Chicago — The lot of the modern financial executive is not an easy one.
Chief financial officers need to navigate a market full of both opportunities and threats, according to Paul Hogan, CFO of Nelipak Healthcare Packaging in Cranston, R.I. Hogan spoke June 9 at the Plastics News Financial Summit in Chicago.
One trend impacting CFOs is consolidation in the customer base, with some customers reducing the number of vendors they work with from 50 to 10.
"Scale drives margin," said Hogan, who won PN's CFO of the Year award in 2016. "You want to be a preferred vendor."
The list of challenges includes logistical, regulatory — in both the U.S. and Europe — financial reporting, cultural differences, language issues and currency, where there's potential volatility. All of these can lead to misunderstandings.
Frequent travel also can put strain on management at a company like Nelipak, which operates in eight different time zones, Hogan said.
"A corporate culture has to have shared values, beliefs and behavior," he added. "When you try to assimilate number of different nationalities, it can be a real problem."
Hogan explained that U.S. culture is based on individualism, but cultures in 70 percent of the world are based on collectivism.
"Corporate culture is based on the underlying national culture," he said. "So you need to find a common culture that won't clash with national culture. But forcing a one-size-fits-all corporate culture isn't likely to succeed."
CFOs at firms owned by private equity — such as Nelipak, which since 2014 has been owned by private equity firm Mason Wells of Milwaukee — also have to deal with a limited time horizon, Hogan said, since private equity firms at some point will look to sell the firm to another buyer.
"In private equity, there's a heightened focus on value creation," he added. "A private equity CFO needs to make tough decisions but also be flexible."