Verizon's Matt Ellis, CFO of one of the largest companies in the United States, has ample resources and lines of sight at his disposal. However, it was crucial to get an outside perspective as he and his team put together plans in early April for managing the economic impact of COVID-19.
"Initially, our corporate FP&A team put together three different cases, at the macroeconomic level, of what [the pandemic] means for our volumes," said Ellis, who was promoted to CFO in 2016 after heading up finance for the company's wireless and wireline businesses. "But to ensure we hadn't missed something, it was valuable to pressure-test our assumptions against external parties — consultants and banks, things like that."
The pressure testing didn’t change any of their assumptions, Ellis said this week in a CFO Thought Leader podcast. But it helped validate the scenarios his team put together and now he feels relatively confident the company can pivot quickly based on what the economy does going forward.
"In this scenario we'll do this set of actions; in scenario B, we might do a completely different set of actions," he said. "It gives you a chance to think about what those sets of action would be in each scenario rather than having to do it on the fly."
That kind of scenario planning is indispensable for dealing with unexpected macro events like the pandemic, but it's also something many finance heads, including himself, don't do as much as they'd like.
"Like so many companies, we've talked about scenario planning for quite a while," he said. "As you think about it and read about it, you think it would be great if you could do that. But for so many businesses, just getting the base plan built is a huge effort. The idea of producing multiple versions of the plan is not immediately met with a lot of smiley faces from the finance organization.
"So, like many companies, we haven't been great at scenario planning. But you come into a situation like this, and ... the range of what the operating environment will look like over the next six to 12 months is as wide as any of us has ever dealt with,” Ellis said.
Verizon, one of the baby bells spun off in 1984 as part of a landmark antitrust settlement between the Department of Justice and AT&T, is 13th in the Fortune 50 ranking of the largest businesses in the U.S., with 2019 revenue of $132 billion and 136,000 employees.
When the scope of the pandemic became clear in late March, the company took only a week to move almost its entire workforce to remote status, Ellis said. Today, about 115,000 employees are working away from the office.
The transition was especially tricky for the finance team, Ellis said, because at the time it was closing the company books in preparation for the company’s quarterly filing. "It was just a tremendous response by the team," he said. "Every step of that process happened on time, even though nobody was in the office together and we actually even got a couple of things done sooner than we expected."
Ellis attributed that success in part to a communication policy the company adopted early in the crisis that put a premium on keeping employees connected while operating remotely.
A daily webcast, in which the CEO and HR chief discussed the company's plan and what to expect going forward, was the core of the communications plan. "It took some of the uncertainty away," he said. "Because a large part of what causes people to slow down and not get things done is uncertainty."
Focus on what is ahead
Ellis launched his career decades ago in the United Kingdom as an accountant for a large retail operation and moved into public auditing at Coopers & Lybrand. For much of his career, his interest has been in the forward-looking aspects of finance and he brought that focus to finance leadership roles at Tyson Foods before moving to Verizon.
For any finance leader to succeed, he said, it's crucial to set aside the skill that helped you rise through the ranks so you can focus on the strategic tasks that are unique to your role.
"There's this security blanket nature of that work you used to do," he said. "You got promoted because you did that work well and you like doing it and this management thing at first feels squishy and different. So, one of the challenges I had when I was first in a supervisory role is realizing your team is going to get a lot more done if you spend your time helping them do their work instead of spending half your time trying to do some of the work yourself."
His ideas about leadership stem from his earliest days in business, he said. There was a lesson at Coopers & Lybrand when it became clear weeks into an auditing project that the head of the team had failed to organize the project in such a way that the team could complete it as expected without working late nights and weekends at the end. That changed his perspective on what leadership owes the people who are doing the work.
"It's okay to do something that affects you negatively," he said. "That's your choice to make. But when you're a leader and you don't run things the right way, it's not just you who gets negative consequences; it's the people on your team."
For Ellis, leadership entails asking a lot of questions to get as wide a view of the situation as possible and then taking responsibility for making the decision, even if you couldn't get all the information you wanted.
"There'll be times when, after you've asked all the questions and gotten as much information as possible, you're the one who's going to have to make a decision about how the group goes forward, even if you don't feel you have any better information than any of the other folks in the room."
For him and other finance leaders trying to navigate the downturn, making decisions with incomplete information is the rule, but by hammering out alternative plans and getting those tested with outside eyes, you can approach the challenges with a set of tools so you’re not working entirely in the dark.
"Finance doesn't just have to be the scorekeeper," he said. "We can give business leaders a view into how the business operates and maybe it's an opportunity for a better financial outcome."