Aon's Global Ambitions Grow Along with its Thirst for Return on Invested Capital

BF: You arrive at Aon as part of a turnaround team, but separate from the team -- as the finance leader. What is it that you're going to accomplish here? What exactly is it that you expect to put your thumbprint on at Aon?

Davies: I would say that the first thing that is my area of focus is capital management and making sure that we measure and manage return on invested capital, with all the scrutiny it deserves for shareholders. The second would be improving the quality of management information. I do believe that my role as CFO is to partner with the CEO to drive business decisions and, therefore, everyone who reports to me has that same role of partnership with the business to improve the quality of management information so that the business leader can deliver the best value for clients.

I would say that my third objective is to improve compliance and controls, which I think currently are good, but we have acquired a lot of companies, so they still have room to improve. The last thing is really around improving the efficiency of the finance organization. I definitely think that there's room to take cost out and to optimize the organization of which resources sit where.

BF: You were a CFO for a giant division within a software developer, and meanwhile today you are CFO for a large professional services firm. These are different worlds in many ways. Or are they?

Davies: It is definitely a change, moving from the technology software industry, where value is really created by software developers, to an insurance brokerage and human capital firm, where the talent is really in the people in the field and how they interact with clients every day. The locus of economic value is quite different, and I would say that the industries are very different.

They're both service businesses where the main asset in the entire firm is people. We have 36,000 colleagues who come to work every day and try to deliver great value to clients. At Microsoft, it was similar: We had 8,000 people around the world who were trying to deliver value to clients. That part of it is actually quite similar. Fortunately for me, running the finance organizations is also very similar. You have to review the books every month, you have to drive compliance and controls, you need to get the right management information structure in place. All these sorts of things around running a finance organization, getting the right talent into finance -- they're all similar objectives.

BF: The finance organization's costs within most companies have seen a drop from roughly 3 percent a few years ago to about 1 percent of revenue. How does this match up against Aon's finance costs?

Davies: I would say that finance falls into the non-client-facing category. It is higher than you would naturally expect for an organization like this, simply because of the acquisitions we have done. There have been about 400 acquisitions over the past 20 years, and in many cases these acquisitions haven't been integrated. You have lots of different duplications in the field and at headquarters of finance activity. So we fall into that same category you were describing, of the 3 percent moving down to 2 percent. There's a lot of natural efficiency around what should reside at a regional level and what should sit at a global level, and then at the global level around what should sit local, versus offshore.

We're going through a very thorough analysis of that from top to bottom to really understand how we should optimize the finance organization to achieve our three key objectives, which are improving the quality of management information so that people can make the best decisions about the business in the fastest possible way, improving the control and compliance of the organization, and making it more efficient.