The finalists for WashingtonExec’s Chief Officer Awards were announced March 25, and we’ll be highlighting some of them until the event takes place live, in-person May 11 at the The Ritz-Carlton in McLean, Virginia.
Next is Chief Financial Officer (Public Company) finalist Gordon Foster, CFO at Serco Inc. Here, he talks key recent achievements, career turning points, proud career moments and more.
What key achievements did you have in 2021/2022?
When I joined Serco as executive vice president and chief financial officer in October of 2020, the company had experienced a period of strong organic growth and recently completed a sizable acquisition that placed the company on the path to become a multibillion-dollar enterprise. My mandate was to develop the mature finance systems and experienced team that would enable the organization to scale.
My team has provided operational leaders with the tools to better understand the drivers of profitability and cash flow and used monthly financial reviews as a forum to identify opportunities for improved margin performance. This helped teams develop strategies to increase direct labor contribution and optimize indirect rates to enable Serco to invest back in systems, technology and business development.
I also helped implement robust systems to monitor billing, collections and free cash flow, which resulted in consistent achievement of goals for cash-flow generation.
In 2021, Serco achieved record trading profit in North America of $162 million, significantly above the ambitious target the team had set. Trading profit margin increased to 10.6%, also a corporate record.
In 2021, Serco faced the challenge of closing and integrating a very significant acquisition, Whitney, Bradley, Brown, while operating in challenging environment due to multiple surges in COVID-19 pandemic. Acquiring WBB had the potential to strengthen Serco’s footprint in the U.S. Air Force and Army, establish a presence with several important new customers and bolster capabilities in high-end consulting that were strategically important, including AI, cyber and data analytics. But with a very broad portfolio of engagements and diverse client portfolio, effective due diligence was vital to accurately understanding the deal’s potential.
I played a leading role in due diligence of this transaction and our team demonstrated resourcefulness in investigating all the relevant issues to fully vet WBB. We were able to successfully transition all the contracts to Serco and have now fully integrated our financial systems.
What has made you successful in your current role?
The first factor was an ability to quickly get up to speed with the business and integrate seamlessly with the executive leadership team and my finance leadership team. Having spent time across so many DOD, federal civil, intelligence, state and local, international and commercial portfolios, I was able to wrap my arms around Serco’s diverse and complex business model quickly.
My finance team had an excellent grasp on the business, which allowed me to be very targeted about where I spent my time. Having such a high-performing team allowed me the freedom to dive in where necessary, while empowering and supporting my team to prepare for the next level of growth.
The second success factor was my industry acquisition experience and ability to immediately add value to a strategic transaction. We started the acquisition process for Whitney, Bradley, Brown in November of 2020, just a few weeks after I joined Serco. I led the due diligence team, and we were able to bring high-potential talent into the process and train and mentor them on the Serco acquisition playbook in a way that will allow them to take a bigger role in potential acquisitions in the future.
I have learned that every challenge should be viewed as an opportunity to build leadership capacity and skills that will be essential for sustained growth.
What was a turning point or inflection point in your career?
Leaving a large and well-respected aerospace and defense contractor after 15 years with the company was a huge decision. Northrop was a wonderful company and looking back at my journey, I can’t imagine a better organization to grow up in. The company ethics and values are top notch and I never saw any compromise over my years there. I had the ability to rotate around and see many different businesses, which was hugely beneficial. At the time, it seemed like a major risk to leave that behind.
The one downside to very large companies is that a lot of things happen where you may not have insight as to the strategy and mechanics behind those major changes. I was excited about the opportunity to have ownership and involvement in those big decisions from end-to-end.
Over the past seven years, I’ve been able to serve as the CFO at several companies — including private, private equity-backed, and public — that are in the $1-2 billion revenue range. What I really enjoy about my role at Serco is that I can bring all the experience and toolsets that I acquired in a big company context and see the direct impact of applying them.
Having ownership for the decision-making and outcomes brings a whole new dimension to the job, as well as a lot of responsibility. I enjoy walking the hallway and knowing that the folks on my team and the functional organizations are a critical part of making the company successful — it’s really empowering.
What are you most proud of having been a part of in your current organization?
I am very proud of the role that my team played in the acquisition of Whitney, Bradley, Brown. We started the process of looking at WBB just a few weeks after I arrived at Serco in November 2020. We had a small team that initiated due diligence over the holidays to pursue the deal. We ramped up the full team after the new year and were able to quickly complete the necessary diligence activity along with the legal aspects of the sale and purchase agreement.
We closed that deal, including obtaining the required Hart-Scott-Rodino and CFIUS approvals, on April 26, 2021. By July 1, we had integrated WBB into the Serco ERP and all other sub-systems.
Watching my team go above and beyond to reach those milestones gave me the confidence that we could overcome any challenge together. We introduced some of our up-and-coming talent to the process so that they could play a larger role on future acquisitions. We identified a number of synergies between the capabilities of WBB and our previous acquisitions of METS and BTP, to marry them with our legacy business.
We quickly found that we could improve our probability to win on new business and recompete deals through the combination of better past performance, capabilities and key personnel. That has led to several strategic wins over the last nine months that we would not have been able to capture without the acquisition.
Which rules do you think you should break more as a government/industry leader?
I think we should be more forward leaning on the technology side. The government market has lots of rules and regulations, which is essential given the high stakes of the work we do, and the position of trust involved with taxpayer resources. But it can also slow things down and can be burdensome. As technology and innovation cycles move faster, traditional ways of doing business may no longer be adequate.
Serco is deeply involved in helping our clients to reimagine those processes through our work with the Air Force Rapid Capabilities Office, DARPA and others. If you look at what we are doing with unmanned underwater vehicles, cyber, robotics and small lot production, it is amazing what we are putting in front of our customers. We are changing the way our customers have done business for decades and we need to continue to push those barriers for the safety of our nation and our allies.
As a senior functional leader, I feel the same urgency to constantly evaluate how we can increase the agility and scalability of our systems. We have a large and diverse organization with over 95,000 employees and approximately $1.6 billion in annual revenues across seven lines of business. Through our last three acquisitions, we have brought significant new capabilities to the organization. We are continually looking at ways to employ technology to deliver information that is most useful and enables us to leverage our full breadth of capabilities across our customer sets.
Looking back at your career, what are you most proud of?
I am equally proud of the impact that I’ve had on the businesses that I’ve been fortunate to be a part of and the relationships forged along the way. I believe that I helped contribute to moving each organization I was part of forward in different ways, making them stronger and more resilient to stand the test of time. That was only possible due to the teamwork across the financial organizations and executive leadership teams I was a part of.
In a services business, it takes hundreds, and thousands, of hands to make things happen. Positive, enduring change can only happen if you have the entire team moving in the same direction. I’ve tried to empower my people and then get out of their way to let them achieve great things.
What’s your best career advice for those who want to follow in your footsteps?
There is no substitute for hard work and dedication. You must put in the time to become an expert in what you do. Then find a way to leverage your strengths in the organization so that you stand out and get visibility. Becoming the “go to” resource in your area of expertise will give you the ability to take on the hardest tasks and the special projects.
My philosophy has always been to have my own house in order and running like a well-oiled machine and then to raise my hand and take on special projects. Leading efforts that span the disciplines and lines of business across your organization is a way to learn more about the business while being seen as a leader amongst leaders.
Lastly, you need to lead with empathy, even more so when times are difficult like the last few years with COVID. We end up spending most of our waking hours at work, so you tend to develop your “work family.” Although work is a big part of each one of us, it does not define us. We need to be there to support one another in the tough times and to celebrate in the good times.