Leading Global Treasury Teams to Success with Fred Schacknies

Foreign.

Welcome to this week's Treasury Career Corner podcast where I talk to treasurers each and every week about their treasury careers, how they started their careers, where they are now, where they see both themselves and the treasury profession going to next. But this is one of our revisited episodes. You're going to hear me in a moment having a lovely conversation with Fred Shaknies. When I originally spoke to Fred way back when, back in beginning of COVID really he was at Hilton and we'll talk about his career there. But actually I then catch up at the end of the show with Fred. Now he's with Technape and he can tell you all about them as a company, talks about some of his experiences within Treasury. He's a great guest. Let's get on with the show.

In this week's show I'm joined by Fred Shaknes, the senior VP and treasurer at Hilton Worldwide, headquartered in Virginia. Hilton Worldwide, as many of you will already know, are an American multinational hospitality group. In 2018 they were recognized as one of the best workplaces to work in. And in recent years they've moved back from, well, they've been both at public, a private and more recently a public company again, which I'll ask Fred to perhaps explain a little bit more detail in the show as you treasury guys love your facts and figures. I just wanted to highlight a couple of their numbers because I think they're truly amazing. So Hilton Group have 16 world class brands, 5,500 properties, 895 rooms, 109 countries and territories. Get your head around that lot and they've in their hundred year history welcomed more than 3 billion guests. And I've been one in the past and be very happy. Sometimes on the podcast I give a detailed introduction to our guests. But rather than that today what I want to do was get Fred to tell us about himself rather than me ruin it for all you guys kicking off into it. Fred, you've got a degree from Brown and an MBA from New York. Maybe talk us through your first moves into the world of corporate treasury and how you started out, if you would.

Sure thing. Thanks Mike, very much for the opportunity and glad to be joining you today. After college I started out actually on a trading desk somewhat through happenstance. I knew coming out of college that I kind of wanted to focus on economics. That was my degree and the reason being I was just sort of quantitatively oriented. But I think what I found interesting about economics was it's something that kind of had a social impact too as well. I mean it's really just as much about psychology as it is about math. So coming out with that economics background, I kind of decided to go into finance and stumbled into treasury, really by way of a trading desk. Not that I saw myself as a trader per se, but that's where an interesting opportunity came up. And so the first five years I spent trading currencies and interest rates and doing sales as well, having done that, and that was a fantastic and fascinating place to spend a couple years. But I didn't really have any particular idea of what happened, what transpired in that value chain that I was on before me or really after me. And as fascinating as those kind of microseconds are, you know, when, between bids and ask and price changes, I wanted to get a kind of a bigger picture of a better understanding of what was going on in the entirety of the. Of the finance value chain. So I decided to go back, get an mba and then from that went into the corporate practitioner world. And that's something I'd kind of gotten a glimpse of, having spent some time in corporate sales desks as well, speaking with corporate treasurers and understanding about their perspectives, the problems that they faced, and really how it fit in with the bigger picture of the issues their companies were dealing with. Having gone through, having got my mba, worked then for three companies. The first one was Lucent Technologies or what was then Lucent Technologies, based in New Jersey. After that with what was then Constellation Energy based in Baltimore, and now for the last 10 years or so have been with Hilton here in Virginia and.

With those roles at Lucent. That was your sort of introduction to treasury, if you like, you came into it, so you focused on sort of in house banking of things. Or how did your treasury career grow? Because you're the global treasurer of Hilton, so you could have done pretty well through those years.

Yeah, it was an interesting transition to go from a trading desk with a mindset of a trader and into that of a corporate treasury practitioner. And obviously you've got to shift your objectives, your framework, your risk perception, everything else that you look at. So the problems that Lucent was dealing with at the time, being a growing global multinational company at the time, lots of issues with global liquidity, with global risk, and those are the kind of things that somebody who works in a trading desk probably has a good sense of. Most of the issues that I focused on when I was at Lucent had to do with dealing with kind of global growth and the financial consequences of that. So in house banking, yes, was definitely one of the big Successes there by implementing a very successful in house bank platform in terms of what it was able to achieve but also in terms of how it did it in terms of technology and process. Everything else. It really did have some positive financial impacts for the company in terms of ability to repatriate cash, in terms of ability to get our arms around risk. And so you know, lots of good lessons learned there about I think how to things that companies should look at with rolling out that type of platform.

And from technology and telecoms you then made move into America's energy choice Constellation or explain those guys. And it was a move of location as well.

It was. And partially based on the fact that my I'm from the Baltimore area originally and my family was nearby there. And this move happened shortly after our first two children, twins were born. So the idea of being closer to family sort of grew in significance in terms of career choice. So an interesting change in terms of not just location but industry. Everything kind of from the utility management side to longer term projects of nuclear power plant generation and to the kind of the day to day volatility of trading activity. So an interesting portfolio with treasury challenges, let's say.

So what then happened with Constellation as they evolved or changed what happened with the group?

So the company, very successful in lots of different activities, ultimately was acquired by Exelon. And it just so happened that around the same time that that transition was going on, Hilton was relocating from Beverly Hills to Northern Virginia. So an opportunity came up at Hilton that I think was just, you know, too good to pass up kind of going back to. So my roots and interests really lie with international, with global Enterpr and the challenges of international finance. And Hilton having, as you mentioned earlier, a really profound global footprint which is really absolutely fundamental to who we are. That was an exciting opportunity. You know, I myself was one of those 3 billion folks that you kindly pointed out at the beginning. And so it's just kind of one of those brands that, you know, a majority of people have a very positive affiliation with and myself included and having traveled quite a bit myself as I have the idea of being part of an institution that sort of fosters international travel was certainly attractive in and of itself.

You joined Hilton back in 2009. Where was it in its journey if you like? Because you've been there what, nine over nine years now. And throughout that time it's changed a lot as a company. Treasury to one side, we'll dig down into that. But how was it different?

Yeah, so as I mentioned, I joined immediately after the Relocation from California to Virginia, which came shortly after the company was acquired by Blackstone and was taken. Taken private. A number of profound changes there in terms of leadership, the ownership, in terms of kind of the entire corporate leadership team. But the timing of that, ill fated though it was in the downturn of kind of 2008, 9. It was a. You know, that was a rocky time for a lot of companies, you know, and Hilton included. And so lessons that I had learned in terms of managing liquidity and dire straits at two companies prior certainly came into play as well. And, you know, I think, though, that, I mean, Hilton has a very strong franchise, very strong brand, and withstood all the cash flow tests during that period very soundly and has really solidly rebounded since then.

So as you went through that downturn and recovered, the company changed as well. You went back to public, and there were a couple of different changes. How did that change and affect you guys in treasury and your role and what happened?

Yeah, so it definitely is an interesting transition point. The company being private for a number of years was an essential phase in its development, I think. I mean, a number of changes had to happen in terms of not just the physical location of the company, but in terms of the makeup of the organization, in terms of refreshing a number of the brands, in terms of integrating a number of the corporate activities, and really just revitalizing the entire corporate enterprise. And I think those types of decisions, many of which are very expensive and many of which are very painful, are often, I think, best executed under the umbrella of a private institution. And I think that's a lot of those changes are what Hilton was able to make. And I think in the years that followed, I think the leadership team has done a fantastic job of exactly that, of really revitalizing the corporate enterprise and the franchise. So from that, the company, I think, has rebounded very successfully in terms of sponsoring organic growth, not just of net units of hotel rooms and hotels, but also in terms of brands. All of that, obviously, was being done by a PE investor, was done with the expectation of eventually returning to the public markets. That was done in 2013. The company went through its actually second IPO, the first one being a couple decades earlier. So that transition back into the public world, I think by that point, I would say it really wasn't that tremendous of a change, because by the time we'd gotten into the tail end of this ownership phase, many of the corporate controls that you would normally associate with public life, you know, were already in place. Many of the disciplines in Terms of management structures were already in place. You know, there was a bit of a transition in terms of our main owner being from sort of the, you know, sold to majority to minority to now, you know, entirely disinvested. You know, there was some change there in terms of who reports what to whom, but really in terms of the, you know, all of the installation and the growth of the kind of the corporate engine behind it all, I think was already in place.

And with that, throughout the time that you've been there, in the nine and a half years, you know, a global multinational, you've led teams US and UK and overseas and different integrations with treasury globally. What's it been like for you leading a global treasury team? What's your leadership style for those guys? Are you hopping on a call every week or how do you spin the plates for each of the different locations, as it were?

When I got to Hilton nine years ago, I was actually the only person on my team here in the head office and everyone else was either in one of our hubs in Memphis or outside of London. And so I had literally no connection to them other than telephone and email and whatever data they were able to share in whatever format, you know. And to answer that question about how does one lead a global team, it's putting in place a stool of people, process and technology and that, you know, has to span globally, you know, for all of those things to come together. In terms of the technology, which was a large piece of focus for several years, it was just getting all of the different offices on the same technology platform. Without that, it's impossible to share data, much less intelligence. So that was a key focus for really the first five years, I think, of being here. But along with that is aligning process and making sure that everybody's working under the same set of policies and according to the same standards and according to the same goals. The last piece there of people is the hardest one to realign. And the most important, you can't do that without a certain amount of face to face. And I do travel to try to get in front of the other teams. Maybe not as much as I could. As much as you can, you know. Yeah, as much. As much as one can, you know, it's putting other people in front of their faces too. So we're trying to be more mindful about building connections, not just at my level, but up and, you know, up and down the organization. Getting people to the point where, you know, even if you're in a different location or a different continent or different time zone. You know, it's knowing what your colleagues are doing so that if you call them up, you know where they are in their day and their workflow, everybody's essential essentially working as part of the same team, you know, even if they're not co located. And again, getting to that level of sort of people alignment, you can't do it without process and you can't do that without technology.

And Fred, you talk there about all pointing one direction. Everyone processes everything. But how did you come up with those goals? What's the ethos for the treasury team at Hilton Worldwide?

So that's a great question. Yeah, I think, you know, aligning everybody around the same purpose, around the same goals really does start top down. And I think to give credit, where do I think Hilton and the leadership here have done a tremendously good job at defining that at the corporate level and pushing it out. And so our vision, mission and values is all very clear. You know, we all know that whether we're working in one side of treasury or the other or accounting or anything else, you know, it's all going to the same goal as a hospitality company. But you know, pushing that down more tangibly into what does that mean for finance, what does that mean for Treasury? You know, all derives from top down mission statements. And you know, for my role, it's up to me to sort of take what's, you know, what's given to me at the, you know, from CFO level down and articulate that to my team, you know, and pull them behind a common purpose, you know. And we say, you know, this is why we do what we do. We don't do it to manage cash, we don't do it to trade currencies. You know, we do it to make sure that, you know, our goal, which is to fill the earth with a light and warmth of hospitality is something that we can continue to fulfill. And so, you know, obviously then that's all sounds very good. But then it comes down to some tactical matters of treasury management. It's you know, aligning everybody around a common set of goals and a purpose and making sure that everybody knows, you know, how what they do every day fits into that, those common purposes. And so you know, from, from kind of corporate to finance to treasury and you know, it parcels out into, there's matters of cash management and operations, there's matters of banking, there's matters of financial risk, there's manage of liquidity. Everybody hopefully understands how what they do ties into the goal above them and the goal above that.

When people actually look through your profile, perhaps on LinkedIn, and look there, you guys have won some awards now. What have those been? You've got a Pinnacle Award for. Through the afp. Alexander Hamilton. What have those been for? Not just saying, oh, we did this project, thanks very much. But how did it come about or what. Give us some examples there.

The first of the three chronologically was the Pinnacle Award, the grand prize from a couple years back that was related to work we had done on cash flow forecasting, which really was kind of a byproduct or wasn't in reaction to the company's transition from private to public and with the ipo. And it was in response to some changes in how we had to manage cash. And so to sort of to react to your question earlier about, you know, what did it mean to transition out? I guess at a more tactical level, you know, there were some other reactions. And so, you know, the cash flow forecasting requirements of a public company versus a private one, it sounds simple, you know, it's, it's a large event and as you can imagine for a company of our size, and it's something that, you know, you can throw loads and loads of bodies at, but, you know, there's better ways of doing it. And that's kind of the gist of what we did was really just kind of building a better mousetrap when it came to forecasting methodology. It was, you know, I guess the secret sauce of it was taking that data that was available, which, you know, there's not always perfect, and making the best use of it by kind of just applying some statistical overlays and some kind of rational conclusions to sort of normalize and to kind of build a forecast where imperfect data was, you know, or where the data wasn't perfect, I guess.

Yeah. And you actually got a result that was actually meaningful sort of thing.

Yeah. And it's, you know, we got a, you know, from that, it was for that point of our transition, we got a process that was really, by all accounts kind of FTE wise more efficient and still providing a great output in terms of intelligence.

And then a couple of the other projects again. Is that the evolution of Treasury? You've seen it through or what's been happening?

Yeah. And so the other two projects, I'll sort of respond to them together. One was related to global liquidity and one was related to global risk. And to be fair, they kind of go hand in hand. Each one of them was sort of a large and multi year project by itself, but to collectively they kind of, they speak to sort of Hilton's, you know, ongoing growth overseas. And as you kindly noted earlier, you know, we're in 109 countries and territories now and continuing to grow. And you know, harking back to earlier days of my own career at Lucent, not dissimilar challenges of any company that exists and is growing in many places around the world, you know, presents loads of challenges in terms of, of managing liquidity efficiently, avoiding trapped cash, getting it back in a way that's friendly from a perspective of tax and accounting and Treasury. And so the cross currency aspects of that were challenges that we needed to get a better handle on. The kind of, the liquidity visibility aspects of that we need to get a better handle on. And each of those was a multi year project in its own right and grateful and thankful for getting a little recognition for each of those. Each one of those is obviously a team effort and it was good to draw some attention to the work that many members on the team had been doing.

And that team, how are you structured and what would you say has been key to the success of that team? What's your ethos?

And you know, our team is organized with kind of a, we've got a regional treasury organization that sits in three locations and looks after cash and banking and is really the sort of liaison to the operational finance world on all matters relating to Treasury. And then we have two corporate based teams. One that's sort of aligned to kind of front office responsibilities, really looks after the managing of risk and liquidity. And another, essentially a middle office team that looks after the systems, process controls and data that flows in and out. In terms of central ethos of building that team has been, I think, striking a balance in terms of diversity of skill set, of background, of mindset, of personalities. And I think we do have a good healthy diversity on all of those fronts. And I mean if anybody on the same expertise, you know, you wouldn't really get a lot done and you wouldn't grow very much, you know, and part of that, the benefit of that diversity is just bringing lots of different, different viewpoints, you know, and often and often healthy disagreements on things, which is something that I absolutely value, you know, in my, in my own team having open debates on topics and coming to, I think coming to a better outcome than you would if everybody just said yes boss, that sounds great.

Yeah, that's how we do it. When you talk about diversity, widening that sort of definition, you know, we've looked at the women in Treasury. I did a women in treasury month actually was very successful. It was quite an interesting one because there were a couple of my guests who. And these were ladies and they said, well, actually it doesn't matter, Mike. You know, it's about, you know, not just gender, it's about equality with, you know, looking at disabled people, looking at different people coming from different ethnic backgrounds. It's, you know, a much wider issue and that's what they were definitely supporting. But you say about the diversity and the different makeup of the background, how do you try and encourage that or what's your sort of thoughts around that?

In my own career experience, I've had the unique opportunity to experience diversity and the lack thereof on a couple fronts. The first five years of my career I was working in Saudi Arabia on an entirely male company. Thankfully, after that, every other organization I've worked in has been roughly 50% female and kind of within the treasury domain, sometimes even more than that. So I will say, having experienced one extreme there and then I definitely favor the kind of diversity of gender as well as other dimensions of opinion. Have also worked overseas, have worked with a number of folks from really all parts of different worlds. And you know, I can say firsthand, I mean, I do very much favor diversity in terms of not just ethnic or, you know, national or cultural. There's lots of different factors there that influence how people think about things and address them. And I do very much favor, you know, diversity on that front as well. But I mean, even besides that, there's people who, some are more sort of, you know, organized than others, conceptual than others. Some are more faster, slow thinkers, some are more introverts or extroverts. I think each one of those dimensions influences how somebody views a problem. Fundamentally, that's what any of us are trying to do is just deal with the problems, you know, be they kind of short term or long term. Having that breadth of background and experience, I think ultimately makes you better problem solvers as a team.

And when you're, you know, taking that the further on step when you're recruiting, what are you looking for in terms of those people?

Yeah, I think, you know, anybody who walks in the door looking for a job in treasury is almost certainly someone who's, you know, at least sort of quantitatively minded, hopefully kind of logic minded as well, you know, and I think that applies for anybody who's looking for a finance job in general. I think for what I find interesting and what's kept me in treasury for all of my career has been, you know, the unique characteristic of I Think, you know, everything we do in treasury just having this profound immediacy, you know, everything has a kind of a real tangible immediate impact and short time frames and imperfect information often and usually with, you know, material impact. That type of thought process I think takes a certain type of personality to it. You know, someone who, I think there's a, there's a level of maturity and confidence, but I think also a level of even risk tolerance, you know, I think which is sort of, you don't hear treasurers talking about the benefits of risk tolerance too often. But the reality is that everything we do, you know, recommending a decision on something or making a decision on something, everything we do is we're taking some risk on because nothing that we react to has perfect information. My framework, coming from a trading desk, that's what trading is. You know, it's making time crunched decisions with material impact based on imperfect information.

How has world of treasury changed, would you say? And where do you see it going next?

I think everything I described there, I think is what makes for a thoughtful treasury practitioner. But the special ingredient, the one that makes a perfect candidate, I think is the ability to communicate and to interact and to manage people, you know, whether it's up, down or sideways and you know, to demonstrate leadership potential. Put that in the context of, I think where treasury is coming from and going to. In the end, all we're doing is not even managing money, we're managing information for the most part. You know, we have to appreciate the fact that the role of capital and technology relative to the role of labor, you know, will continue to shift in our industry just like every other. Some of the advice that I've given to folks is say, assume that at some point during your career you will be partially if not fully automated out of a job. That may or may not happen, but I think it's a good assumption to make because all of us, whether it's in treasury, whether we're managing cash or risk or we're at the treasury level or anything else, I mean, we're all just basically human algorithms, some of us a little fuzzier than others. But when you think about, in terms of, think about your job as you would describe it to a software engineer, hopefully you'll be in a better position down the road to continue to be one of those folks that's kind of solving problems.

When you said that I've had a number of these conversations obviously and spoke to Mark, actually just this week's episode's just come out from Johnson Controls and He talked number one about communication skills. He started very similarly actually in more of a sales role before he kicked off his career in earnest with Johnson Controls. But he said those communication skills he learned in that sales role really helped him and that's one of the things he sees from his team. But then we also moved into the technology space and, or talking about that and one of the things we sort of, you know, and I've talked with a couple of other people is it seems that the pyramid of treasury, if you like, has, you know, it used to be this, you know, big wide triangle but now it's got narrower and there are still those similar. There are still roles in Treasury. You know, people aren't going to be automated completely out of jobs, but instead of having two more junior people just doing a more junior turn the handle type job, actually you're going to need one more senior person, not senior senior, but an operational type person who will supervise, you know, make sure that everything works. So there's still a need. It's more the thought strategic problem solving which sounds like you're seeing as well.

Yeah. And you know, to the point about communication, you can't be effective in that role of not only problem solving but then articulating the problem to, you know, everybody you're working with without those communication skills. So I think, you know, it absolutely key to any, to the success for anybody in that role.

Okay.

And then looking back at you and your history, if you like, what would you put down as some of your success factors? You're the treasurer of Hilton Worldwide. What would you put it down to?

I'll expand it a little bit beyond myself to the success of others. I've observed as well in the course of my career and at one level it comes down to finding the problems that need solving. Having worked in four different companies and four different industries on the one hand, kind of every company feels that they're unique and each one of them is unique in their own mind. I'm sure in the end the treasury issues that span across them are more similar than they are dissimilar but the context different for each company. The prioritizations are different for each company. So I would say as a matter of career success, you know, make sure you're, you're bringing the right tool to the right job. Terms of figuring out what problems are most prioritized for the company that you're part of. Beyond that, other bits of career advice I would pass on and is to try to get the broadest career path you can I myself, for one reason or another, have been fairly specialized in what I've done. You know, I think, frankly, if I could go back, I'd like to have experienced a broader selection of different functions on my way up that ladder, you know, and so I would. That's something I would encourage others to do, too, is experience different. Different ways of thinking, you know, different types of problems and experience working with different types of people, too. Tying all those things together, though, the ability to manage people up, down and sideways and the ability to communicate is absolutely fundamental, I think, to anyone's success.

Amazing. Well, I think, you know, I think it was. We wrap up today's show and Fred said it was gonna be okay. We'll put it in the show notes his LinkedIn link so you can perhaps connect with him if it's appropriate. And everything else, you know, you've obviously given back through the afp, you're on the board there and everything else, and looking, you know, just to wrap up today's show, what advice are you going to give to, you know, one of those guys who says, right, actually, I want to be the treasurer of Hilton, or I want to be involved in the AFP or, you know, want to emulate yourself. Any other things you'd say, yeah, I.

Think getting involved is key. And I think that applies to probably any role in any type of industry. I think, you know, having spent my career in trip treasury, you know, on the one hand, I would say it's a perfectly good place to spend your career. On the other hand, I would be. I'd be disingenuous if I didn't say that there aren't great opportunities to do things elsewhere too, because I've not experienced any of them. But, you know, joking aside, spending your career in Treasury, I mean, it's. It's obviously great for folks who are, you know, particularly quantitatively oriented, particularly logic oriented, you know, as I said, I think, you know, the ability to kind of be able to take confident risks based on imperfect information and to deal in the immediacy of the now, I think are also characteristics that if that sort of appeals to you, then treasury is a great place to spend your career. Don't underestimate kind of the importance of people. And the importance and dealing with people is about communication and whether you're dealing, whether your career is in treasury or takes you anywhere else. I think those lessons will apply no matter where you are.

A great summary, I think, from Fred. Thank you very much for your time today. As I said before, if you want to connect with Fred, feel free look at his LinkedIn link. I look forward to my next day at Hilton.

That's great. Thank you very much Mike for the opportunity and we're looking forward to having you.

Great stuff.

So I hope you enjoyed that podcast. When we last caught up with Fred, he was at Hilton. Now Fred Shekman has actually moved on. He is now the VP and treasurer at Technip fmc. They are a UK based provider of technology solutions to the traditional and new energy industry, but they're actually headquartered over in Houston, Texas. Proprietary technology, comprehensive solutions, all that other stuff. I'm going to let Fred explain that in just a moment. Fred, can you bring us up to date? When we spoke you were at Hilton. Now you've made this move. What was that transition like? And then we'll talk about, about this new company and things. Talk us through. Over to you.

Yeah, thank you Mike and happy to be back and have the opportunity to chat. It's. It certainly has been a interesting, a fascinating transition for me. I've had the opportunity to work in a number of different companies, different industries, all in, in my treasury career. Technip fmc, vastly different in a lot of respects from Hilton in terms of the business and the financial needs, but fundamentally the same treasury principles apply as I have for every other treasury role I've ever had. So, TechEFMC, just a quick word. What we do is provide the equipment and the services to the energy industry, traditional energy industry, but also new energies. And so we manufacture extraordinarily engineered devices that make it possible for energy companies to produce energy. A lot of that is the hardware that sits on the seafloor, the umbilicals, the pipes that connect it, all of which makes our modern economy function with the energy that it requires. So it's an incredibly interesting and challenging environment that we work in as a company, which kind of leads to a comparison. Is it also challenging and interesting for Treasury? It is, yes. Yes. So we operate in 41 countries. That's about 6.7 billion of revenue last year. And very diverse organizationally in a lot of respect, not least of which is the people, and which is one of the most fantastic and fascinating aspects of the job is incredibly diverse group of people from the top to the bottom. So operate in 41 countries. The company itself is a merger of a US company, FMC and a French company, Technip, each of which was in their own right very internationally diverse before they joined.

And what does that, and how does that then what's that like in treasury terms, what's that like for the treasury team?

So it is my treasury team, which is about 60 people, which is not small for treasury, for a 7 billion company, is sitting in 12 countries today. And even in each of those countries sits in sometimes more than one city, which is just a byproduct of the way the company has grown, not just from this merger, but from other companies that have been absorbed along the way. And they're there for good reason. We have physical footprint in a lot of locations because we manufacture stuff and that, that creates challenges in our. Thankfully, in our modern workplace environment where we're all largely on teams. There's. It helps equalize, it helps bridge communication gaps around the world. But it does have that sort of natural fragmentation going on, which is a cultural headwind, difficult together, everybody together for any one thing at any one time. And that really has been one of the challenges that I've sought to address in the two and a half years or so that I've been with the company so far, which is kind of establishing a singularity of culture.

And how have you done that? What, what, what's been the weather vane or what's been the guide for you?

Yeah, so really it's just a question of there's an aspect of identity, which is to say we're one company. And I mentioned the merger that took place, oh, several years ago now, but.

Not that long ago.

We also went through a divestiture, a spinoff of one of three business units, which was called Technip Energies, which was a particular segment of the chain. What remains is largely the production of equipment services, dubsea as well as Surface. So there was a merger of organizations as well as a spin off of organizations as well, which creates a lot of friction and in terms of identity. But beyond just branding, beyond just setting a vision for, hey, we're one team now, is establishing singularity of purpose. What is it? What are our objectives for treasury and for finance and for the company? We went through some very foundational changes, very transformative changes as a company. And in response to that, the needs of the finance organization and the treasury have to change too.

And when you say that, what do you mean by that sort of. Without going into confidential company information, it's more. How did you align yourselves? And I know that you. There were things with different cash cycles or different things with the business and everything else, but again, tell us more because it's.

Yeah, so. So when I. So I joined the company in December of 2020, just ahead of the spinoff, which occurred in February of 2021. My mandate coming in as treasurer for effectively the remain co was three things really. It was help execute the spinoff with all the complexities that has but then beyond that was two things. It was, I would say, fixing the balance sheet and rebuilding the treasury organization. So fixing the balance sheet and this is all public information. Prior to the spinoff, the company had a net cash position of a billion dollars, 4 billion of debt, 5 billion of cash. Not a uncomfortable position to be in for a lot of companies. After the spinoff that flipped, we went to having a net debt position. And so that was a big change for a lot of companies. For most of the people that worked for both companies had only ever worked in a company with a net cash position. And when you're in a net cash position, and I want to say it's your priorities are different, you don't as laser focused on the timing, the velocity of cash flow, tracking where every dollar is at every moment of the day when you're in a net debt position. And by the way, we also were downgraded from investment grade to high yield in conjunction with that, for understandable reasons. We our focus changed quite dramatically as a company where the focus on cash flow and the focus on the cost and capacity of credit were now new points of concern and or focus that simply weren't there before. And that was a change. It's not just treasury change, but finance in general.

Yeah.

And so, so the way you do that is it really required partnership with my colleagues and the finance organization in reprioritizing, in drawing awareness, understanding from the leadership of the company and the business leaders of the company to appreciating what do we do now? To pivot to drive a cash flow mentality and a mentality that finance in all the dimensions of currency and credit and cash flow and capital, all of these things have a capacity and a cost. That's a lot of Cs and sequence. But they all have considerations that now need to be part of our equation. Which by the way, sounds like, well, shouldn't they always have been? And the answer is yes, frankly. But again, for a lot of companies that are in a position either of an abundance of cash and liquidity or capital, it's easy to deprioritize. So it was a question of reprioritizing the company, the leadership and the business and the finance team to support that.

And I'll share with. Well, I'll share with listeners and also share with future podcast guests. Fred gave me the best set of notes I've ever had in my life for this podcast. So there were gray notes. And I was like, this is. But actually I'm going to take one of these. And he talked, you talked here about shifting your mindset from legacy policies, decentralized organization and things. But I'm going to dig into that slightly different angle. You had the, as you said, established teams that were. I was asked last year's Euro finance, someone said, how come you've managed to do 208. Well now, 280 podcasts and all, you know, I thought I'd do 10, 280 later. And I said, look, every treasurer within 10ft of me, I've got 10 different treasurers, right? And they were like, oh yeah. I said, well, they're cash rich, they're debt laden, they're centralized, they're decentralized, they're this, they're that. And they were like, oh, right. So all of these, although they all have the same title, treasurer, they all do it differently going through that at a company. So you were having that shift of mindset. Now you had a team that had been used to, yeah, we got the cash, it's coming in, no problem at all. As you say, laser focus and you get them, but you've obviously got legacy employees. And again, that, that's quite a shift in itself. How did you go about that? Was it just, just sit down, have a coffee. Look, guys, now we've got no money. We've got to do this.

We've got to make sure the money's not just rolling in.

We've got to do this. How did you help those guys pivot? Again, it's for the listeners because they'll be. Might be in a similar situation. There'll be another now listening going, I want this advice.

So how do you.

Yeah, no, I don't want to belittle my own response here, but you just nailed it. Basically sitting down with people. The only thing about, the only thing that changes is whether or not you're physically in proximity to have that cup of coffee together or via Zoom. But yeah, it is about sitting down with people one on one in groups. It's all about communication. And it's. So it's. I mean, communication doesn't happen in a vacuum. You have to start with a vision. So it means starting with setting goals and priorities. So as a company, newly high yield with a very different balance sheet than what we've managed before. And by the way, without the tools, that company with set balance sheet would typically want and expect to Manage cash efficiently. It is sitting down with senior leaders as well as people operating cash positions and everybody in between to say exactly that. Hey, we're in a very different reality now. We have new and different priorities. We have a path forward by the way. We know how to get to where we need to get to. And here are the goals we're setting out. Leverage, liquidity. Here's why those goals are important to us because they impact stakeholders perceptions of our company, which then impacts our own cost of credit and capacity and everything else which makes us more competitive commercially. And so once you lay out those why those goals matter and what our plan is to address them, it's not a difficult conversation, to be honest. Really. Then it just becomes a question of once everybody gets it intellectually says, okay, new set of rules, new goals. There is, to be fair, always going to be an amount of just organizational inertia that for somebody who's done these something a certain way for a certain number of years, yeah, of course it's always difficult to pivot. And that's where a lot of just sort of hand holding or on the job training or getting into the trenches and a lot of going to the Gemba is one of the, one of the phrases here. And that level of connection, of identif, of attaching sort of what's the high level purpose and goals we're trying to achieve and how does that tie down to all the myriad tasks that everybody is doing on a daily basis is the only way you can make that effective. And there's plenty of examples of those. When you think about something like managing debt, well, if your cash is all over the world, makes it much harder to pay back debt in a timely way. So you gotta concentrate cash, well that's pretty simple stuff that's nuts and bolts for treasury, but yet it's still nuts and bolts. Like you gotta do it, you have to assemble that machine and make it run well. And so that means understanding how many different cash operators in many countries do their jobs. And usually there's similarities, but there's a lot of circumstantial differences too. So it's tying to something as, I don't want to say as mundane, but something as operationally focused as setting cash positions in a certain way in a certain bank account, a certain country. All of that that times hundreds drives our ability as a company overall to pay back debt in a timely way. So it's all about kind of attaching tasks to enterprise level goals and stepping.

Back from that you were joining as you say, prior to this big shift in the company. So you were a fresh face as well. And again, you put in some of your notes here about this treasury transformation with people, policy and different things here. But also then you were learning a new company crumbs a lot of spinning plates, just intellectually as much as anything. What was that like for you on a personal level as a treasurer? Obviously, sometimes I know that when I, when I did things with the podcast, I felt like a bit like that Harry Potter with things being dragged out your brain something and you crumb you. Certainly after some of the podcasts or some of the sessions I've done with my US clients, I go to bed and I'm just absolutely exhausted because it's great, it's intellectually stimulating. But for you going through all that change, what was that like?

Yeah, it is a. It is daunting, to be honest. And another point of comparison here. So if you understand the business model of hospitality, which has certainly been around for thousands of years, it's pretty simple at its core. It gets more complex when you think about the different channels of ownership and how the economics flow accordingly. But then something like what we do in energy, creating the mechanism, the machines, the systems that allow oil and gas, let's say, to be extracted from the seafloor. Sounds simple enough, but in, in practical reality is extraordinarily complex. And I have no engineering background other than to say I appreciate how enormously challenging that is. But then when you break that apart into the different components and the different businesses and the different commercial drivers, why different challenges drive cash flows, as one example, it is a huge amount to learn. Absolutely. And I, as for the two and a half years, feel like I'm. There's plenty and plenty for me to learn still. It is. But at some point, you have to also be comfortable without perfect knowledge of a situation. And I am perfectly comfortable acknowledging that I don't know as much as most of my colleagues do about our business, and that's just the reality of it. But yet I have to rely on them, the partnership, and ask questions. I'm hopefully not afraid to ask questions when I don't understand something that I need to understand and perfectly comfortable doing so. And likewise, if I'm speaking with someone who knows our business inside and out, but yet doesn't have that kind of treasury mindset, similarly want to make sure that they're comfortable psychologically asking questions as well. And I think that's been really the tremendous partnership that I've seen within Technip fmc is that a willingness to ask questions and to challenge what we're doing and to engage in that dialogue.

And where do you see it going from here? Where's the again in your notes you've already said the next legs of your transformation but with what goal in mind? Where do you see it sounds like pretty you've come in with. You've had this wealth of treasury expertise before. What's your definition of the next of the perfect Treasury? What's happening next for you guys? What again you're on the AFP committee and things. What are the things that keep worry you but you're thinking right I need to keep an eye on this or we need guys, we need to be focused on this. What's coming next?

Yeah, so so we're under a various transformations as a company in finance and treasury and a lot of that just stems from within the finance organization getting to the level of alignment post merger which was already several years ago that we need to get to, but also taking that step further and just getting to the level of, of modernization and efficiency that we can get to. And so acknowledging that has been a key step and that's been driven by our CFO in setting goals as a one finance organization and establishing very specific targets for the types of operational efficiency we want to achieve and the types of financial performance we want to achieve. And so it's within that framework that our CFO has set out. It makes my job a lot easier in expanding that in Treasury. And so within treasury there are multiple dimensions of transformation that we're going through under I was just like grab some.

Water if you need it because I don't want you.

So one of which so is revamping our foreign exchange program and policy. We do a heck of a lot of FX hedging because our supply chain is, is very global and we do very long run projects. And so that that's a complex set of FX risks to manage. Beyond that is managing our global liquidity. I mentioned getting all of our cash organized so that we can be more mindful about our managing our debt is is another huge priority and then manage getting a global perspective on our credit needs, our trade finance needs. So these are all credit, currency, cash flow are effectively the lifebloods of our business, of any business and getting the right tools in place, which means not only policy tools but system tools as well. And so we're going through a Treasury system implementation at the same time. So all of that is kind of the infrastructure to drive our transformation. But at the same Time. The transformation is of course led and affected and done by people. And so there's an organizational aspect to that transformation too, which means getting the right meters in place to drive the right types of change. And on that front. So one of the remarkable experiences I've had at Technical fmc, which is something I never would have thought I'd say as a career long treasury person, but a majority of my direct reports today actually had no prior experience in treasury before I hired them into their roles and, and that, and at senior levels as well. And that might sound shocking to a lot of folks. It was shocking to me before I really did it. But it is, it builds on a theme that I've been observing really through my career, even before Techno fmc, which is there's a tremendous opportunity out there. I mean, treasury is such an incredibly siloed place, which is great. You've got lots of smart people that are really good at what they do. It does mean sometimes you've got a, a silo mentality and a bit of a cultural inbreeding, if I can use that term. And that means that unfortunately treasury in general, many companies not always as effective as they can be in partnering with the business and understanding the business. I myself am a product of that environment and I'm trying to overcome that. But so what I found a lot of success in is bringing in people from outside of Treasury. And let's be honest, as complex as treasury is, there's nothing that can't be taught to someone of reasonable intellect and reasonable intellectual curiosity and bringing in people with the right attitude and aptitude and intellect who understand the business in different ways and who can learn treasury and want to learn Treasury. And that to me has been tremendously successful in the organization we've created to drive this transformation as one example. And I've got various folks coming from different sides of the company, one of whom is coming in with a background in various things, one of which is operations and really brings firsthand knowledge of industrialization. So lean methodology and all of that great stuff that drives a systemized way to change. And as much as I know about treasury, this guy knows as much if not more about industrialization. And so it's been a really fruitful partnership on how to affect change in a meaningful way for the Treasury.

And you gave great takeaways before, but you know, we're gonna not take too.

Much of your time.

You're a busy man. What are the takeaways? Maybe you reflected in this new role or what are the.

As we wrap up.

We'll put your LinkedIn details in the show notes. Of course people connect to you and I know that we'll see you at various conferences and other things. But you know what are the takeaways you'd share with the audience today, would you say?

The one thing is that is always essential in any role in treasury is to ensure that the methods, the goals that the, that what treasury is doing is aligned with the needs of the company. As you noted as well before, companies have different needs. And while I've said in my past that the principles of treasury are unchanging, which is true, the circumstances of the companies differ and they sometimes differ during the course of your own role, which I've seen myself a couple times. So making sure that you're aligned with what your boss, the CFO needs and his boss, the CEO needs or her boss is absolutely essential. The other point though is ensuring that alignment is understood and embraced by throughout the organization and driving the importance of culture is absolutely essential and is often said is probably even more essential than talent because a, A, a well oiled group of people. It sounds like a terrible analogy but a, a well organized machine of individuals can do a lot better than a bunch of individual talents can do. And seeing that and I have seen the benefits of what we're doing at tech competency along those lines too.

Well, I've talked a lot. Sorry, just, sorry just go back to that and I'll let you camera. But that analogy where you know the it's the sum of the parts isn't it is greater than the whole and that, that's incredible. Sorry Gordon, back to you.

Yeah, right. And I mean very self evident but when you've been around enough to see kind of successes and failures it becomes apparent and the last piece is just, it's getting the alignment with leadership on the company, getting the alignment with the population, with the team broadly. But then is it's not that difficult to actually implement a policy or implement a system or implement change, whatever it is. Doing that in a methodical way, in a repeatable way is a skill unto itself. And I wouldn't, I won't claim that I have that skill embedded in me but I recognize it and I know how to find people who can do that. And that's the whole industrialization of why that's what makes that possible. And that's something that I will say I've learned different things from each of the companies that I've, that I've worked for. Hilton for example, fantastic on communication, really knows how to talk to people, which is part of their DNA. TechEAP FMC Engineering Company really understands industrialization and that's kind of a skill set that I've really benefited from learning in my time here.

Thank you very much. Lovely way to end my day. Having a lovely chat to Fred, catching up with this new role and as I say, looking forward to seeing you.

Absolutely. Thank you very much, Mike.

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