Insights from member meetups in Austin and Houston, distilled by NeuGroup’s founder and CEO.
By Joseph Neu
Treasury leadership is alive and well in Texas. That’s one big-picture takeaway from my trip to the state last week. I was there to talk with treasurers—and leadership was on my mind. Here are some themes that surfaced, divided into three sections:
Why are you a treasurer? I asked that question at a salon dinner for members hosted by NeuGroup in Austin. In addition to “why,” the answers also highlighted how each person rose to the position of treasurer.
- Quality treasurers beget quality treasurers. What’s interesting is that no one present set out to become a treasurer. Instead, they learned about its attractions and advantages after coming into contact with a high-quality treasury team led by a top-notch treasurer during some phase of their finance career (i.e., on the job and not in school)—either on the banking or corporate side.
- Strategic, please. Most members in Austin were drawn much more to being a strategic treasurer than one with a more administrative role. Strategic treasurers develop a deep understanding of the business so their teams can enable it. On a lighter note, in many cases, nobody in the company really knows what you do, yet it sounds like you are a supersmart rocket scientist. That gives you some sway to do things that add strategic value.
- An important stop for CFO. Members were split on whether they wanted to become chief financial officer, with a number saying yes to CFO aspirations and a few saying they would prefer to remain treasurer. All agreed that working with a CFO who had been a treasurer made their jobs easier, especially if the CFO lets the treasurer be the treasurer. A good working relationship between treasurer and CFO is essential.
Treasury KPIs: Are they bold enough? The topic of treasury key performance indicators (KPIs) came up while I visited treasurers in Houston. Here are some discussion points to help answer the question:
- Be bolder about enhancing business revenue. Efforts to enhance the revenue of the business can always be bolder, according to some back-and-forth among treasurers. Yes, the skewing of treasury KPIs toward cost reduction metrics deepened after some teams sought to profit from financial transactions, e.g., derivatives. But if treasury can instead enhance the revenue and profitability of the businesses it supports, then why not reward the function with profit-oriented goals and objectives?
- Promote treasury leadership more boldly. The other area to strengthen KPIs is around treasury leadership. In a recent podcast, I discussed the correlation between top-performing companies and treasury leadership with Ron Chakravarti, head of global treasury advisory at Citi Treasury and Trade Solutions. He co-authored a study by Citi GPS demonstrating that companies with superior financial performance have leading treasuries. This should help both inspire treasurers to set bold treasury leadership goals and make the business case for resources to meet bold KPIs.
- Treasury performance aligned to investors. If your treasury is in doubt about what KPIs to prioritize, think about what investors want. Ron emphasizes that treasury KPIs should be aligned to what matters to investors and that starts with a philosophy and mindset that treasury is there to support top-line growth and profitability. Accordingly, each goal should align to thinking about the business and what it may need to grow.
Development and retention of treasury talent. My conversations in Texas also touched on the critical component of talent in treasury leadership. Three takeaways:
- Teach treasury well. Treasurers continue to find it challenging to recruit, develop and retain treasury talent, particularly at less senior levels. Thinking back to the Austin discussion about why members are treasurers, it is imperative to teach treasury well to produce future treasury leaders. These leaders will also be attracted to a strategic treasury mindset, so teach that approach.
- Connect staff with peers to grow knowledge. A big part of learning is found in sharing and learning with peers. In conversations with treasurers about joining NeuGroup, for example, their first reaction is often focused on how it will help their staffs develop professionally. Whether it’s with NeuGroup or another means, treasury leaders develop better with networks that source and validate new ideas and best practices.
- Be a talent exporter. Great treasury organizations will invariably see top people leave to lead treasury at other companies. One sure sign of a leading corporate treasury is that many of the team’s graduates are treasurers elsewhere, making some treasurer meetups feel like one company’s alumni gatherings. This reality of top talent moving up and out is one reason CFOs who have been effective treasury leaders may try to retain top performers by helping them find compelling career paths within their own organizations, outside of treasury. Exporting talent this way counts, too. The problem is that love of treasury can be hard to undo!