The Workings of Global Treasury with Sarah-Jane Hall

Foreign.

Welcome to Today's show. Our 200th episode, my goodness, 200 episodes since the 2nd of October 2018. And the array of incredible treasury professionals and I've spoken to ever since day one has, well, blown me away. I just love talking to Treasures each and every week. And what we're actually going to do is we're going to go back in time right Back to episode 001. That's right, the first ever episode that I did with the amazing Sarah Jane hall from GlaxoSmithKline. If you hear myself talking at the end, I will tell you a bit more about what's happened with Sarah Jane since we've recorded this and what's happened since 2018. Yeah, you've heard it. Global pandemic. The world's changed. Lots of different things going on and the world of treasury has evolved and changed in the three years. It's amazing. But as I say each and every week, let's get on with the show and listen out for me at the end. So I'll be talking to Sarah Jane about how she first got into finance and then treasury, how her career has developed. And we move on to talk about the current challenges that she and the treasury team at GSK currently face. We also look to the future and what she thinks it holds for the treasury profession and future treasurers. And given our recruitment background, I'll also talk about some of the treasury talent and some of the challenges GSK faces when they're recruiting on a global basis. Now that's certainly enough for me. Sarah Jane, perhaps we can start off by talking about how you first got your break into Finance and then discovered Treasury. So it's over to you.

Thank you very much, Mike. Hello, everybody. So, yeah, so I did get into treasury by accident. I don't think I'm unique in that point of view. I mean, certainly nobody ever said to me during my university life, you know, would you like to go and work in Treasury? It just wasn't really known. So I joined a start up finance company, which was actually securitizing mortgage assets as a temp. After leaving university and having traveled around the world and taken slightly more than a year off. So I wasn't expecting this to transpire into any lifelong career or anything. I was just thinking, I was just hoping that I would find something that grabbed my interest in the London market. So I joined that company very long time ago and ended up working there for seven years. After I joined, I set up their telepath payment system for them, which arrived In a box from HSBC had all the security key codes and everything else, which is kind of interesting as a temp by the way from a control point of view, but we'll gloss over that for a minute. And there was a Treasury team there and I was interested in what they. Because it was all open plan and I could see that was where my interest would be. So when they asked me to stay full time I said yep, I'll stay so long as I can work in Treasury. So I did all of my treasury qualifications and I think that's where the kind of pain was. I did it was before the act had their own kind of part one exams. So there was no AMCT in those days. You had to go off and do corporate law exams from corporate secretary exams, tax exams, all from different boards. It was all quite complicated. And then there were the part twos that you could do and get your mct. So that all took about two years I think. And at the time I was doing a lot of sailing so I do remember going on the Whitbread Round the World race with my tax manuals which I had to smuggle on board because they were quite heavy and make sure.

They weren't all overboard as you.

Yeah, yeah, they got nice and damp by the way. Anyway, so I eventually got qualified and then I got very focused at that time and actually what I really, really wanted to do and decided I either wanted to work for BP or SmithKline Beecham because I was only wanted to work for a company that had a truly global treasury operation. So I basically kept on applying until to both of those companies until one of them took me, which was SmithKline Beecham and I joined SmithKlim Beecham as a treasury manager 23 years ago. And that's sort of where my. I think that was a good big break for me at that point because I'd gone from a purely domestic UK company. We did the first mortgage backed securities by the way, in the UK market. Mortgage securities number one and two and three. But it was great to be working in a multinational global company and particularly in the pharmaceutical industry. So that was a great thing. And then within a few years, you know, I kind of established myself within treasury at smithklim beach and I was working for Smith Stephen Crompton who was the treasurer at the time, very clever man. And there were lots of other assistant treasurers and things. So I got promoted a couple of times. And then when the merger happened with Glax So wellcome in 2001, I was recruited. We had to go through the recruitment process at that point to be group treasurer. So I have been group treasurer of Glaxismthe since 2001.

And how many were in the team then? Or you say sort of the merger. What size did you go from and to something?

Yeah, well, Glaxo welcome had a smaller treasury team. They were more decentralized than we were at the time. From a Treasury operations point of view, we went with the SmithKlim Beecham model which was to centralize everything, so centralized cash operations and foreign exchange, etc. So in terms of numbers, we didn't increase the numbers at all. There were a few people who left at the time of the merger out of those two teams and we haven't really increased numbers since then. So we managed the core treasury operation at GSK with a team of 25. I now all have taken on insurance and pensions risk management. So pensions risk management team is four people and the insurance team is six people. So that anything to do with risk under the CFO is managed by myself.

How have you seen it sort of your role as treasurer evolve and change? You know, what's, you know, looking back now and looking to now, how's it different?

So I think it is very different. Certainly in those post merger years we were doing a lot of integration work on a global basis and then we went through a period of it being sort of quite steady. Eddie, because the company was doing very well. We had very few moves within treasury itself. Hardly anybody was moving elsewhere in the company or even outside. People who do join treasury tend to like working in treasury, which is great. So we had very small amounts of turnover, small amounts of net debt, et cetera. So we've sort of had to exponentially grow what we do and I think we've got similar number of people. But the way we've been able to do that is to improve our own systems and processes down the years. So for example, at the moment we run to joint ventures as well as GlaxoSmithKline itself. And the joint ventures need to be ring fenced from the point of view of cash management and so on. So there's a lot more complexity than we had, you know, let's say five years post merger. And also the role changed completely when I took on the management of insurance and pensions finance risk because, you know, that's the whole kind of parallel world to what we do in treasury and there's a lot of interest there in terms of or there's a lot to learn in terms of, you know, investment management and how to run a pension fund. So our pension fund assets are substantial around the globe and how to manage the risks attached to those pension funds. And similarly in insurance, that's another whole new world for me. And so I've had to increase my knowledge on how the insurance market works, what we want to insure, what's worth insuring, that's not worth insuring, et cetera, et cetera. So it has changed a lot down the years. There's always something new in Treasury. I think that's why I and others have been doing it for so long.

Yeah, because you. And also, as you say, by taking a more holistic view of risk, as I know that you guys did, it's far broader than perhaps the average treasurer sometimes gets involved in.

Yes, it is. I think the main difference between my role and roles, let's say in the FTSE 100, is the global nature of the business. So, you know, as soon as something goes wrong in Argentina or Turkey, as it has in the last months, you know, I need to be all over it. So running a global operation is just completely different to running a domestic or European operation. I would say that's a, that's one of the big differences. But other treasurers also look after insurance in particular, and sometimes pensions, risk management as well, but they tend to do it with an awful lot more people. So those teams tend to be much bigger. So I always say we're a lean, mean operating machine.

And how many countries do you cover now?

So we have operations in over 100 countries. That's legal entities. And also there are other markets that are just export markets where we just, we don't have legal entities, but we export to the market.

I remember we've discussed before that you said that a lot of your time is spent with, you know, so 80% of your time might be with 20% or 20 of the countries rather than the other way around because of the different natures of, or different challenges from different, you know, countries. Is that right or.

Yes. So I mean to go, you know, for our treasury structure, the way we run it is we have the core. Treasury has three centers of excellence. One's corporate finance, which includes all the funding, liquidity, investments, foreign exchange dealing, etc. The next area is a global treasury consultancy and that's a whole team of people who are focused on particular areas of the globe. So there's a person responsible for Europe, the Americas, for the Middle east and so on. So they have sort of daily or day to day Contact with the finance directors locally. I don't need to get involved on a daily basis in that activity, but if something goes wrong, then I do need to get involved. So, you know, we've seen huge currency swings in emerging markets over the last month. So yes, I have spent time on those issues and there are countries that are difficult to trade in, so they also require resource.

Going back to yourself as a treasurer, what's your ethos? What do you see as you've obviously done a number of years and very successfully, so what's your key to success or your personal ethos?

That's a nice difficult question. Thank you, Mike.

Well, no, this goes to you because you and I each other for many years and you've done very, you know, you're the treasurer of gsk, it's fantastic. But yeah, but that takes some doing.

Yeah. So I think I wrote a little note to myself here saying, being a goat, you know, I'm quite sort of determined, so I kind of keep going. And I think that's really important to have that kind of determination. You know, you need to sort whatever it is and ensuring that you follow that through and that the project that you're working on is adequately resourced and that you are going to get to a successful conclusion. All of that takes a reasonable amount of drive. But I think that, you know, I have particularly enjoyed working at GSK because of the ethos of the company. So, you know, what we do on a daily basis fundamentally impacts the lives of patients globally. So the fact that we might not be able to get the imports into a particular difficult country or something is not just because, you know, we're trying to make money. It's because we've got people sitting in hospitals on the other side of the border who need the drugs, you know, so it puts a completely different spin on what you're trying to do. And I like that. And I also, I mean, you know, clearly over the years, this is my team, I'm a long standing member. There are other long standing members of the team, but it's very much my team. And so I really enjoy, you know, being with the people I work with. Not very good, sort of sitting at home and doing nothing. I just like, you know, I like being with people.

And what's key to that success then? You've got a team, you've got obviously different levels and you know, what do people say about you as a boss? What's their you as a leader for them? You've obviously got your interest in sailing, you've Got other things. How does that come across to them?

Clearly, I've had a lot of feedback down the years and I think I'm reflecting in my earlier comments that feedback that I've received. We're not just all here to. To do the business of treasury, we're also here to work together as a team and we're here to make sure that we support each other as well. So I think that's really important and I think that's an important part of creating the right sort of culture. So that when people do run into issues in their lives, which they inevitably do, because that's what life is like, they don't feel that, you know, taking the time off to sort out X, Y or Z is going to be a career limiting move. It's very important to me that people feel supported by the company, by myself, and not just, you know, they're not just jobs.

Yeah. It's actually a Treasury career and you say that obviously been 25 years. How have you seen it change from when you first started to now the world of treasury, as it were?

Treasury profession? The world of Treasury?

Yeah.

Yes. I think that there have been a lot of advances in clearly in the way we do things and I was reflecting on this and I think that there are systems and processes advantages. So you were able to do three times the amount of volume that we were doing at the merger with the same number of people because of those process improvements and system changes. So automatic dealing would be an example, being a member of the continuous length settlement. So we net or foreign exchange transactions before they settled, etc. Those are all great advances. I think from a people point of view, that has not changed. I think we still have the same people issues, the same. You know, there are a lot of clever people in treasury and that's very. It's really fun to work with lots of clever people. That hasn't changed from the day I joined to now. Always enjoyed working with those clever people.

And if you look at that, then if someone wants a. If they want your job, if they want a career as successful as yours, and looking back, as you said, you've reflected on what's got you here, what would you give? So you've got people joining the team, they're saying to you, oh, I want to be the next global treasurer for gsk. What advice would you give them? You know, what has been key to your success?

So I think, I do think there's a kind of base level qualification that is really, really important and I've always promoted the treasury exams. I think if you do want to be a group treasurer anywhere, you should have an MCT qualification. It's possible to do it without it. And there are other qualifications that you argue are equivalent. But if you're working your way up through treasury then my advice would to get as many qualifications as you can. But again, it's not all about qualifications. So then you need to develop the project management skills, get exposure to as many different areas as you can. Part of the reasons for having the centre of excellence like I described earlier were so that people can move within those sort of between those centres of excellence. So if you're, I don't know, working in corporate finance, you might go and work in the global treasury consultancy or you might work in cash management. So we've made it flexible that way so that people get a sort of proper development within treasury to lots of different areas. And then the other skill that I'm particularly keen on is writing skills because communication being extremely important, you know, not just, you know, with banks, one of the few people in the organization who has a very external focus. So it is up to me to manage the relationship with our bondholders through the banks to make sure the company has enough liquidity, manage bank relationships and so on. So it's very important that you are the sort of person who's able to build those types of relationships. But also it's important to have the writing skills. So if you are wanted to be a group treasurer, you know, you'll be the person responsible for sending the papers to the board and making sure they're written in such a way that a non executive board director with no experience in treasury can understand them. And that is a particular skill that I promoted quite heavily within treasury and you know, we're continuing to develop.

So when you're recruiting, that's the thing you're, when you're looking through the CVs or resumes, you're actually going, right, bring me some communication or demonstrate.

Well actually, interestingly, we've also developed our own little test for people. So we say, well, here you go, here's this problem, we're going to leave you to it for half an hour, we'll come back and ask you how you would draft a paper on that.

Just to see how they approach it, but also their written skills.

Yeah, yeah, because it's quite difficult to test for writing skills in an interview process.

And in the softer skills, attitude, ethos, some of the, what's the general, you know, GSK fit, would you say, with some of the people that you know, you've got within the team.

I think it's true with any team though, isn't it? I mean, I was at something yesterday when with another treasury conference type thing, and people were talking about their teams in exactly the same sort of way. I mean, I think clearly people have to be able to work together in teams. But I would say that's not just key to treasury, it's key to any operation within GlaxoSmithKline or within any other company as well. Then there's anything particular to treasury or to GSK about that. The thing is very important that you do have people who are a team player.

Yeah. They really fit in and you know, and then with yourself, you've been there a number of years, how obviously you've got evolution since you've been there. But where do you see it next for you and where do you see your career developing from here with GSK and onwards, sort of thing?

Yeah. So I think the reason I have managed to stay in treasury for so long is because every year is completely different from the year before or every day is completely different from the day before. So you never know quite what you're going to get when you come into the office and that makes it really interesting. And so therefore I'm not sort of particularly wanting to move on to another group treasurer role somewhere else. There's very little point in me doing that. I would like to pick up a non executive director role in due course. Slightly relies on me having the time to do that. And because we've been doing quite a lot of business development transactions, I've been slightly curtailed on that ambition, but that's still where my ambition lies. So that when I do eventually hang up my boots on the day job, I want to still have an interest in other companies and how they work and making a difference. I'm not going to be able to sit at home and do nothing.

No. And you want that transition and interest level as well.

Yeah, definitely.

And we touched on a bit about the future of treasury and you said you'd been at conferences. We've just come back from another conference ourselves and everyone was going, right, that's it. Treasurer is replaced by robots and all the other malarkey and different systems and challenges like Brexit coming along, looking into your crystal ball, what do you see as coming along for treasury and the challenges and how are you guys planning for it?

So I'd say that treasury was one of the few places that not going to be replaced by robots. Clearly, as I said, we sort of tripled the amount we do with the same number of people. So automation is key to being able for that to happen. And that's true for treasury operation. Then we've got treasury accounts and treasury operations that actually don't report into me. They need to make their own systems improvements and so on to make sure that things are automated as far as they can be. But I think that's the lovely thing about treasury, is that it's not just about the numbers. You know, it's not just the fact that, I don't know, your cash forecast says X. You have to. Then you have the human intervention of working out what you really think is going to happen, sort of despite what the number says. And then, you know, strategically place the company in the right place to ensure that liquidity is there for the future, that the risks are managed in the correct way. And that is not a robotic exercise at all.

Yeah, because it's free will and it's open. Open thinking and everything else.

Well, it's all interpreting the facts that you've got and making them apply to the future.

Wow. I mean, anything else that you think is that I haven't covered, that you think is important about treasury, that you would say to. If someone's listening to this podcast, we've covered about treasury talent and everything else, but any words of encouragement if someone's coming into treasury and saying, right, that's what I need to do. Obviously we've talked about qualifications, fantastic. But what other things should be people thinking about if they want to come to Treasury?

So in my experience, with all the people I've hired down the years, people know very quickly whether or not they want a career in Treasury. Some people who, I say have joined treasury and then they go, oh, well, this isn't for me, they might go and do something else. But if you know you want to be in treasury, then that's the first step, because it doesn't mean that you have to have the most WYSI qualifications. We employ people on all different spectrums. So we have finance apprentices, we have people with degrees, we have people with MBAs and so on. So I'm saying if you want to be group treasurer, definitely get as many qualifications as you can. But there's still a good career in treasury for people who don't necessarily want to do loads of qualifications. Knowing what you want to do is the key. And then the sort of treasury world is your oyster and you can specialize in whatever you want to specialize in. There's so many different subjects. US cash management, for example, is a good one to pick on when it's quite different from how we manage cash in the UK and payment systems are different and so on. So if you become an expert in that field, then you're going to be useful to any company that has a cash management operation in the us.

Yeah.

So there's lots of different pockets of treasury to specialise in and become an expert in. And then you're very employable in the market when you've got those skills.

Yeah, very attractive. And when you do get those skills, just call us, because obviously then I'll be calling Sarah Jane on your behalf, which is fine.

Yeah, well, call Mike, obviously.

As you say, I love the quote there. The treasury world is your oyster, because if you develop those skills, you can roll out those skills wherever you might be. If someone's been at GSK for a number of years, what happens next? Where do they go from here?

Well, the lovely thing about developing skills in a broad global treasury operation is they're very transferable to other companies. So several of people who've reported to me over the last 10 years are now group treasurers of other companies in the FTSE 100 and FTSE 250. And I think that's fantastic because clearly everybody needs career progression and the fact that they've been able to do that when leaving BlackfootSmithKline is great.

So it's a big thumbs up to the sort of the knowledge they've developed with yourselves that they can then apply it to, you know, somewhere else as the number one, wherever they might go.

Absolutely. Very transferable skills. Yeah, yeah.

Well, I don't have any other questions unless there's anything else you wanted about Sarah Jane. This has been amazing. Thank you very much.

Not at all. Thank you very much, mate.

What an incredible show that was with Sarah Jane. So, so very grateful. I did catch up with Sarah Jane when she wasn't out on the water. She's a keen sailor, as you might be able to see from her photo. Now, as I say on the episode, you might want to connect with Sarah Jane on LinkedIn, but be warned, she's not actually on there that much, but at the end of the day, she's got this great life balance, so she's enjoying her role, she's doing some sailing and just, you know, a wonderful lady and I'm very grateful to her. And it's still our most popular ever episode, so that just shows. I hope you guys has got some great tips from it. Thank you for being regular listeners. Please feel free to leave us a rating whether it's on itunes or Spotify. It does help us with ratings, does help us, you know, help spread the amazing word. Spread the word of Treasury. And again, amazing treasury professionals such as Sarah Jane, a wonderful lady, and I hope you continue to enjoy the show.

Ra.