Rado Petík: We must be predictable in times of growth
In every company the Finance department is surrounded by a veil of secrecy. At first glance we feel that each of us knows what this department is in charge of: Money. On the other hand, how many of us really understand the process of natural money flow throughout and for the good of the company? How to build a functional team that operates with money in the interest of all stakeholders, in spite of the economic cycle? Radoslav Petík, CFO of Foxconn Global Services Division (FGSD) knows a lot about this subject. Throughout his entire career he has been connected with the world of finance, mostly within Foxconn group.
Radoslav – or Rado, how the FGSD CFO is known – comes from Slovakia. In 2000 he graduated at the University of Economics in Bratislava, the department of Corporate Economics. “Yes, I studied at the University of Economics in Bratislava, yet in Košice” laughs the kindly looking man in his forties who oversees the finances of one of the largest European companies focused on aftersales services for technology companies. After he graduated, he performed military service, which in 2000 was still compulsory. Then he took a crucial step: he accepted an offer to get on board at the Foxconn group in Pardubice, which was at the beginning of its operations.
A young company, a young man
“Foxconn CZ was a new company, founded a year earlier. It began to develop its activities, especially in manufacturing. I started as a cost analyst at the department of cost management,” says Rado. He remembers his beginnings as a “hectic period.” “Because Foxconn and I were really young, we worked well together. From the development perspective I gained a lot of knowledge because the company began to implement a core ERP system – SAP. From the perspective of a person who supervises costs it was a crucial point to be present at the moment when system settings for the whole company were activated. I got a good insight into the whole company and into the activities that lead to its costs that I had to supervise,” he says.
The process of deep understanding of the complexity of functioning of the largest electronics manufacturer in the world continued. SAP implementation in Foxconn CZ lasted for nearly two years. Rado continued to assist in setting up the company processes. “We put together a reporting system for the whole company – not just the content of reports, but also the relationship with other departments. The Cost Management section performs control functions for the entire company. Therefore it was necessary to agree on the things that would be important to observe, in order to be able to predict how they will develop in the future,” says Rado.
The period of mutual development continued. Foxconn CZ began to grow dynamically and production activities from Western Europe began to concentrate in Pardubice. “Because I’ve been there from the beginning, I was able to participate in the adjustment process regarding the implementation of the system and I was also there to support the management in negotiations on the price of services. Overall, it was a period of great development for me,” he recalls.
Rado worked for Foxconn CZ till 2006 when he decided to try something different. He accepted the offer of Nylstar, a Slovak company that at that time was the leader in the production of polyamide fibers for the automotive industry. He stayed there for a year as the CFO of the manufacturing plant in Slovakia. Yet fate brought him back to Pardubice. “In 2006 I got married and we were expecting a child. My wife comes from Pardubice and I wanted to be there when our baby is born, so I decided to come back.” The offer came from another starting company called Foxconn Global Services Division. Since FGSD was a separate company that focused on aftersales service, it was a new challenge for me. Accepting the offer to start working at the FGSD Department of Finance has been an excellent choice for me, both personally and professionally.”
Rado started a new fruitful phase of his career. “FGSD grew quickly at the begging, mainly in Accessory Kitting. There were a lot of requests from headquarters regarding pricing of new services across the company, which led to the development of our department,” he says. Gradually the Finance Department at FGSD began to change. Besides the classic aspects of controlling – preparation and analysis of results, analysis of reports, cash flow – transactional and accounting agenda was added afterwards, which was related to the restructuring of the financial management of Foxconn in the EMEA region. FGSD also began to offer a much broader portfolio of activities. Therefore it was necessary to prepare larger storage allocations in five European countries. “We started to manage the underlying agenda of reporting between countries, especially in terms of VAT. Those were good years,” he says.
Difficult years of the economic crisis
But what started so promisingly began to feel the consequences of the global economic crisis, which hit the Czech Republic in 2008. Hardly anyone likes memories of 2008-2010, when the Czech crown was strengthening sharply. Because of that, Czech exporters suffered significant foreign exchange losses. “We had to prepare so-called hedging projects (Editor’s note: hedge-centered approach aimed to protection of money from volatile fluctuations of foreign currencies). Shortly before 2008, one dollar was around 15 CZK, while in 2004 it was 25.7 CZK on average. FGSD as an exporter of services and spare parts was affected a lot.”
But the money must be managed even – or perhaps especially – in times of an economic downturn. Therefore Rado and his team began to focus internally on what can be done to make the company show at least minimal growth. “We dealt a lot with performance, labor productivity improvements or automation of certain activities. Rather than pro-growth, we focused on improving results and strengthening the company. Some projects have been completed, the company restructured, we experienced a decline in number of employees and revenue. However, what we experienced in those years was put to good use in 2011, when the company recorded a sharp increase of economic results.”
Eventually, everything leads to something good
Toughened by the crisis, Rado was ready for the next career step. It came right in 2012, when he was promoted to the position of FGSD CFO. His team already had 8 people. Currently, there are 10 people working in FGSD under his leadership. “In 2012 we experienced an internal transformation. Part of our team joined the New Business Development Department (NBD), led by Ivan Blažek, an experienced financial expert. At the same time there was an overall reassessment of our strategy. The most important thing was that we proactively began to promote our company and our services. From traditional customers, who had been flowing internally within our group, we began to focus on the search for external customers. This involved the need to define how to measure the performance of the NBD team so that investments in this area are measurable and predictable.”
The FGSD´s Department of Finance has kept going in this proactive growth mode up to now. As Rado himself admits, the CFO is primarily a warrantor of the company for shareholders and other stakeholders on how the company money is allocated to activities that bring revenue. “Otherwise there are more interests and activities of the CFO. De facto he divides the overall goal of shareholders into partial goals for the whole company. . He transforms these partial goals into a language understandable by every manager. We have to be able to show them how they each contribute to the fulfillment of the strategic plan in terms of finance, and which are the activities that contribute most to the creation of the overall value for shareholders,” Rado explains his role.
E-commerce and circular economy lead FGSD into the future
In 2012-2014 FGSD began to focus on new areas of services. Above all they started to invest in e-commerce, and also in strengthening the bid of repair services for a wider range of customers. “Our investment in the repair center is considerable. It is important that its performance is consistent and managed in detail. We want to be able to offer e-commerce solutions to companies that do not have our technological facilities aimed at repair, refurbishment and recycling, and also a solution applicable at an acceptable price.”
The most important step currently is the investment in people. “We need capable people who can repair a wide portfolio of products. We want FGSD to grow to a level where it will be able to be creative and offer its own range of repair and service solutions needed for example by e-commerce,” he adds.
From the perspective of short-term risks Rado keeps a close eye on this year´s termination of the currency intervention by the Czech National Bank (CNB). “Our company has definitely focused and properly invested in good products and new trends. The concept of circular economy is essential for us, as we will try to close the circle of the use of technological equipment with our services for repairs, modifications and recycling of products. In a global market saturation stage we need to watch our performance so that the investments in our repair center are paid for in labor productivity,” says this experienced financial manager who knows how to navigate both the shallow and the turbulent waters of the economic cycle. “For FGSD it will be very important to turn to each other, to look at processes, to automate and to simplify them, to adapt our infrastructure to market conditions and to consistently listen to customers – what kinds of services they want, to what extent, to what depth, and so on. We need to know how much to cooperate with the department of technology to automate and streamline our processes, so that the investment that we made in the growth phase would serve us well in case of economic downturn and make our company competitive and resilient to further shocks. For us as an exporter of services it will be crucial to manage the response to the changes of the Czech crown, and then continuously invest in the company and employees, as a lack of resources is reflected in the inability of the company to implement its strategy,” he adds.
Key to a functional CFO: clear strategy, close cooperation with the company´s management
When Rado is asked what the most important fact for the Finance Department is in order to be able to operate continuously, he says that the CFO needs to know the vision of shareholders and other stakeholders about where the company is heading. This is related to the need of securing funding sources. “Last but not least, it is crucial for me to prepare our environment in terms of results and expectations about the market. We must be able to inform our shareholders, the tax office, customers and all involved in our ecosystem that our company moves in this direction. We need to be as predictable as possible and gain their confidence that we are heading in the right direction, so we can avoid any bumps and shock reactions from the environment. If we can do this and we do it honestly, there is a great future lying ahead for our company,” Rado Petík summarizes his vision.
Beyond talks about money and finance management, Rado is also a passionate golfer. “To see finances clearly we need to know how to gain critical distance. Golf has been helping me to achieve that – and meet amazing people in the process. It’s a very fulfilling job and life,” he concludes.
Author: Cristina Muntean, Integrated Communications Manager, FGSD