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Kepner-Tregoe’s core business is bringing critical thinking capability to
organizations through either training or consulting. For this process,
their consulting projects involve applying their own expertise to resolve
difficult client issues and to deliver specific agreed upon results.
“We are much more than just a training company—we are a capability
development company,” says Baldwin. “Our extensive experience tells
us that training is one part of this development. But first we must seek
to understand what problem clients are trying to solve and provide a
complete solution for that problem. Our competitive advantage comes
from the fact that critical thinking matters and can deliver significantly
improved results to organizations that employ it well. We strongly believe
that no other organization does critical thinking capability development
better than Kepner-Tregoe.”
As CFO of Kepner-Tregoe, Baldwin manages the company’s finance,
legal, IT and certain aspects of the HR functions. He is also a member
of the company’s Board of Directors and Global Leadership Team.
“My responsibilities include financial planning and reporting, bank-
ing, financing, tax strategy and much more,” says Baldwin. “Over the
summer, I had the opportunity to manage our operation in Japan on an
interim basis which was a great experience from a business and cultural
point of view.”
Over the past few years, Kepner-Tregoe has made many major in-
vestments. These include geographic expansion into China, Western
Australia and Western Canada, as well as investments in consulting
resources—primarily in hiring and capability development, product de-
velopment, and IT systems and infrastructure implementation. “When
CFO of the Month
Kepner-Tregoe
- William B. Baldwin
choosing where to invest, each of our decisions involve elements that
must be considered, evaluated and incorporated into our strategic and
financial planning. At the same time, we also have to balance these
investments with the overall financial and operations management of
the company.”
In addition to these investments, Baldwin has also helped Kepner-Treg-
oe provide deeper opportunities for KT employees. This includes the
implementation of a new ownership model through the introduction of
a restricted stock plan. According to Baldwin, this “has expanded the
number of employee shareholders from 15 to 50 over a three-year peri-
od and refinanced the company’s bank facilities, which ensures capital
availability, when needed, at an effective cost. I have also continued to
develop and modify our employee incentive plans to balance employee
performance and company growth.”
Across the board, KT employees are extremely passionate about the im-
pact their proven processes have had on supporting organizations over
nearly six decades, particularly KT’s flagship problem solving and deci-
sion making methodology. “We are immensely proud of our processes
and the benefits that it brings to our clients,” says Baldwin. “Believe it
or not, it was actually KT’s methodology on problem solving that allowed
NASA to save the astronauts from Apollo 13. It is a story that everyone
in our company loves to tell because it illustrates the type of impact KT
processes can have when executed well.”
In order to ensure that their high standards of service are maintained,
KT implemented a set of Basic Beliefs that guide the organization. It is
this set of Basic Beliefs that provide the framework for KT’s employee
Kepner-Tregoe, Inc. (KT or the Company) is a world renowned multinational management consulting
and capability development company. Founded in 1958, the Company is a leader in helping organi-
zations improve and leverage the critical thinking skills of their people to drive operational improve-
ment. We spoke to William B. Baldwin, CFO of KT, to learn more about the financial aspects of their
company and how they have adapted to the many challenges faced by their business.
4. www.wealthandfinance-intl.com
55
recognition, awarding those who go above and beyond. “Unlike many
other professional service firms, KT has an extraordinary retention
rate,” explains Baldwin. “I believe this is a testament to the passion our
employees have for our products, the value we deliver to clients and the
culture we have built over the years.”
Throughout the years, there have been many significant changes in
the company’s operations, some of which have been internally driven
through changes in strategy, structure and leadership. Other changes
have been externally driven, particularly the financial crisis in 2008
and 2009.
“The Global Financial crisis dramatically affected our business,” says
Baldwin. “So much so that our revenues declined by 32 percent
between Q4 2008 and Q1 2009. However, we reacted very quickly
through a number of cost containment actions. They say ‘never let a
crisis go to waste’ and we fully embraced this crisis to create many pos-
itives that remain in place today. This includes our variable compensa-
tion and workforce models, quarterly incentive plans and more effective
utilization of our consulting resources. Today, we remain very diligent
as to how we manage our cost structure and measure what investments
we choose to make in the business.”
According to Baldwin, the crisis also reinforced the importance of
maintaining a strong balance sheet and building cash reserves to
ensure the financial stability of the business. “It’s not a question of if
another financial crisis will occur but when,” Baldwin explains. “So it’s
important to ensure that your organization is prepared, and we set cash
reserve goals and continue to work towards achieving those goals as
well as minimizing debt for operating cash flow purposes. In fact, we
have been debt free for operating cash flow purposes for the last five
consecutive years.”
Working within in a highly competitive consulting and training land-
scape, Kepner-Tregoe understands it must stay nimble to continuously
improve its approach as well. That is why Baldwin views change as
something that is positive and will only serve to improve their overall
services. “While people and organizations are generally resistant to
change, or slow to adopt to change, I have learned that change is a
necessity and can be very positive if the changes are clearly com-
municated, well implemented and supported by leadership across
the company. Organizations and their people, particularly in today’s
business and economic climates, must be quick to understand the
need for change, identify what changes are required and to implement
those changes in a rational manner enabling individuals and organiza-
tions to grow and thrive.”
It is this level of responsiveness that has enabled Kepner-Tregoe to
weather a dynamically changing world over nearly 60 years in busi-
ness. Baldwin believes the consulting arm of the business has been
particularly adept at helping the company identify, and solve, critical
issues. “Our consultants are in the trenches helping clients resolve
business issues that are affecting them today or will affect them in the
near future. Communication between our global resources, as well as
with our marketing and products group in Princeton, help keep us at
the forefront these emerging business issues. “
Extending this effort, KT’s North America operations team is also
forming a Customer Advisory Group. This group will consist of various
clients they will work with to develop new products and services that
meet today’s business needs. Alongside these measures, they also at-
tend and present at various industry conferences throughout the world,
sharing best practices and client successes.
With the world becoming more globalized, Baldwin believes that social
media has also become instrumental in achieving success. “Through
social media platforms such as LinkedIn, we are in constant commu-
nication with user groups, industry groups and many others discussing
and exchanging ideas regarding current business issues impacting a
variety of industries. Hosting WebEx events also provides opportunities
to discuss current business issues.”
A key testament to KT’s financial success is that their North America
business unit has increased its revenue by 36 percent over last year.
According to Baldwin, this growth is the result of a number of factors.
Among these include greater involvement by senior leadership in
business development, increased sales results from recently hired client
relationship managers, greater account penetration with current clients,
more effective lead generation activities and growth in certain industry
segments, particularly in operational and service excellence.
“Alongside these measures, our operating profit has significantly
improved as a result of several changes implemented over the past few
years,” says Baldwin. “These include having a more variable compen-
sation structure and work force, improved utilization of our consultants
within their regions as well as across the company through a ‘global
resource pool’ and a quarterly incentive system that rewards operating
profit performance of our regions and the total company. Finally, the
realization of the investments we have made in new hires and capa-
bility development of our consulting resources has added value to the
projects and results we deliver our clients.”
Looking to the future, Baldwin remains optimistic that Kepner-Tregoe
will continue to grow and is fully prepared to embrace any changes that
come along the way. “Each year we challenge ourselves as we develop
our strategic, operational and financial plans for the next three-year
period. We look beyond growth in revenue, profitability and shareholder
value each year to other goals and objectives. We want to continue
to deliver sustainable, measurable results to our clients through our
processes and help our clients build capability in our processes.
“In order to achieve this, we need to evaluate our resources, our mar-
kets and our products. We also need to ask ourselves who are we look-
ing to hire, what capability development we provide, what product and
service innovation we invest in, what markets are growing and what are
emerging client needs. In evaluating these questions, it challenges us
to ensure we continue to deliver results to our clients, continue to grow
revenue, profitability and shareholder value and build an organization
with highly capable, valued and engaged employees.”
Company: Kepner-Tregoe, Inc.
Name: William B. Baldwin
Email: bbaldwin@kepner-tregoe.com
Web Address: www.kepner-tregoe.com
Address: 116 Village Blvd., Suite 300, Princeton, NJ 08540
Telephone: 609-252-2558
