Joe Thomas’ keen eye for detail is in demand. Until recently, he was Mohamed Hareb Al Otaiba Group CFO, but a risk-conscious chairman has now made a special request for his attention to fine detail to be deployed as the Group internal auditor.
It’s the little things that make a big difference. Joe Thomas appreciates this as well as than anyone, but is acutely aware that the smallest of numbers are the product of the quality of staff in any given organisation. If the wrong people are in, the wrong numbers come out.
“Everyone has agendas,” he says. “It’s commonplace for a manager, or someone in a position of power, to say ‘give my boy a job’. Unfortunately that’s not good enough, and those kind of unfair advantages mean you end up missing out on rough diamonds and hiring the wrong people. You need the right candidates with appropriate commercial and market knowledge.”
Thomas has acquired a broad range of experience across the Middle East, having worked as car rental firm Avis’ regional CFO and general manager, and in Xerox’s finance department prior to joining Mohamed Hareb Al Otaib Group (MHAOG). For the last two-and-a-half-years, he has served as chief financial officer for the Group, but his expertise has now been called upon in his new specialist role. Thomas’ work has now shifted to being more focused on controls and risk management, to guarantee that MHAOG is not exposed to fraud and shoddy accounting. “A lot of things can so easily get missed out from day to day,” he says. “Making sure we don’t miss them is absolutely necessary.”
Many figures in the industry may ask why a seasoned CFO is taking what could be perceived as a step back by becoming group internal auditor. The answer stems from an MHAO leadership that is conscious of the risks their organisation could always be open to. “Our chairman wanted to hear it from the horse’s mouth, so to speak,” he says. “As CFO, I was responsible for the oversight which drove the business and its operations, but my role is now about drilling down into details which can make the difference.”
Flawed recruitment is a prospect that gives Thomas nightmares to this day. He has witnessed the disastrous effects of hiring the wrong people, and knows that it is, unfortunately, easily done. He apportions a fair degree of this to nepotism. In order to combat this practice, Thomas intends to establish a line of reporting to MHAO’s chairman. “I believe that hiring for key positions should have his approval,” he says. “The same goes for contracts that are above a certain value; he must give his say-so and at the very least be informed of the development.”
Beyond the risks posed by favouritism, Thomas is also highly mindful of “conmen” who go out of their way to deceive in job applications. “A lot of these CVs could be only 60 percent accurate, riddled with suspect qualifications,” he says. “In my experience, this is often accompanied by a fantastic covering letter, but if you asked these people to write a letter apologising to a customer, or negotiating with a supplier, they’d spout utter nonsense.”
If it seems as if Thomas is at pains to stress the importance of recruitment in the finance department, it is for a good reason. If candidates do not have “the skill or will”, they are liable to cause sizeable problems further down the line. “Employing people who appear perfect but then flop is utterly useless,” he says. “If you take somebody on without the skill or honest will, then how on earth can you trust the numbers they are generating? It will be pure garbage in, and garbage out.”
The idea of “the skill and the will” is central to Thomas’ philosophy of having the right people on board. One of these traits takes priority, however. “I would always hire someone for their will before their skill,” he says. “If someone can’t handle a situation for one reason or the other, I’d always rather it was due to lack of experience rather than a lack of integrity.”
With real-time information becoming increasingly important in the finance department, Thomas believes this propensity for false numbers has the potential to cause real difficulties. “You need to act on information quickly,” he says. “Decisions should be influenced around 30-40 percent by numbers, and you need the right facts to make the right call.”
In order to facilitate the CFO’s role, Thomas says, it is essential to introduce periodic employee declarations that provide clarity as to their completion of tasks, and their observations of risk. “Have they completed all consolidations, completed their tasks on time and checked the inventory?” Thomas says. “No one is going to get fired for making a mistake or holding their hands up, but it’s important that we’re aware of issues to avoid any nasty surprises.”
This desire to avoid last minute shocks is at the core of Thomas’ aims. “If there’s bad news, I need to know about it as soon as possible so I can deal with it,” he says. An admirer of Warren Buffett, Thomas believes the entrepreneur and his companies have set the standard for professional conduct and sound judgement. “Speaking at a US university graduation ceremony, Mr Buffett was asked by an audience member how he could so famously make calls on $1 billion deals in just five minutes,” Thomas says. “He essentially answered that his 60 years of experience and knowledge allowed him to make decisions. What’s also important is that if Berkshire Hathaway is interested in making an acquisition, it does things with high standards of ethics. It keeps any potential deal confidential, and gives the target company a deadline for any decision, which is also well-informed because their numbers are precise.”
Once again, Thomas also links this to the importance of the right staff within a team. “It’s important to find the right people. It’s also better to wait on an important decision like that rather than rushing it and coming to regret it in the future.”
Pressure from other departments is yet another hurdle that stands to imbalance the books – and cause worse effects, Thomas says. He recounts his experience of working for a former employer as financial controller, where a saleswoman could not take ‘no’ for an answer. “Just before the financial crisis, this employee had a 1.3 million AED deal lined up,” he says. “The deal had to be cleared by the credit controller, and because she was desperate, she came straight to me.” After running quick checks, Thomas discovered that the customer had made three previous orders with the company, for 20,000 AED, 50,000 AED and 70,000 AED. He immediately smelt the proverbial rat.
“I told her ‘The cheque will bounce,’” Thomas says. “The drastic increase in spend was a surefire indicator that the deal would go bad, so I didn’t approve it. She went to the general manager, who supported my stance, and then to the sales director, who backed her. I told them, ‘This deal will go bad. If you sign, it’s your problem.’” The saleswoman in question agreed to forfeit her job were Thomas correct. Within two weeks, the customer in question had absconded, and Thomas had been vindicated. “Salespeople can be driven by pressure to hit their targets and earn commission. They can run you over if you’re not tough. Credit managers need thick skin as well as the skill and will.”