When a global crisis – such as the COVID-19 pandemic – strikes, companies face difficult choices around issues like layoffs, talent and prioritizing corporate purpose beyond shareholder value. At Booz Allen, one of the world’s largest IT consultancies, CFO Lloyd W. Howell, Jr., was faced this year with a wholesale transition to remote work while also looking after the needs of the company’s 27,000 employees. Remarkably, Booz Allen has avoided any layoffs despite the extremely challenging global environment.
I recently conducted a Q&A with Lloyd to ask him about how he, as CFO, was able to navigate one of the most difficult challenges in decades. I also delved into Booz Allen’s broader approach to talent management, which informed Booz Allen’s decision to retain all staff during the COVID-19 crisis. Finally, I asked Lloyd about his own experiences and outlook as an African-American CFO at a time when businesses, including his own, are confronting and being called to act upon ongoing racial inequity.
Jeff Thomson: Amid COVID-19, business continuity was top of mind for CFOs who were tasked with hard decisions like staffing cuts. As many companies laid off staff for cost containment, Booz Allen, in contrast, guaranteed employment and continuing benefits for all 27,000 of its employees through July 1. What cost containment measures did you put in place to ensure business continuity? What role did you play in the decision to keep all staff employed? How did you restructure financial resources to make this happen?
Lloyd W. Howell, Jr.: We sensed in late January that what was then an overseas pandemic could ultimately impact our business, and from those early weeks we established three priorities that drove every decision: First, we would protect the health of our people, their families and our communities; second, we would continue to support the critical missions of our clients, and third, we would work to ensure the financial and institutional resilience of our firm.
In March, we saw that our employees, who directly deliver our revenue and were now mostly teleworking, were fearful about the pandemic’s impact on their jobs and families. We leveraged our business’ strength to remove that worry quickly and guarantee full job security through at least July 1. We are a values-driven firm, and that approach to initially support our people was core to what we stand for.
We ran multiple models to assess the potential COVID-19 adverse impacts to our firm. My finance organization worked with experts in our health care practice to estimate how much sick leave or elder and childcare leave people might end up needing, how much our client work could be impacted, and how our communities could be hit.
Those models indicated that $100 million, referred to as our Employee Resiliency Fund, could cover it, and other financial modeling helped us determine where we could repurpose existing funds without impacting our overall financial performance. Given our exceptionally strong balance sheet built over the years, we had the flexibility to take care of our people. Separately, we worked with our People Services organization to determine where to apply those funds.
We found the money in some obvious ways, and some tougher ones. We knew no one was going to be traveling to or sponsoring conferences and we could discontinue large celebrations like holiday parties and off sites this year. Beyond that, senior executives sacrificed some compensation, and we held off promotions, raises and hiring in parts of the business.
As a result, beyond preserving jobs (and we’ve still not laid anyone off due to COVID), we funded emergency time off, more dependent care, greater funding of our Employee Resilience Fund and grants to our local communities. With reduced job worries, our employees have been more productive than ever, our financial performance has been exceptional and we still have some of the $100 million available if there are new COVID-related impacts later this year.
Thomson: Like many other companies, Booz Allen had to rapidly transition much of its staff to working from home amid the pandemic. As working from home becomes the new normal, is the company rethinking investments in facilities and telework technologies, staff management and customer service? How are you contributing to these conversations as CFO?
Howell: We were in a relatively strong position from a technology standpoint when the move to telework began. During the week of March 9, we determined that majority telework was necessary; we did a test run with maximum telework among our 27,000-plus employees that Friday and when we saw the network and our collaboration tools holding up so well, we announced the move to maximum telework on Sunday. We went from about 20% telework to well over 80% almost overnight, and eventually to over 90%. For those employees whose jobs required them to be in our office or on a client site, we focused on developing extensive safety protocols.
We discovered that people were actually more productive at home, and taking less time off, which has resulted in strong business performance in our past two quarterly earnings reports. However, it is clear this level of work is not sustainable. We know that the stress of childcare, schools, parent care and other issues are wearying, and we’ve placed a great focus on providing resources, mental health support and other assistance. We have also been very proactive in encouraging people to take time off to refresh themselves; even a week off helps people return to work in a better mental place. While some employees begin to return to the office, most will work from home for some time, and we continue to look at and assess the challenges of working from home in this environment from a financial and people management focus.
My organization is looking at continued investments in technology and other ways to support robust telework, and we initiated projections regarding our future real estate needs but, frankly, it’s too early to consider major decisions. We just don’t know the full course of this virus and what will happen afterwards. We also are listening closely to clients, because they are finding their way, and because their needs will impact our plans.
Thomson: Major upheavals and organizational changes make it more important than ever for companies to have strategies for talent acquisition and retention. What is your approach to talent management as head of Booz Allen’s finance function? When it comes to hiring finance professionals, what skills and types of backgrounds do you look for? How can finance education programs better equip entry-level employees with these skills?
Howell: As an African American executive with an engineering degree, I’ve seen firsthand the impact of diversity on organizational and financial success. In my current CFO role, I’ve never been more convinced that diversity is core to operating as a high functioning organization that will attract and retain talent, particularly in times of crisis. Long before this summer’s national focus on race and social equity – a topic on which my firm has been outspoken – I have focused on developing and recruiting against a broader definition of diversity within my organization.
Beyond the traditional measures of diversity, I find an even greater impact on business performance comes from giving the same level of attention to recruiting and developing staff with diverse skillsets and training them on how to apply their unique professional expertise to higher-level financial problems or business crises within our firm. Within my department, we have staff trained in tax accounting, Sarbanes Oxley regulations, treasury functions, government accounting, compliance and other areas.
But to raise this diversity of training from a slate of staff with functional skills to the level of influential strategic business partner requires development, mentoring and fostering an environment of credentialization. An important part of diversity in a financial organization is supporting and encouraging diversity in credentials and certifications that provides a level of trust and confidence to the larger organization we serve.
We ask our financial staff to look at larger problems with a “CFO mentality,” meaning that every individual decision by staff at every level should be made as if they are sitting in my own chair, looking more broadly at impacts across our company and market. To get there, as an example, we train our professional staff to look beyond the mechanics of cash collections, to understand the end-to-end process and impacts, starting with client issues related to payment timing all the way to the impact on cash deployment and guidance to investors. With that context, their diverse core skillsets have greater influence and inclusion in corporate decision-making.
Thomson: As you just indicated, more business leaders are understanding the tangible benefits diversity delivers. What does Booz Allen do to attract and retain minority talent? What are your personal perspectives on this, as an African American finance professional who has worked with Booz Allen for most of his career and has reached a senior leadership position?
Howell: I spoke about this on Booz Allen’s most recent earnings call, in which we opened our call – before talking about our finances – with a lengthy discussion of our firm’s approach to addressing race and social equity. The past few months have been challenging for our country and our firm. July 18 marked 32 years since the day I joined Booz Allen. This firm is my family, and just like with all families, sometimes difficult conversations are needed. We’re in one of those times. We have one of the most diverse leadership teams in corporate America today, and our Board of Directors is also much more diverse than most. I’m proud of that; it’s an important start.
But it is also clear that we have work to do inside Booz Allen and throughout society. Given my place in this “family,” it was meaningful to me to help craft our six-point equity agenda that includes a full independent review of how all our business practices impact people of color, educational actions and philanthropic investments. To be a force for change in the world, we must start by ensuring that every person at our firm feels empowered, and that those who have been marginalized in the past know they have a voice, a seat at the table and an opportunity to thrive.
When employees and candidates see our commitment and the results of our efforts, it will reinforce their desire to continue to be a part of our work, and the success of the business and our clients.
Thomson: You began your career with Booz Allen as an engineer, before obtaining your MBA and then rose to a senior leadership role in the finance department. How did you bring your skills and background in the technical side of business to bear in being a leader and decision-maker? How does your engineering background inform your approach to finance?
Howell: I began with an interest in engineering, which led me to opportunities and increasingly greater responsibilities at Booz Allen, but I have always felt that no career is linear. Circumstances change, things happen, you learn and develop experience in new areas and these impacts can take you to a place you hadn’t expected. I ended up having decades of experience running parts of Booz Allen’s client-facing business.
I think that has made me particularly effective in my CFO role, in large part because I can communicate and articulate needs as I would have wanted to hear it in my previous roles. I’ve been in the shoes of my internal clients for a long time and appreciate the pressures they are under and the performance they are trying to achieve and how to help them as best I can to achieve that performance.
Among the most effective tactics for my own career success, I think, has been a willingness to admit when I am wrong and relying on mentors and my surrounding colleagues. When people try to “fake it until they make it,” eventually they are found out. I think there’s nothing wrong with admitting when you don’t know something. When you do, more times than not, folks are very open and helpful in response. Beyond that, I’ve always reached out to colleagues, mentors and coaches for advice and counsel. I think the best education and learning process is to learn from others. That was essential as I took over the CFO role. Finance is a language. To be good, I think you need to listen to others, understand and learn the language.
I’m president and CEO of IMA (Institute of Management Accountants). Prior to joining IMA, I was the CFO for business sales at AT&T. In this column I’ll draw on my experience to offer CFOs – and their teams – insights and ideas related to challenges of the position, in light of market demands and global economic conditions. During my tenure at IMA, I’ve spoken on accounting regulatory issues, providing testimony to U.S. Congress on internal controls and risk management as it relates to Sarbanes-Oxley implementation, appearing before the SEC and PCAOB on critical regulatory matters impacting U.S. global competitiveness, and I served as a member of the COSO (Committee of Sponsoring Organizations) board of directors, which delivers global guidance on internal controls and enterprise risk management. I’ve authored numerous trade articles on accounting issues and recently contributed a chapter on ethical leadership to “Trust Inc.: Strategies for Building Your Company’s Most Valuable Asset,” entitled Trust: The Uncommon Denominator in an Uncommon Business World.
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