Consumer goods finance leader: Safety first during pandemicBy emphasising psychological safety, this management accountant is nurturing true ‘diversity of thought’ within the finance function.
Editor’s note: This article is part of “A Year of Evolution: CFOs on 2021” series featuring insights from finance leaders across industries, and their COVID-19 lessons and 2021 plans. This interview has been lightly edited for clarity. To receive weekly updates on this series, sign up for our CGMA Advantage newsletter.
Mikateko Tshetshe, FCMA, CGMA, is the vice-president, Finance Africa at Unilever, a British-Dutch multinational consumer goods company. In addition to leading the finance team, one of Tshetshe’s primary roles is to drive the sustainable growth of brands with purpose in Africa.
FM magazine interviewed Tshetshe to find out how she guided her teams through the first wave of the pandemic and how Unilever Africa is steering a course through ongoing volatility. Tshetshe is based in Johannesburg, South Africa.
Was there anything that you did after the first wave of the pandemic that you consider a successful response to a crisis? What was that?
Tshetshe: Yes. Firstly, the entire organisation prioritised the safety of our teams, especially our essential workers. We stepped up our medical preparedness and also threw our weight behind the global and national medical efforts of the pandemic.
We prioritised supply continuity by accelerating our raw material localisation plans. Given that we were unable to import some raw materials normally used for the production of our brands (due to supply chain disruptions in China and elsewhere), there was a major risk to supply continuity. As a result, we ramped up our research and development and procurement teams to ensure that our localisation initiatives are not compromising our quality in any way. Where the relevant raw materials are available at the right specifications in Africa, we were able to pivot quickly to access these local resources, thus ensuring supply continuity.
We also prioritised cash, providing cash flow relief for smaller and more vulnerable customers and suppliers, recognising that these are strategic and important partners in the value chain — and some of them were not able to continue trading during the lockdown, resulting in liquidity constraints.
How has the pandemic delayed or cancelled Unilever’s and the finance team’s ongoing projects?
Tshetshe: We delayed certain projects to prioritise safety and to ensure that everyone prioritised being set up for working from home. For instance, we were working on automation projects within customer development to improve efficiencies in how we process claims. Other simplification initiatives were also delayed given that some project team members were unable to travel to South Africa for the transition and handover process. Now that we have a new understanding of the realities of working in this pandemic, we are exploring ways to continue this work. In certain cases, we are reconsidering some of our plans for the new environment.
What are some of the circumstances unique to South Africa or Africa that you have had to deal with as a finance leader?
Tshetshe: In South Africa, load shedding [prolonged power outages] is a nightmare for businesses and results in significant lost productivity. As a country, this is our current reality, but it’s an issue that needs to be resolved in order to provide a sustainable environment for businesses as well as to attract the foreign investment that is needed to ignite growth.
Looking to other markets, the oil price crash earlier this year led to currency devaluation and scarcity of foreign exchange in Nigeria. The resulting lack of access to foreign currency has impacted some of our supply continuity. Similarly, in Ethiopia, the major forex constraints in that market make it challenging to accelerate growth, thereby underscoring the importance of localisation initiatives that lessen our requirements for dollar-denominated trading.
Are you still working from home? How have productivity, collaboration, team morale been impacted?
Tshetshe: Yes, we are still working virtually. Productivity was initially impacted as we reorganised our teams for remote working. Now, there is a rhythm and productivity levels have been re-established, and this is strongly supported by the long-term relationships within our teams — and the sense of trust and accountability that has been built up over time. This element of trust is critical. Many team members have found themselves working after hours more often (our internal survey showed a 22% increase in after-hours working). Some team members are clearly struggling with work/life boundaries.
In order to mitigate the risks of burnout and fatigue, we have revisited our leave policies and have been encouraging team members to take their leave. We have also been looking closely at improving our teams’ capabilities around prioritisation — identifying work to be deferred for later and/or eliminating non–value-adding deliverables. For those who experience the burden of care, we are intentionally providing additional space and time where it is needed so that our teams can focus on family needs. We really encourage team members to frame their boundaries and to have the confidence to speak up around what they need.
How do you help build the mental strength of yourself and your team as COVID-19 drags on?
Tshetshe: We partner with third parties such as ICAS [a South Africa-based employee health and wellness consultancy] for people-focused solutions around employee wellbeing. Through workshops, practical toolkits, and one-on-one counselling, we provide physical, mental, financial, and emotional guidance to enable our people with purpose to continue thriving. For book lovers, I recommend a book titled Boundaries by Henry Cloud and John Townsend.
How are you conserving cash? How are you managing costs?
Tshetshe: Alongside safety and supply continuity, cash is our third-highest organisational priority. More specifically, we have prioritised cash collection and cash generation within the business and have set up a specific NACREMS team — the National Credit Management Squad — to ensure that we can sharpen our credit management policies; enable fast, robust credit decisions in the market; and leverage on the global credit capability network. This approach has been successful, leading to increased on-time collection of cash across our African markets, while reducing overdue debt.
We have also implemented recruitment freezes in certain markets, while driving a cultural movement around optimising costs in every area of the business. For instance, we have eliminated travel expenses and placed expense credit cards on a limit of zero for the lockdown duration. A major element of this internal cultural movement is communicating its importance to team members and gaining their buy-in and support. In this environment, everyone has a responsibility to manage costs, and this culture will allow us to avoid salary cuts for as long as possible as we continue to invest in our people and our brands for sustainable growth.
What are the biggest threats to your business now, and how are you managing the threats? What indicators are you tracking?
Tshetshe: The biggest threats are the macroeconomic challenges and the resulting or potential disruptions to business continuity.
We measure what we treasure — volume-led growth, absolute profit, and cash. We measure this through our 4G growth model, which provides a helpful framework as we focus on [key performance indicators] in the multi-stakeholder model. We measure:
- Consistent growth through quarter-on-quarter underlying sales growth, driven by volume.
- Competitive growth focused on volume and value market share.
- Profitable growth, measuring absolute underlying operating profit and free cash flow.
- Responsible growth, measuring the purpose score index versus the market for key brands.
How have your business drivers changed? Are they being reassessed?
Tshetshe: As an organisation, our true north has not changed. We believe that companies with purpose last, brands with purpose grow, and people with purpose thrive. Our business fundamentals aligned with this purpose have not changed.
In response to the pandemic, we have become a lot more agile, adjusting to new consumer behaviours by considering the shift in demand spaces, eg, the reduction of out-of-home eating in favour of in-home dining with small treats, and new channels such as e-commerce. We are focused on maintaining a strong COVID-19- and recession-relevant portfolio, which prioritises, for example, our hygiene brands. So, while our purpose remains the same, there is new emphasis on agility and the pursuit of excellence through growth fundamentals.
What do you see as the main constraints for your business in 2021?
Tshetshe: Macroeconomic challenges as well as geopolitical tensions in Africa. New waves of infection also pose a significant threat.
It is likely that African countries will take a lot longer to bounce back from the recession, so we are anticipating a slower economic recovery in many of our markets.
What approach are you taking to budgeting and forecasting for 2021? How is that different from past years?
Tshetshe: We have accelerated the integration of digital tools into our financial forecasting process. In collaboration with Isazi, a team of creative scientists who optimise businesses using AI, machine learning, and advanced algorithms, we’ve incorporated Hudson, an AI integration layer that uses a library of mathematical models to predict demand, sales-out and sales-in data while optimising stock based on required service levels. This has been a huge learning curve for our team and will continue to be as we future-fit ourselves to operate in a data rich, digitally enabled environment.
We also now have weekly planning and forecasting cycles versus monthly ones. These meetings include the sales, finance, and supply chain teams. We need to be able to provide weekly updates and outlooks to our global management and stakeholders, as well as to manage expectations.
What has been your biggest lesson from this pandemic?
Tshetshe: From a business perspective, the concept of putting safety first has really shone through. While it has always been our first priority, it is a different experience really “walking the talk”. I’ve learned that the safety and wellbeing of teams translates into having a sustainable business, and staying calm is paramount. Losing revenue in certain places to protect employees is part of this reality, and we have made hard decisions to shut down certain manufacturing sites temporarily where infections were detected, to comply with our COVID-19 protocols.
On a more personal level, I’ve learned the importance of providing an environment of psychological safety where teams are able to show and employ themselves without fear of negative consequences to self-image, status, or career. For me, having psychological safety is a shared belief held by team members that they can feel accepted, respected, and comfortable to be themselves. This is critical to bringing “diversity of thought” to the table as we strive to make sustainable living commonplace.
— Jessica Hubbard is a freelance writer based in South Africa. To comment on this article or to suggest an idea for another article, contact Drew Adamek, an FM magazine senior editor, at Andrew.Adamek@aicpa-cima.com.