Interview with Andreas Soland, VP Controlling, Tax & Treasury at Hero Group
Hero Group is an internationally operating Swiss food manufacturer specialized in fruit-based products, baby food and cereal bars, headquartered in Lenzburg, Switzerland. The family-owned company currently employs around 4’000 people in 19 countries. In 2021, Hero collaborated with IFBC to further develop the process for managing and documenting costs related to corporate services as well as in connection with projects on group level, so-called HQ projects.
Below, Andreas Soland, VP Controlling, Tax & Treasury at Hero Group, provides insights into the successful project.
Last year, Hero revised the process for controlling and documenting costs for HQ projects and corporate services in collaboration with IFBC. What were the motivations for carrying out this project?
In recent years, additional responsibilities have been transferred to the headquarter as part of the introduction of a matrix organization within Hero Group. Against this background, many so-called corporate or shared services are now rendered at group level and provided to the individual local entities (including tasks in the areas of marketing, supply chain, R&D, finance, IT, legal and HR). As a result of the centralization, the demands on the associated processes have significantly increased with respect to the financial management of the costs incurred. In addition, the requirements for an adequate documentation of the services provided have risen in order to be able to justify the costs charged to the local entities from a tax perspective. The processes relevant in this context have grown historically at Hero and no longer met these increased and diverse requirements. Therefore, we decided to develop a new process design with an external partner. We were looking for a sparring partner who would guide us through the process of solution finding in a structured and target-oriented manner. We chose IFBC because they had already succeeded in the past in providing us with optimal support regarding complex issues and in developing individual, Hero-oriented solutions.
What were the project goals?
In summary, the project was about developing and establishing a lean and efficient process for dealing with HQ projects and corporate services that could meet the increased demands in terms of approval, accounting, controlling and documentation of the associated costs. A key objective was to introduce an effective controlling for larger HQ projects. In addition to structuring and supporting the approval process, the focus was also on monitoring costs during project implementation. Furthermore, we wanted to develop an adequate documentation concept for our corporate services to meet the disclosure requirements from a tax perspective and to minimize the associated risks. Despite the high level of complexity in some cases, it was essential for us to develop a solution with a sound degree of pragmatism to ensure a high level of implementation reliability.
How was the project structured?
In an initial kick-off workshop together with IFBC, we identified the problem areas and defined the complex requirement profile from a controlling and tax perspective. In regular project team meetings, we then sharpened our understanding of the initial situation and the target picture, defined the project framework, and finally specified the project goals. The resulting findings were summarized in a concept of procedure, which was discussed with and approved by the CFO. Based on this preliminary work, the actual development and concretization of the new process as well as the elaboration of supporting tools was conducted in the project team. During the entire project, key decisions were always coordinated with the CFO.
What are the key elements of the new process for managing and documenting costs in connection with projects at group level and corporate services?
In particular, I would like to mention two key elements. The process design has been specifically structured for HQ projects as well as for corporate services, which mostly recur periodically, to be able to address the different requirements in terms of application, approval, monitoring and documentation in a differentiated and target-oriented manner. To enable a clear distinction, both qualitative differentiation criteria and quantitative thresholds were defined. The second key component of the new approach are the tools developed to support process execution. In line with the differentiation made between HQ projects and corporate services, standardized excel-based tools were developed to support the involved parties in recording and documenting the relevant information and to enable standardized evaluations for decision-makers and other stakeholders.
What challenges were encountered during the project?
Especially at the beginning of the project, it was a major challenge to give a clear structure to the numerous not yet well-defined requirements and problems, while not ignoring any essential aspects. In this context in particular, the cooperation with IFBC proved to be extremely valuable for us. IFBC was able to clearly structure the complex requirement profile, considering our individual needs, which was extremely helpful to approach the design of the process in a target-oriented manner. Against the background of the diverse and complex profile, a second major challenge was certainly the elaboration of a solution with a sound degree of pragmatism, ensuring that the new process will be established and “lived” in practical implementation and the new tools will be used.
Where do you see the key success factors in the context of establishing the new process and the tools developed?
A key success factor is certainly convincing the management and the relevant units that the introduction of the new process has a clear added value in terms of improved controlling and documentation of costs, despite the additional effort required. In addition, a successful concept development and the elaboration of appropriate tools on its own cannot yet guarantee a successful establishment. Now, our main task is to introduce the process in a structured and consistent manner by informing and training the relevant stakeholders as well as actively supporting them during the initial application. Ongoing support must remain the focus even after the introduction. Responsibilities must always be clearly addressed, and corporate controlling must actively demand that deadlines are met in time.
Finally, a general question about Hero’s financial management: In the current challenging market environment, what are the key challenges regarding the financial management of the company?
The market environment has changed substantially in recent years and is characterized by significantly higher volatility, uncertainty, fast pace and complexity. This trend has been further exacerbated by the Covid-19 pandemic and the outbreak of the war in Ukraine. The question therefore arises how the financial management of a company must be structured today and in the future, in order to be able to take these ongoing market changes into account accordingly. Established budget processes as we know them today, for example, are increasingly reaching their limits and are often too rigid and extensive in their design to deal with the volatile and fast-moving environment. A rapidly changing market environment also means that attention should not only be focused on the efficiency and effectiveness of existing business activities but should always be directed outward to identify opportunities for developing and establishing new business models. The development of new business models generally requires more creative scope for design and action and greater agility. Accordingly, start-up-like conditions must also be possible within established corporate structures to exploit potential in a targeted manner. Against this background, effective financial management must be designed in an even more differentiated and dynamic way in the future to make a valuable contribution to the realization of these continuously emerging opportunities from a financial management perspective.
Andreas Soland holds a degree in Business Administration (HWV) and is a Chartered Certified Accountant. He also holds an Executive MBA in Business Engineering and Corporate Transformation from the HSG. After more than 10 years with EY in the Audit Services division, he moved to the Emmi Group in 2015 and was responsible for controlling as well as tax and treasury at group level for around 4 years. Since September 2015, he has held a similar position at Hero Group, currently as VP Controlling, Tax & Treasury.