Fully Understanding Your Organisation with John McAnulty

Foreign welcome to this week's Treasury Career Corner podcast where I interview treasury professionals about their treasury careers. Each and every week I talk to them about how they built their careers, where they are now, where they see both themselves and the treasury profession going to next. Let's get on with the show in this week's show delighted me, joined by John McAnulty, the group treasurer at Richemont. Well, until recently, the group treasurer, Richemont. He's recently stepped down from that, handed on the baton, as it were, to lovely Philip Sasser, another previous podcast guest. So I'm looking forward to going through some of the transitions throughout John's career. We've known each other for a number of years, but until recently, as I said, he was with Rishmar. Great brand luxury goods in everywhere around the world. Some my favorites, obviously Cartier, well, Vacheron constantly. There's so many here, you know, a couple of personal favorites, Dunhill and Montblanc. I have a Montblanc, a couple of lovely pens here on my desk now. But John, we're going to go into that in a minute, but if you would take us back a few years. Now, how did you first get started with your career and how do you then discover finance and Treasury? Back to you, sir.

Thanks, Mike, and thanks for having me on the show. I started my career in 1983. My first role, as you say, was with Bowwater PLC and I was very lucky to get my start at Bullwater. I was at University of Strathclyde in Glasgow looking for my first career role and I saw a position advertised on the notice board for Treasury Manager at Bowater, applied for it and had an interview in London with Philippa Foster back, who was the deputy treasurer of Bowater PLC at the time and who is one of the founder members of the association of Corporate Treasurers. So it was a very fortunate start. A lot of people may not even know the name Bowater plc, but at that time it was a listed company specializing in packaging, building products, great services. So I started and I was in the heart of treasury and I always had a sort of inkling that I wanted to go into that field. I studied business, I'd specialized in finance at postgraduate level. I'd spent even more specialism looking at option theory and Black and Scholes models, etc. So I was attracted to that side of the finance world. And this is a very good stepping stone. This was the mid-80s. It was a very dynamic time and I actually only stayed at Bellwater for 18 months before moving to The Treasury Department of Forward Trust Group, which was a wholly owned subsidiary of Midland bank plc and Forward Trust was a leading player in asset financing. So for example, aircraft leasing was a very big business. So within 18 months of my career, I was actually managing a financing book of 2.5 billion sterling in 1985. And this was what we were trying to do was finance these very long term assets such as airplanes. And coincidentally, the interest rate swap market was opening up, so. And the city was becoming more deregulated, I would say one of the very first big users of interest rate swaps in the market. So it was quite a rapid career rise, I would say, within sort of two to three years.

Yeah, so I was going to say, John and so as you say, you were quite the inception of a lot of these things. Did you feel like it at the time? Did you feel like you. I was going back to Wild West. That's the wrong description. The way I was going to say is you were at the beginning of some of these that, you know, as you said you were. And you and I have talked about this before that sometimes, you know, I talk to people that are perhaps, you know, earlier on in their career sort of, you know, they're not, you know, they haven't got the career history you have, but you were at the beginning of this stuff. You know, once I said to my kids recently, this is what a fax machine was. And they said, what's a fax? That. And I'm like, yeah, but you, when you were there, did you feel like you were in that situation? It was all brand new?

Absolutely. I recognized it was a new emerging profession in a very dynamic environment of the mid-80s, a lot of deregulation. It was on the eve of the big bang. So the City of London where I was based was really taking off. And I had this, I would say, intuitive feeling that I could sort of ride the wave in a way. So I commenced study for the association of Corporate Treasurer examinations. And these were literally new examinations to become a professional treasurer. And I completed that course in 1988. And I would say I was in the second year of completing these professional exams. And maybe in 88, I would say there had only been 30 people who completed these exams. So I was very fortunate. I was combining a new professional qualification which was becoming in demand. A very thriving city environment, lots of new financial instruments, much bigger understanding, I would say first in domestic uk, but then internationally the World treasury was both in the financial sector and in the corporate sector was becoming extremely important. And I Had, I would say, a number of breaks because after Forward Trust I was fortunate enough to go to Midland Bank HQ in Poultry head office right next to the bank of England. So I couldn't be any more in, in the heart of the City. And what is very fortunate about that was that I was looking at the balance sheet of Midland Bank. It was the financing division of Midland Bank. So I was actually looking at how Midland bank treasury operations were working. So that was quite a dynamic experience as well. So I would say from during the 80s, I had six, seven years right in the heart of the City. I passed my treasury exams, then took another decision in 1989 because I had a Corporate treasury qualification. I wanted to go back into the world of corporate life and I joined Beecham Group PLC and I was recruited by Stephen Crompton, who was another leading light of the association of Corporate Treasurers. And he recognized that recruiting people with a Treasury qualification was very advantageous to his department. So he did recruit two people at that time with the ACT examination. So a lot of doors opened, I would say both with hands on experience of the City, the qualification, it was relatively easy to move back into the world of corporate Treasury.

And you, as you say you joined gsk, but I think it was Smith Klein before, you know, and you were there was the bringing together a number of businesses at the time. What was that like?

I was recruited actually at Beecham Group plc, which was just about to merge with Smith Klein and French, a U.S. pharmaceutical company. And my role at that time was to effectively finance the merger through the debt markets. So we had a new company, SmithKline Beecham. There was a Smith Klein and French had a Treasury Department in Philadelphia and we had one in London in Brentford. So we had to finance the new group and merge the two treasury functions. And I would say that was one of the first times I saw the ruthless side of corporate life. I hadn't witnessed firsthand the merger of two major treasury functions. And the reality is you only really need one. So there were significant job losses at the time in the treasury, but I survived and I spent three, four years looking at international treasury integration and financing the balance sheet of the new company.

So I started treasury recruitment in 98. So it was around that time, you know, a few years in that you then made the move to Switzerland, to Richmar, remember talking to Gavin Jones and he was at the time making a move across for our hold and at the time, you know, making the move across to Switzerland. So you, you predated that. So that was Very early days of making an international move. How did that come about or talk us through that? Because fantastic times.

Yes. Well, in fact I joined Richemont in 2000 and in London for the first four years. So I actually moved to Switzerland in 2004. But what had happened is that at Smithline Beecham I had moved out of treasury and worked in corporate strategy with the chief executive's office and learned really an awful lot about strategy and I did that for five years. So the opportunity then came to join Richemont and I would say the idea was to create a global best in class Treasury Department. And Jan du Plessis who recruited me, was looking also at the strategy element of my cv. So I think I had the firsthand treasury experience combined with strategy. Gave me the tools, I would say, to really embark on quite a risky career move. Because Richemont at the time was really, I would say, close to a holding company structure. It had a nice collection of luxury maisons, but they were very independent. Right. There were probably half a dozen treasurers within the Richemont organization at the time. And my department, my role was to create a single group, Treasury Global Department.

Tell me about the group then because I know that it's evolved massively. Again, you and I have talked about this before, but what was it like when you joined them in terms of luxury goods and everything else? Because it evolved over, you know, crumbs, 20 years. What's it been like? Talk us through.

Yes, at that time the luxury sector had started to evolve quite rapidly. The branding of luxury products had taken off and there were a number of big players that have over the years consolidated. They've collected maisons into their portfolio. So when I joined, I joined in central London in a, a townhouse in central London. But I quickly realized that we had approximately, I would say 15, 16 maisons at the time. We were in process of buying three maisons, Jaeger, LeCoultre, IWC and Lange and Son from the management group. And that was a multi billion transaction in the year 2000. So it was a period of consolidation, providing a framework, increasing recognition of the power of luxury. And I would say over the last 20 years the growth has simply compounded. These are major luxury groups, I would say maybe four, five, six major groups now exist after a significant period of consolidation.

You know, the role itself, I know that when, you know, we, you were showing me one of the presentations you did because you're a big believer in straight through processing, in using automation, in, you know, leveraging that to make treasury really interesting. Before people did that, you know, before, you know, it was the done thing. Let's get a TMS in, let's do this. But you were actually. Hang on, let's see, how did you go about that? Was that always been a passion of yours? Where did that come from?

I think that came from my experience at Smithline Beecham, where the treasury function was, I would say, leading edge and had been exploiting technology very successfully. Treasury functions historically had quite significant headcount. I mean, when I was at Smithline Beecham, I managed a dealing room of four people, all making calls via telephone. And now, as most of the audience will know, that resource doesn't exist. You basically do foreign exchange all via the Internet through auction platforms. Everything was manual phone and telex, quite traditional environment, a lot of manual activities. And this is really the dawning of exploiting technology. But when I joined Richemont, the first step I had to do because I was on my own, I had to recruit a team. And from 2000 to 2004, maybe a bit later, 2006, we really worked with our operations to introduce best practice treasury solutions. We put in a global netting system, we put in a global cash pool system, we started trading foreign exchange online, etc. We put in payment factories. So I think an awful lot of it was common sense in that these tools were becoming available. The technology was relatively straightforward to introduce. You just had to manage the politics, I would say, of having all these who had historically been very independent. We had to show the benefits of automating these processes to the Maison CFOs and the regional CFOs to get them on board, to show the significant advantages of bringing this technology in.

You say that, but go through a business case or if you not in detail. But what I'm trying to get is the listeners now are going, oh, crumbs, I'm in that situation now. I think we should do this now. You were doing it at inception, you were doing it when, you know, some of these were brand new technologies. Probably more of an uphill battle in a way going, guys, this is what you need to do because are you just going to them with. Right, these are the financial benefits, these are the time saving benefits, these are these. But or what? How did you present it to those guys? Because again, we do this as an advice podcast if you like. So you have treasury professionals listening now going, hang on, we've got the global treasurer, Richemont saying, just go to them. Hang on, he's the global treasurer. Yeah, we have to we'll believe him. Yeah, that's great. John knows what he's doing or, you know, how did you sell that to them? Maybe in those days.

Well, I would say it wasn't straightforward. I think I probably entered Richemont with quite a high level of naivety. I had been working in quite very sophisticated multinational groups and Richemont, as I say, was a collection of Maisons which was embarking on a. Trying to create a matrix structure where you would have the Maisons supported by global operations. Treasury is one element of the trend transformation that was taking place. So there were an awful lot of different processes to create. Shared. I mean the word shared services is not always liked, but we were providing operational services to the Maisons but it wasn't straightforward. So I remember very early on, you know, having to go to Geneva and meeting with up to 20 people in meeting rooms of quite skeptical, I would say, CFOs of maisons and having to explain to them the benefits of what we were trying to do. And I think that's where the strategy side of my career came into play. You keep the presentations relatively straightforward. You have to consult, you have to get buy in. I think you have to show the operational benefits and the financial benefits, but you do have to engage. And the idea that it was all smooth sailing is. I wouldn't want to give that.

No, no.

But I think what, what I've experienced over the years, if you provide a common sense argument to something, you know, we have very bright people around us in the, you know, in all our organizations and they will accept it. They won't accept it as they're being dogmatic, but that's nearly an irrational action if you're going to bring significant benefits. But there was a lot of consulting. I was very fortunate to have recruited a good team around me who had already good experience of the group. So that helped. But there was a lot of diplomacy. It wasn't straightforward. I had the sponsorship, I think that's critically important. So I had the sponsorship of the group cfo, I had the sponsorship of the Richemont board. You simply wouldn't be able to embark on this sort of transformation without that sort of high level benefit sponsorship. And in parallel, I think, just to say, just to finish, the financial institutions were developing very powerful solutions that had never been seen before. I mean, this corresponded with the development of the Internet. You could go online with a platform and sell foreign exchange from anywhere in the world. You could simply go online, log in and buy and sell foreign exchange. Whereas before, as I Said it was all done by telephone and paper confirmations, et cetera. All these processes were automated by, I would say, very clever technology. People in financial institutions going back to.

Drilling down a little bit without any confidential information. But looking at Richemont, how did you structure Treasury? You know, and also you're, you know, luxury brands, you know, so you've got money awash, surely you've just, you, you want it, you get it. I'm joking, obviously. What was it like, you know, with your treasury team and, you know, on a day to day basis, you know, and we've been through a pandemic and what's it been like? Just reflecting on some of those things. What are the things you would try and share with your, you know, say we're saying, we're sitting here having a coffee, you know, what the challenges you faced or what have been the benefits of being, you know, working for a Richema?

Well, I think the Richemont has a very, very strong focus on liquidity. It's got a reputation of having a very strong balance sheet and that is a big advantage because you have the resources. But they are obviously very tightly controlled. So we didn't have to worry too much about financing, I would say, at that stage, so I could focus the energy with the team on operational improvement. But clearly we had major setbacks, major concerns. With September 11th in 2001, we had just undertaken major acquisitions. It wasn't an easy time. So I think throughout the last 20 years, we've had a number of crises which destabilize you for a while. I would say the main challenge at the time was lit geography. I was based in London and the team was developing in Geneva, the head office of Richemont in Geneva. So I was trying to manage a number of strategic issues out of London and develop a team in Geneva. But I must admit, I would say there was probably a high element of controlled luck. You know, I managed to recruit very strong people who were really able to drive through projects. So I think you need, it's very interesting. I don't think always you need treasury experts when you're trying to establish a Treasury function. They need to learn quickly. But a lot of it is about communication and strong project management skills and tenacity. So you need to get the right balance between this treasury expertise and these broader skills and obviously diplomacy as well, because it's all about change management. I think there was quite a lot of luck and momentum behind us to put this in place and we were doing it with a relatively small team. At that stage, in the early days. Now when I look back, what we achieved between I would say 2000 and 2006 and the number of projects that were driven through with a relatively lean team was highly impressive.

So how did you do that with a small team? You know, we're going to have listeners today with very similar situation. They might be in a high margin business, might be great, great and everything else, but they're facing the same challenge. Oh, hang on, we've only got three, four, five people. Where, where did you focus your attention? I know you've got your immediate, as you say, immediate challenges when there's a, a crisis or something. But in general terms, when it's, you know, you're back, okay, everything's calm, everything's back to normal, where do you then think? Right, this is where we can add value. What, what's top of your list, if you know your pick list?

Well, I think it evolves over time. But you know, in the early days we needed to ensure control of, of liquidity management. We needed to ensure control of foreign exchange. That wasn't easy because we were transitioning from manual processes to automated processes. But I would say one thing. You, you cannot achieve this with a four, say a four, five, six man team or six person team in the center. So what was, I was a game changer and maybe we learned this by accident, but you had, you have to leverage resources of the group that you're working in. So Richemont was developing a regional structure. North America, Japan, Hong Kong, Europe, the usual multinational regions. And we said to the teams in these regions, look, for example, we had identified the bank with the local team that we would work with. We had a finance team locally and we said to them, your job is now to implement. We have done the tender process. So for example, we would select HSBC in Hong Kong, for example. There's no way my team from Geneva could manage the Hong Kong implementation. So the local finance team really drove the project management working with HSBC and then we would move on to another market. So I would say we took a strategic perspective, selecting the bank, selecting the solution, looking at the contractual implications of what we were doing and then the local team would implement. And I would say that has been one of the key success factors of reshaping over the last 20 years is very strong regional structures. I must say we never really met resistance. I think local finance teams enjoy the challenge of implementing something that is new and it worked very well. So I would say maybe secrets to success is optimize existing resources and delegate as much as possible, but don't abdicate. You still need to monitor the implementation. But I would say that within, I would say three years, four years, we had effectively put in established quite sophisticated regional treasury structures into our major regions. And that's only possible with the high level support in those regions.

Let me take a moment to reflect. You know, we're not that far off the end of the show, John, and as we look, you look back across this and you know, maybe, you know, usually we use our closing comments but actually, but we're not quite a closing comment. So I was going to say, you know, when you're maybe someone comes to you now and they want some mentorship from you, a successful treasurer and you're sitting there and you're sort of going through maybe some of you previous members of staff and they're saying, look, what would you recommend I do? You know, what are the tips you would give them? Not for the general world, but say more individually. If you're mentoring someone and you're reflecting on a very successful career as you have had at Richemont, what would you say are the key things there?

Well, I think anyone coming into the profession or even taking on a senior role or aspiring to a senior role really needs to, I would say focus on what the role of the function is within the organization that they're working for. So I don't think you can lead a successful treasury organization unless you have an intimate understanding of the organization. So you need curiosity if you're sitting in the, I mean I've heard it said before, if you're sitting in the ivory tower trying to drive through these implementations, it won't succeed. So you need to get into the operations. And I always think about, in fact the word Treasury I think is becoming an outdated word. I think you have a multinational group and most multinational groups have a physical supply chain unless it's a pure technology group. But we talk about traditional multinationals, our manufacturing product, distributing product around the world. Every time there's a physical movement of product, there's financial transaction and the treasury organization needs to understand every single step of that financial movement. So you need curiosity around the organization. I definitely think you need diplomacy, you need to have all the change management skills. You need to be a good project manager. I think a strong word that we use in Richemont is empathy though. I think you need to understand both sides of the coin at all times. What is the impact of what you're doing having on the group? What is it having on your Colleagues. I think the reality is in multinational groups these days, with such demand on resources, you need patience, you need to be realistic. I also think it's why I'm not sure the word treasury applies anymore. I think, you know, within the treasury function of Richemont, you also have insurance, you have enterprise risk management. So how does risk, multinational risk impact the group? We have also developed a consumer payments and services team that has really been effectively gone from a startup position five years ago to becoming a very sophisticated consumer payments team. And by that is using all the technologies that our customers are using in our boutiques or online when they pay for products. I mean, that is still part of the financial processes of the group. I think a number of individuals I come across, and I would say even some of the financial service providers, still think of treasury as purely cash management, foreign exchange and financing. And it's much broader than that. And that's why I think we need to understand the roles of different financial solution providers.

Amazing. Now, so we are towards the end, as I say, we keep our podcast. What used to be a typical commute for people for half an hour, 40 minutes is no longer that, but we do keep that.

Yeah.

I mean, John, what are the takeaways? You know, and again, if we now focus these, you know, you talked about treasury as a whole, which I think is great. But if we now look at someone listening today, they're in the early stages of their career thinking, right, how do I become, you know, become an assistant treasurer, gsk, to then make the step to group treasurer. And also the other listeners will be more senior listeners. So, you know, maybe other treasurers, what's the sort of takeaways you would give to them? Again, if you reflect or, you know, you're talking to them maybe at a conference or something like that, and they say, crumbs, what do you attribute your success for? You know, previously, what would you say?

First of all, you have to really understand the role and how it sits within the organization. And I think one thing about the group treasurer role is that every time I've spoken to a group treasurer, and I know many, because the organizations are so different, their role is so different. So I think you do need sort of an empathy with the organization you're working for. You need to understand it very well. And I would say that one of the things is it's always better to be in a successful sector and a successful player in that sector than not. So I've had real privilege, I would say, and been very fortunate to work in the banking in the 80s when things were booming, the 90s was a decade of pharmaceuticals and you could say the last 20 years have been the decades of luxury. So what are the sectors that will grow and allow your role to grow? So I think that that is quite important because if you're in a struggling organization, the role of treasurer, it become, can become more narrow because you're just trying to look at how do you finance that company that could be loss making, etc. So I was always very interested in being in high margin businesses. I thought businesses that could be very successful. So that maybe was a bit selfish in a way. I didn't want to work for organizations that were constantly on the, on the brink of collapse.

I think it's good strategic treasury decision, surely. And career decisions.

Yes, exactly, yes. I think you have to manage your career and I think you have to say to yourself, do you want to head up a Treasury function? Because I think that the challenges for treasury professionals are do you want to use Treasury Department as a three year position and then take on another financial role or a commercial role in the group? That is one option. Do you want to be a career treasurer and say I am recognizing it's going to be harder to move outside of the world of treasury and you have to do that quite early on that the reality of career life, I would say a multinational global life, people do get a bit defined. So my skill set is a certain skill set and it'd be harder to move out of that area, say after a decade or 15 years. That's the sort of reality I would say. And you have to be realistic about what the role is. Do you want to drive through? So I think traditional treasury, the old world of treasury is effectively becoming automated. And I would say another fact is multinational Treasuries are not taking huge risk positions in the way they manage their financial assets. I think they're not speculating. So if you want to be speculative, you want more the sort of sexy image of treasury, so to speak, you probably still want to go to a trading company or a bank to be at the heart of making lots of financial transactions. If you want to understand technology, if you want to be in project management, if you want to see the department develop, it is a very interesting area. And you need to think about risk more broadly.

Yeah. In a more holistic sense thing and in different areas.

Exactly.

Any final bits before we just sign off? Just the final words of the people out there.

Well, I would say finally, it is a fantastic career. I think the profiles of the candidates have changed dramatically over the last 20 years. In fact, even over the last five, seven years. So I would say we're recruiting people with much broader skill sets. They're not necessarily pure financial skill sets. They have these broader range of skills that then can be applicable throughout an organization. So I think it can be a very powerful stepping stone into a broader career, but it can also be a very rewarding long term play if you have these broad skills.

There you go, some amazing words from an amazing treasurer and and long may you enjoy all the next next things that you're doing, sir, and I look forward to seeing you soon at some real life event, hopefully, whether it's in the UK or overseas. It's lovely to catch up with you and I think anyone listening today is great reflection on careers. So, you know, thank you for your time today. It's been lovely.

Thank you Mike and thanks for having me on your show season.

Thanks very much. Hello, it's Mike here again. I hope you enjoyed this week's show. If you did, then maybe you want to follow the show or subscribe depending on where you listen, whether that's itunes, Spotify or another great place to listen to the show from. It's totally free and means that you'll be the first to see each and every week when we release a new show. And maybe whilst you're there you could even leave a quick review. Review and ratings are among the most important metrics for a podcast to effectively rank. And as you can probably appreciate, the podcast is a lot of hard work to produce. Every week it'd be amazing. Just take say 20 seconds, leave a quick review of my amazing guests and their great career stories. We'd really appreciate it. Thanks very much and I can't wait to see you soon. Sam.