefore, the CRO and support team can not afford to lose its focus.
Remember, this is not an easy job, and it’s usually not a popular one, and it might not even be a successful venture—just one in five distressed companies recover—and that was pre-COVID.
Could a Controller be the Right Person for Leading a Restructuring?
Though you may not be as legally-gifted as others, if you can rely on your finance skills and continue to keep up with creditors, you might be able to lead the restructuring. You probably won’t be the most popular person at the organization, but if you can keep the organization afloat, a vastly different company is going to be better than a nonexistent one.
Whether Keeping Your Business Afloat or Reorganizing, Lead Smarter with the Controllers Council
At the Controllers Council, we launched to help our members develop necessary skills and lead the finance and accounting organization whether it’s chugging along or struggling to stay up. From networking opportunities to a forum to help you discuss all the latest trends, we would love to have you around. Learn more about the benefits of membership here.
Additional Resources
How Controllers Move the World (Infographic)
The Evolution of the Controller and the Importance of Growth
The Evolution of KPIs: What Broader Use Means for Controllers
