Why People Can Break or Make Your Spend Culture – Mason Brady

Cultivating a Healthy Spend Culture – Is It People, Processes Or Systems?

Mason Brady [00:01:45]  I think people are the hardest thing to change. If you can’t hire right, it causes a lot of complications because it’s really hard to change people’s mindset in regard to how things should function and work. I do think it’s possible, but I think it often takes years and years for them to change their mindset about how something should operate in one way, versus the way that they’ve operated for maybe 20 to 30 years of their life.

So, yes, the people part is the most important piece of it that if you don’t have people following the same direction in terms of your spend culture, it’s going to be a real challenge.

 If you hire somebody that is very cost-centric and loves cost efficiency but you place them into an organization where that’s not as important, that’s just not going to jive, that’s not really going to work. It’s really about making sure that the people fit the system. It’s a beautiful thing but it’s also a messy thing that we’re all complicated creatures.

And so it’s really easy to write a standard operating procedure, a system. It’s really easy to put some of those things in place but the people part of it is probably the most challenging but also the most important in my opinion.

As a finance leader, how do you bridge the gap between departments like that or even departments like finance and procurement?

Have Humility and an Inquisitive Mindset

Mason Brady [00:10:10] This was a tough one for me. I don’t think people have too many posters of, like, CFOs on the wall. I don’t think a lot of people when they grow up they aspire to necessarily be a CFO. I’m sure that there’s something else that they’re doing. 

I would say maybe not necessarily a finance leader but somebody that came to mind – I felt like Sheryl Sandberg just as a COO,(not necessarily a CFO) but even as a COO is actually a really good example.

And from the aspect that she’s probably the best-known number two role in the entire world as a COO. The fact is, she complements very well to Zuckerberg. Again, I don’t necessarily agree with some of the things that Facebook has done as a company but it’s just the reality is that she’s a very influential person and complements a CEO well, that’s something to look up to is the way that she’s able to lead a big part of the organization and she is very influential, I think more finance leaders probably need to aspire to have that same level of influence from a strategy standpoint.

 To be honest, I’ve had some really great mentors over the course of my career and one of my current ones is Dave Stewart. He was the previous CEO of a bank and he’s one of our board directors for our company. And so he has a really sharp finance background. I’ve learned a lot from him and what I’ve found is just his humility and his willingness to listen and care is one of most immense things.

I hope I touched on that a lot earlier and I got my point across because I really think that those aspects of seeking to listen and care to people is one of the strongest leaderships skills that you can have. So, those qualities actually make him influential. His voice is well heard because people know that he cares and they can trust him.

So, in terms of people, I guess where finance can go, Sandberg is one of them but the qualities are definitely being an influential person but somebody that you feel like you can trust and that is humble and able to complement other skill sets well.

 

So, if you had to describe the Spend Culture of Homegrown Organic Farms, what would it be?

Liberal and Democratic That’s Highly Relational

Mason Brady [00:13:09] Probably leans a lot more liberal and [democratic]. Our business has been built upon relationships. We’re a marketing and distribution company. And so we don’t have a whole lot of assets ourselves and the business models that we provide as service to growers, we sell and pack their fruit on behalf of them, so the growers can just focus on growing the fruit and then we get their fruit to market. That’s really where we fit into the value chain and so given that our business is highly relational, so we have a culture that’s highly relational.

 And that means that I was talking about with our CEO the other day that we have a pretty liberal business meals budget for the fact that we see business meals even between co-workers as a really great way that people can get to know each other and to interact with each other and spend time with each other and build that trust that’s needed for every department to really work well. And so we don’t really have a budget for business meals. We just kind of let it go as it needs and as long as the business is growing, we say, hey, we don’t really have a problem.

 So, we have some things in place but obviously, we build our budget but we look at variances against our budget and we just try to make sure that we’re not massively off-track or that there’s something really wrong going on, but otherwise it’s pretty much, people can do as they need.

 And for us, it’s really important because a big part of our job is to ensure that we get the best possible return back to our growers and that’s who we work for. Apart from that, it’s a double-edged sword. That means that we can both reduce costs and we can find really good programs with our customers to sell the fruit, too.

So, you know the fact is, I think it needs to start with how do we help the growers sell more of their fruit at a really high price and so that means we have to go look at this business development opportunities and those revenue growth opportunities for the grower.

And then alongside that, we can come and figure out the process of how we’re going to get there. We need to look at how do we make that process the most cost-efficient that it can be.

 But I don’t think that coming out the gate that we should have a mindset of trying to cut costs right out the gate, instead look for the new opportunity for the innovative opportunity that can really build revenue and then try to create a streamlined process behind that. And that’s really the approach we try to take.

What is the process for managing and tracking company spend look like at your organization?

Mason Brady [00:15:45] Really, we have weekly kind of meeting where we look at our financial statements. By every Tuesday, we should have our books pretty up to date at that point because it’s just the fact that we have, we can order so by Monday, we come in and we ensure that all the transactions are posted against those we can order, so then by Tuesday we look at our financials for the previous week.

We just really look at variances and we go try to fix variances at that point but that’s our method for finding if something is off and that we need to go check on further, and we’ll check on it, create a solution and come back next week and it should be fixed at that point.

The organic and whole food industry is becoming more and more popular and obviously being in this industry, are there some considerations that are unique to you in terms of supply chain and purchasing?

Mason Brady [00:17:08] Yes. The fact is, because organic is a growing segment, there’s nobody really doing organic in large volumes. Therefore, you’re not really getting economies of scale in the same way that conventional food is produced and distributed.

And so, say our counterparts in the conventional industry today, they’re shipping for truckloads of products at particular, on multiple orders. They’re shipping for truckloads while for us, we may only be taking a couple of pallets. I should say, we’re only taking a couple of pallet spaces on that truckload and so everything happens at a smaller scale. Everything’s happening in smaller quantities.

We’re at the stage where we really have to be creative to try to keep those costs down because although the demand is growing, the demand is now at a point that our counterparts are seeing, and so we have to really be creative so that the organic industry as a whole isn’t seen as extremely overpriced and that demand can continue to grow because people can afford the products and people want to go get the products.

So, that’s really something that’s unique to us is that we’re shipping a lot smaller quantities, we’re having to handle smaller quantities. Again, we work specifically with growers and you’re going to find a lot of conventional growers can have anywhere from 20 to 50 to 100 to 200 plus acres of fruit products while we’re working with organic growers that may just have five to 10 acres and sometimes its even that and they’re kind of a weekend farmer and they’re doing this as a labor of love.

And so we’re working without the economies of scale that our counterparts can do and so we have to again be really creative about how we enter the market and we’re keeping costs down so that we can be competitive and more consumers want to buy our products.

How Do Accounting Processes Usually Change and Scale Within Organizations as They Grow?

Mason Brady [00:21:43] I can answer this question by saying what I think usually happens but instead, I’ll answer in what I think needs to happen. Everything needs to be simplified.

We’re walking through that a lot now because we’ve built a business that is highly relational and highly customer service focused. But that meant that we often changed a lot of our systems to fit with whatever a customer or grower wanted.

And as we’ve grown to a certain point, that causes some pain points for the organization because you continually try to grow while trying to maintain a budget and not adding too many people onto your staff and not to say that adding people isn’t a good thing, it’s a fixed cost and you have to be wary about how many people you’re going to hire because if you do have a down year, the last thing that you want to do is to actually let somebody go.

I do not feel comfortable with having to let somebody go as a result of just a poor business performance year. So, we keep in mind that we’re trying to scale appropriately but we would never have to have that happen.

We know though that instead of just throwing more resources at a problem and we know that we’re going to have to simplify our value offering, our value proposition. And so we may not be all things to all customers, but because we’ve built relationships with many customers, we can define who are the most important customers to us and who are the most important growers to us and we can continue to define that a little bit more.

And so that we ultimately have the opportunity to say, you know what, operating in this particular space of the market, that doesn’t necessarily work for us. We’re a little bit more streamlined to doing something like this over here.

So, again it’s really simplifying it and trying to really highlight your value proposition, your offering and I think that that’s what’s important is that accounting processes need to keep up with that and things need to be made simplified.

Because otherwise, if things are super-complex, those things aren’t going to scale very well as you’re going to have to add new tools and new systems on top of it. If things are really complicated underneath, it’s simply not going to scale because you’re going to have to have these super experts on how your accounting software works, for example. That’s expensive to have.

Again, from a scaling and growth standpoint, I think every business needs to continually think about how do we simplify what we’re doing so that we really have a strong guy proposition and offering and we can make sure that we do better at that value offering than anybody else in the market.

The finance department and accountants in general, we scare people often, and part of it is just because we operate in a rules-based environment that we have to comply with GAAP, US GAAP or IFRS, etc. and different regulations. We have to comply with the tax codes and so there’s a lot of rules that we have to understand.

But the thing is that we still have to try to simplify as much as possible because otherwise, we’re not going to be enjoyed by other departments in the organization because if we try to make systems that are too complicated, they’re going to be frustrated with us. They’re not going to understand that we’re trying to help them grow the business.

The Need to Have Accountants Explain Something Super Complex to a Non-Accountant

Mason Brady [00:25:02] I think it’s tough for finance and accountants to think of simplifying it but that’s the one skill set that I think we all need to learn a lot better is how do we take something that’s super complex and try to break it down so that somebody from the fifth grade can understand it. And when we’re able to do that, we’re able to just focus on building the business at that point in time.