Controllers must master many skills to ensure career success. Things like risk management, the ability to anticipate challenges, and technological savvy are near the top of the list. But according to Mike Whitmire, CEO and cofounder of FloQast and author of Controller’s Code: The Secret Formula for a Successful Career in Finance, soft skills, such as managing people and building a positive team culture, have never been more important.

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By: Bill Hayes, Pennsylvania CPA Journal Managing Editor

Podcast Transcript

The role of the organizational controller is evolving. At this point, it involves not only financial responsibilities, but building a positive team culture, managing risk with help from the correct technological solutions, and anticipating the future challenges to be confronted by your personnel. In his new book, Controller's Code: The Secret Formula for a Successful Career in Finance, Michael Whitmire, CEO and co-founder of FloQast covers all of this and more, and we are happy to have him as today's guest.

As we mentioned, in your book, Controller's Code: The Secret Formula for a Successful Career in Finance, you discuss the framework for the modern controller. What are the top traits a controller needs today, whether that's the traditional ones or the new ones?

[Whitmire] What's interesting is I started my career in accounting. So just to take a step back here: I'm an inactive CPA. I was at Ernst & Young auditing for about four years. Was in the mid-market space, so the controllers that I was working with were overseeing teams of anywhere from, let's call it, five people up to about 50, and the skills needed very much varied based on the size of the accounting department, and I then saw that firsthand, I moved over to a pre-IPO software company. I joined when there were five people in accounting, we had our controller, and I was there for three years and she helped scale the team from five to 50 in that timeframe, and that's a really good example of how the controller's job has evolved over time, and then also evolves when you're at a company based on the size of that accounting department.

So I just want to set that stage. I think that's really important. Let's take a step back, broad, just high level. I think the people and soft skills are becoming a much higher demand for controllers. You're only as good as your team and the ability to hire, manage, and lead that team is more important than ever, particularly in a world where accounting is pretty much always understaffed. You need to have a really great team and be able to motivate them and train them, and having continuity in your accounting department is very, very important. Turnover is painful for us. Generally, you have a good process in place, you're doing the same things every month, and once you get into that rhythm, you'll hit a good close time frame, and you'll have a happy CFO with the accounting department.

But as soon as turnover hits, it's really expensive. The stat around turnover is ... it actually costs two times the salary of that employee to replace them. That's a combination of hard costs and soft costs because of how much time goes into hiring and then how much ramp up goes into actually getting that employee as productive as the person who left. That's why I can't overstate the importance of management and leadership skills, and then the ability to hire very well on the front end. Then the other component of the soft skills and people skills is reporting up to the CFO, and it used to be a controller would say, "Hey, we're done with the financials. Go for it, CFO."

Now the controller is expected to think a little bit higher level, be more strategic, understand the numbers, in particular understand why certain things might've changed, period over period. I point to the flux analysis as a very strategic activity that controllers can take on and provide value for the CFOs, and that's just becoming the expectation at this at this point. When I started in accounting in 2006, what I mostly saw were controllers who were really focused on the numbers, making sure things were done correctly, reviewing reconciliations at a detailed level, and making sure guidance was applied properly, looking at all the journal entries. I've just seen that work fall in the plates of accounting managers or senior accountants today. The controller offloads that work so they can focus their time on the other areas that I just listed there.

That's a quick overview. Then, back to the concept around stage of business, being a controller at a start-up with four people in accounting is very different than being the controller of General Electric, and that's going to require just a different skill set to be successful in that position. So, the early-stage controller is going to have to be a roll-up-your-sleeves-type personality and get stuff done and care about the details and care about scaling and hiring a team. It's a very, very difficult job. Whereas a controller at a Fortune 500 company can definitely take a step back and let their team of hundreds of accountants get a lot of that work done and focus on the higher-level things that I pointed to earlier.

You mentioned turnover there, which is interesting because it leads into this question, because part of preventing turnover is being able to effectively work with people. How important is it for a controller at this point to be able to effectively work with people, whether we're talking about people on their team or even outside stakeholders that they deal with?

[Whitmire] I would argue that this very well could be the most important skill for controllers to have right now. Managing people is much more difficult than people give it credit for. Everyone starts in accounting and they just assume they want to be a manager and a controller, but in many regards management isn't everything it's cracked up to be. That's difficult, and I would point to a big area of emphasis: assigning work and how you do that. You really need to trust the team. You hire smart people, trust the team to get stuff done, then when you're assigning work out, I think it's really important to think about how you do that and how you word it specifically.

I remember I had a boss back in the day. She would come to my desk and just tell me what to do, and she'd go, "Run this report, do this, do this, do this." I like to think I'm a pretty smart person and a pretty good accountant, and if you just tell me what you need, what you're looking for, why you want me to do work, I can figure it out on my own. That's a really big thing. In that example I just laid out, my boss was looking to understand our revenue per country so that we could get it into our S-1, and she was again telling me, "Run this report. Do this. Reconcile this. Remove these items. Blah, blah, blah."

I finally snapped because it was midnight, and I was like, "Why are we doing this? What's the point?" She explained it to me and I could go into NetSuite and run one report and spit all of that out for her in about five minutes. It really was not a good use of time. I didn't feel empowered as an employee. And that's a really good way to just start to lose team members: telling them what to do, instead of explaining why you need something and then letting them figure it out from there.

It sounds like you did not have a positive culture there.

[Whitmire] I would actually say we did have a really good culture. The team really liked each other. We worked hard. It was very much that Seal Team Six, we're in it together, let's work late nights and get this IPO done. It's just those little annoying moments of management style, they do start to pile up over time. But, more broadly speaking, great culture at the company, good within accounting. It's just those little tidbits and they do wear on you and people will leave a company despite good culture.

How important do you think that culture is to team success?

[Whitmire] Incredibly important, and it's really difficult to maintain, especially as you're building out a department. There's so much that goes into it. I think back to my audit days for the level of importance of a team dynamic. I just heard time and time again, "I want to leave the Big Four, but I don't want to leave my team hanging." That's how powerful the team concept is, that people alter their career trajectory to not let down the five or six people on their team that they work with on an audit job, and that's a very similar mentality in accounting. That's very powerful.

Your book talks about the need for a controller to tame organizational risk with technology. How vital is it at this point for a controller to be tech-savvy? Can you be a controller without having that technology at this point?

[Whitmire] I think for the time being you can get away with knowing enough to be dangerous, and then hiring people who are really experts in it. If you're a controller, the bare minimum is to understand the technology landscape and understand what can be applied to benefit the different pain points that you might be having within your organization. Then, if you're saying ... for example, what FloQast does, the solution we offer, wasn't even a thing 10 years ago. It's a new category in accounting. So the onus in some regard is on the controller to be actively looking at what's developing in the technology landscape. Is this something that could help me be more efficient, and could it mitigate some risk for me? Be very open to that.

I think as long as the controller today is open-minded about it and then empowers their team to run evaluations, suggest what the best solution would be for the company, lead the charge on implementation, make sure they get it done, as the controller, you look like the smart one, because you figured it out and you let the team run with it and they're going to be happy, they're going to feel empowered, and then the organization is going to get the software that they need as well. Going forward, if you think about how this plays out from a controller cohort perspective, I guess – I can't think of a much better way to say that – but people who are senior accountants or accounting managers today are going to be controllers in 5 or 10 years, and by that point, the understanding of how to actually use this technology in some level of detail is absolutely going to be expected.

We talk about in an overall sense having to be tech-savvy, but are there certain particular tasks or responsibilities a controller faces that are most important to be tech-enabled or automated, and, if so, what are they and what are some of the tech solutions that are out there?

[Whitmire] Back to high-level strategy, like laying out a technology roadmap and thinking about how you want to automate these processes over time, it's important to think about the order that you want to put technology in place. For example, to take the extreme, let's say you tried to go public on QuickBooks and you're trying to get Sarbanes-Oxley compliance. There's no need to implement a Workiva to help with reporting and compliance if you haven't even gotten off QuickBooks yet. So make the ERP transition first. That's always going to be the first thing that you want to upgrade from a tech perspective is the ERP. I highly encourage looking at cloud-based solutions like NetSuite and Intacct. Oracle Fusion is now available. In general, I think COVID has put the spotlight on cloud-based solutions and has definitely shown that's the direction of where we're going here.

I would look at that, and then step two is look at what pain points you have in your accounting department and try to stack-rank those various pain points and put together a strategy of how you want to take care of those over time. You're not going to solve it all in one month or one quarter, but if you're sitting there saying, "Man, our billings process is a really big pain, our quote-to-cash process is a pain. Accounts payable, it's tough for us to get that done. Accruals, that's a pain for us as well. Month-end close. Commission." There's a zillion things that start to become a really big task as you scale up as an organization, and you could probably sit down today and just using your gut stack-rank “What is the biggest pain?”

I would then interview my team, ask them to stack-rank their biggest pain points, reconcile that against my gut checklist, figure out how I should prioritize it, and then go find solutions or ask my team to go find solutions that would solve those problems. Put together a deck. This is really important. Not a lot of controllers put together PowerPoint presentations. Put a deck together, outline the strategy for how you want to approach technology, what the ballpark timing would be, estimated budget, and that's sort of the level that controllers should be thinking about right now.

One of the sections in your book is titled “Knowledge Connects Everything.” How necessary is it for controllers that are faced with constant change to be in that continuous learning mode?

[Whitmire] It is a pretty tough time. The haves and the have-nots are the ones who have stayed up and continue to educate themselves. I have talked to a lot of accountants who view accounting as a nice, secure job. I don't have to work a ton of hours. I get a nice paycheck. All I have to do is take my 40 CPE credits and I can remain active. But I think the people who really do excel are the ones who proactively look for knowledge around accounting guidance, becoming better at managing, leading, and understanding the technology landscape as well.

You say it's important for controllers to anticipate the future. What would you say that future looks like for finance teams, and what do controllers have to prepare for what’s coming down the pipe?

[Whitmire] It definitely depends on who you ask. At FloQast, we are accountants ... just a bit of a step back. FloQast, we build accounting workflow automation. It started with close management. The close process was what I identified as a big pain point for me in my job, so I started working on this. One of our big things at FloQast is we're built by accountants for accountants. My background is in accounting and my cofounder as well. About 30 or 40% of our company actually has a background in accounting, and that's in every department at FloQast. So very much embedded in our DNA, and we want to build solutions that empower accountants to own the technology. With a lot of technology out there, you're partnering with IT to get your work done, and IT has a zillion priorities, and unfortunately the reality of how IT works is they're always going to prioritize a revenue-generating project over an accounting project. Oftentimes, things just don't get done. Our philosophy around this is let's build software that is so easy to implement and administer that it could actually be owned by accounting, not by IT.

What that means for the future of accounting, if we're able to execute on that, you'll have this controller that has a combination of extreme technical guidance, they understand journal entries, they have the knowledge, they can assess risk, understand looking at the balance sheet where things get risky. They can hire, manage, and lead a team, and then by that point are able to implement and administer a system like this, certainly in more than enough detail to where they can train somebody beneath them to actually take on that work. That's what I think the future of a controller is, this hybrid accounting expert, leader, manager, hirer, and then technological expert as well who can actually do the work in terms of getting technology implemented, at least on the FloQast side, and that's our vision for how we think things should play out.

For people who read your book, and just one more time, it's called Controller's Code: The Secret Formula for a Successful Career in Finance, what do you hope will be one or two of the main takeaways for them as far as helping them thrive in their careers as controllers?

[Whitmire] What's nice is I think anyone who's reading a book is inherently falling in the camp of trying to get better and wanting to progress their career. I'm hoping the area that I hit on hard enough that people take away from it is the importance of soft skills. The hiring, managing, leading, the ability to present in front of a board or a group of executives, the ability to work cross-functionally, get people on board with what you want to do in accounting. Accounting is one of the few functions that works with every department of the company. Literally every department of the company.

You need the ability to wrangle those people. Oftentimes, it's herding cats and you have to do it in a good way to have it be efficient. By a good way, I mean in a manner such that the other departments are bought in to what you need and they understand why you need it, and you don't have to pound your fist to get what you need every month or every quarter. The knowledge around the soft skills, I'm hoping is the somewhat unique takeaway. I think everyone knows you need to be good at accounting. Technology is coming. You should be up to date on accounting. I think the surprise for some people might be, "Oh, these soft skills are actually insanely important as I progress in my career."