Leadership Q&A: A Focus on Strategy

To help set a company's vision and growth objectives, CFOs need to have the right team in place, according to Carol Tomé, CFO of The Home Depot.

What are the major challenges for a CFO at an organization that is undergoing rapid growth in today's business environment? Business Finance editor in chief Laurie Brannen asked Carol B. Tomé, executive vice president and CFO of The Home Depot in Atlanta, to share her experiences overseeing a finance organization with staggering dimensions and continued growth opportunities. The Home Depot is the world's largest home improvement retailer, with more than 1,800 retail stores and about 300,000 employees. Tomé was elected to the UPS board of directors in 2003 and serves on that company's audit committee. Fortune magazine named her one of the 50 most powerful women in business in 2001.

Laurie Brannen: What are the biggest leadership challenges you and other CFOs of large enterprises currently face?

Carol Tomé: Keeping up with the regulatory environment in the post-Sarbanes-Oxley world is a challenge for everyone. Many companies struggled when SOX was first enacted because the rules weren't clear and they continued to change. That put a lot of pressure on us and other companies because we wanted to do the right thing, but clarity on several issues had to be sorted out by the regulators.

Today, I'm a strong proponent for SOX because The Home Depot, along with the rest of corporate America, is better as a result. I am also a strong believer that SOX compliance is not an end unto itself. Adoption of corporate governance best practices should not foster senior executive or board complacency. "Best practices" are not the endgame; the endgame is the best competitive performance a corporation is capable of.

As companies and their boards of directors look beyond reform implementation, the challenge is to get down to business, focusing on corporate strategy and its execution and, in particular, on understanding the key risks to the drivers of corporate performance and how management is controlling for such risks.

LB: What leadership characteristics do the best CFOs possess?

CT: CFOs should be corporate strategists helping to set the vision and strategic growth objectives for the company. CFOs cannot stay in that "bean counter, back office" mold. That's just not the reality of business today.

In addition to being a good corporate strategist, the best CFOs also understand that focusing on recruiting and retaining a high-quality and high-performing finance team is essential. Having the right team in place ensures that nothing is slipping through the cracks. I'm very dedicated to developing leaders within our finance organization. At the end of the day, a company's success is determined by its people, and we can never forget that.

LB: What should finance do to ensure that its leadership pool is up to meeting the organization's future needs?

CT: A strong recruiting program is the first critical step. From there, it's all about having good training and leadership development programs in place.

The Home Depot has several leadership programs in place to identify and develop outstanding future leaders within our organization. These programs include classroom learning, group business challenge projects and individual development plans.

We have an Internal Audit Leadership Program [ILP] to deliver outstanding customer service, drive continuous improvement and develop future management talent. ILP is a two-year program, which ensures varied business exposure and development of future talent through challenging auditing/consulting rotational assignments. The areas of focus include store operations, finance, supply chain, international, merchandising, marketing and more. Rotational assignments are aligned with learning opportunities in leadership, Six Sigma, finance and technical/functional areas to create practical business application. Graduates of ILP have the opportunity to continue their career in internal audit or move into functional roles within the business.

It is also critically important to be brutally honest about a person's performance. Everyone deserves feedback and coaching. Every year we raise the performance bar in finance, and through our development programs, we strive to give everyone the opportunity to reach their highest potential.