Deloitte is building its outreach to CFOs, appointing Frank D'Amelio, the former executive vice president and CFO at the pharmaceutical giant Pfizer, as its CFO-in-residence.
He is becoming an independent senior advisor to Deloitte's
D'Amelio brings tons of experience to the firm. He led Pfizer's finance side from 2007 to 2022 and was also responsible for business development and certain business operations, including information technology, procurement and real estate. During that time, he led the acquisition and integration of Wyeth Pharmaceuticals, King Pharmaceuticals, Hospira, Anacor Pharmaceuticals and Medivation, as well as the spin-off of Pfizer's animal health business, Zoetis, the sale of its nutrition business to Nestlé and Capsugel business to KKR, the combination of Pfizer's Upjohn business with Mylan to create Viatris, and the combination of Pfizer and GSK consumer health care businesses in a joint venture. In total, he oversaw business development transactions at Pfizer of approximately $200 billion. During his 15-year tenure as EVP and CFO, Pfizer's market cap grew by nearly $165 billion.
He has worked with Deloitte for many years on various projects at Pfizer and has already started on his new role. "I'm an independent advisor, and I'll be working with clients," he said. "I'll work with the senior leadership at Deloitte and with some of the Deloitte teams," he said. "They'll plug me into the many activities that they have as part of the Next Generation CFO Academy, the CFO Transition Lab, the CFO Vision Conference, the CFO Forum and CFO 4Sight."
During a CFO 4Sight session last week, he and Steve Gallucci, national managing partner of the U.S. CFO Program at Deloitte LLP, did a half-hour Q&A session discussing what's going on with the economy and what CFOs should be thinking about and doing in 2023.
"Given his vast experience as a CFO, including having helped lead Pfizer through the global COVID-19 pandemic, Frank D'Amelio brings a wealth of knowledge and insights, as well as the skill set required to advise CFOs through their most pressing obstacles," Gallucci said in a statement last week. "We are thrilled to formally welcome Frank to the CFO Program team as our CFO-in-residence."
He'll be giving his fellow CFOs advice about the various risks he sees them facing this year. "To me 2023 is a period of heightened uncertainty," he said.
Among the questions he believes CFOs should be trying to determine are whether there is going to be a recession, or if the U.S. is already in one. If so, will there be a "soft landing" or a "hard landing," and what is the Federal Reserve going to do about further interest rate hikes? As the Chinese economy reopens, what will be the impact on inflation?
He has several pieces of advice for CFOs. "I always say operational cause equals financial effect," said D'Amelio. "You execute with excellence, and the financial results will take care of themselves."
He prefers to think about cash management as opposed to cost management. "When you talk about cash management, you're going to be working on the P&L, the income statement and the balance sheet," said D'Amelio. "You try to improve all of those. You want to save money and free up capital from the balance sheet, put that to work — maybe with M&A, buybacks or dividends — but you want to really pound on cash management."
Capital allocation and business strategy are especially critical during times of heightened uncertainty. "I've been involved in many strategies over the years, and I've never seen one way to go directly from point A to point B where it's a straight line," said D'Amelio. "There's always a whole bunch of zigs and zags. What really gets you from point A to point B ultimately is execution. You want to work on strategy, but execution helps to deliver on strategy."
Talent management has grown in importance with the labor shortage in accounting and other sectors. "You want to make sure you're doing all the things you need to do to attract and retain talent, particularly in the environment that we've been in," said D'Amelio. He believes the corporate finance function needs to be front and center during this period of heightened certainty.
Another lingering uncertainty comes from the COVID-19 pandemic, which Pfizer has played a prominent role in combating through its vaccines. "On the pandemic, I think we're a lot better off today than we were in March of 2020," said D'Amelio. "In my last couple of years at Pfizer, in addition to being CFO, I had responsibility for the supply chain, so the manufacturing and distribution of the COVID-19 vaccine were among my direct responsibilities. It was a period that was incredibly challenging and exhilarating because, from my perspective, we were on a mission to save the world as a company and, in many ways, we really did help to save the world."
Even though China has seen a surge in COVID cases since reopening its economy, he believes much of the world is in better shape thanks to the vaccines' impact.
"This virus isn't going away, but I'd like to think the pharmaceutical industry has done a really good job of neutralizing it to a very significant degree," said D'Amelio. "I don't see it as big a risk as it was in March of 2020, although obviously we've got to still be prudent and diligent and get vaccinated and boosted. China is still uncertain. Obviously they're wrestling now big time with COVID, but it appears that they're opening up the economy, and that's a good thing for global trade and for U.S. multinationals that do business in China. We've got to see how that turns out. That could put some pressure on inflation rates if high demand really kicks in, but net net, with China opening up, all indications are that would be a good thing."
The pandemic has in some ways increased the responsibilities of the CFO. "Clearly, there was a lot more demand from their internal clients, the executive leadership team in the company, really needing a lot more information and analytics," said D'Amelio.
Workload has increased as the role of the CFO expanded beyond just finance, although D'Amelio visualizes it as a seesaw, with on one side all the work a CFO does on risk mitigation, balanced on the other side by opportunities. "When you're going through periods like this, you want to concentrate on risk mitigation," he said, "but you equally want to concentrate on opportunities during periods of adversity that you can capitalize upon."
One risk that's been drawing more attention is climate change, and some accountants have been working on sustainability reporting as the Securities and Exchange Commission weighs the thousands of responses it received last year to its proposed rule on climate-related disclosures. Companies are also doing more reporting on their other environmental, social and governance efforts as investors pay more attention to ESG initiatives, where some accountants provide assurance services as well.
"Clearly, ESG is taking on more importance every day, and diversity, equity and inclusion are part of the role," said D'Amelio. "DEI is a critical component of talent management."
New CFOs typically emerge from the accounting and finance department and are often promoted from chief accounting officer. "If you're new to the role, dig in, learn the job, learn your team and the value drivers of the company," D'Amelio advised. "When all is said and done, the role of the CFO is to create value for shareholders and other constituents. What's most important when you get into the role is you're building relationships. You're working with the executive leadership team and your direct report team, both of which are new now. You really want to learn the value drivers of the company, work with the people that drive the value, and then do everything you possibly can to help them to be successful."
