Accountable Leadership: Former CFOs Lead Arkansas Companies to New Heights

Judy McReynolds, CEO of ArcBest (Michael Woods)

You didn’t have to be a wizard with numbers to know that Judy McReynolds was stepping into a tough situation when she was named CEO of ArcBest Corp. in late 2009.

The company, then known as Arkansas Best, had posted a financial loss of $127.9 million in fiscal year 2009. McReynolds, a certified public accountant who had served as the company’s chief financial officer for the previous three years, knew she faced a challenge in turning around the faltering transportation company.

But McReynolds, who took over on Jan. 1, 2010, was more than up to the task, and her strong accounting background helped her right the ArcBest ship.

“When I think back to [when former Chairman] Robert Young asked me to take this role, I can tell you this: The first thing I thought about was how valuable it was for me to have been a CFO and a controller during the Great Recession trying to navigate my way through that to the successful outcome I believe we have had,” McReynolds said.

While still in a minority, many companies are finding success with former financial leaders in the CEO chair. According to research from executive talent search firm Crist|Kolder Associates of Downers Grove, Illinois, 8.2% of CEOs at Fortune 500 or S&P 500 companies in 2023 were former CFOs, the highest level in 11 years.

“When I tell the story of USA Truck’s turnaround, I often tell people the first thing I did was my team and I built a financial model to understand the levers that were driving the business,” said James Reed, who was CFO and CEO at USA Truck of Van Buren from 2016 to 2022. “With that clarity in the financial model, I knew exactly what levers would move the business and how much. When it became my opportunity to set priorities at the organization level, we set priorities operationally that would move the financial levers the most, and it worked like a charm.

“That’s exactly what Judy did.”

‘Intelligent Risks’

McReynolds, who joined the company in 1997, said her strong financial background helped her understand how to take “intelligent risks” when she took over at ArcBest.

She knew the company had to cut costs to stop the financial bleeding, and her years as controller and CFO told her exactly the best places to do that. Before she entered the private sector, McReynolds had also been a public accountant at Ernst & Young in Little Rock, where she worked with transportation companies and learned the industry’s ins and outs.

“It gave me the opportunity to see the successful companies on the one hand versus what I consider the excessive risk takers on the other,” McReynolds said. “It was a cost-management exercise because of the demand decline that went along with the Great Recession. A CFO piece of knowledge that I had was that we needed to align the resources of the company with the revenue levels that we had.

“It is really, really important in our business. That was very much in my lane.”

Once McReynolds got the costs under control, she realized that ArcBest had to change its operations, too. She admits that operations and dealing with customers weren’t in her lane, but she became a quick study.

McReynolds led the company through a name rebranding and transition to a logistics company that offers a wide range of services rather than just transportation. It has been a success and, by 2022, ArcBest surpassed $5 billion in revenue and turned a $298 million profit.

A crucial part of the turnaround was the company’s $180 million purchase of logistics company Panther Expedited Services in June 2012. It was a risk, but the acquisition was worth it because McReynolds wanted to put ArcBest in a position to compete in the logistics market.

“What we did after we got the costs aligned, I could clearly see that we were going to have to do something different as we went forward,” McReynolds said. “That is really how we developed the strategy that we have today. When you have the background I do, you’re just more comfortable with that.

“Part of my thinking was we had to be open to doing this because I knew if we didn’t, the outcome wasn’t ideal either. It would have just been a waiting game until the economy improved. It is a lot more proactive to go after the opportunity that we had.”

Surgical Decisions

Brian Fowler freely admits he has no idea how to run an MRI machine or any of the other medical devices at Arkansas Surgical Hospital in Little Rock.

He does know how to analyze operations so that the hospital makes the best use of those machines. Fowler joined Arkansas Surgical Hospital as CFO in 2016 and was promoted to CEO in 2020, just before the COVID-19 pandemic dropped on the health care industry.

“They have never been challenged to think about process flows and analytics the way we as accountants naturally tend to,” Fowler said of the nurses and doctors he oversees every day. “I walked into it open-minded and asked a lot of questions. Why do we do this? Maybe there are regulatory reasons or pure safety, but sometimes we do it because we get stuck in trends.

“Having that analytic mindset that maybe we all utilize with math and data is just a fresh approach to seeing things. That’s where the value is. You have to come into it asking questions, because one drawback we have is accountants see the data day to day but data is just one piece of the picture. You won’t know the whole picture and how that data plugs in.”

Every business is, at heart, a people business, but a hospital may be especially so because patient care is what it does. Fowler said the magic is when data is combined with operations to make the most efficient use of resources.

“When you really start getting them thinking in a different way, given their expertise in that field, then they can figure out ways to eliminate waste, which then frees up new resources,” said Fowler, a certified public accountant. “It can really create a dangerously good organization when you can get those pieces merged. It requires people to be open to it. We can get into silos and some people are not open to that approach.

“You have to have thick skin, and you have to communicate well, and you have to keep the mission and the why at the forefront.”

A Question of Balance

Reed oversaw the resurgence of USA Truck, a company plagued by poor financial results, haphazard management and executive turnover.

Under Reed’s leadership, USA Truck posted seven consecutive profitable quarters and a $24.8 million profit in fiscal 2021 before DB Schenker acquired it for $435 million in September 2022.

Reed is now the COO of Kodiak Robotics of Mountain View, California. Before USA Truck, he was CFO at Interstate Distributor Co. of Tacoma, Washington, after earning an MBA from Brigham Young University.

“Like any role, the people who play those roles are not monolithic,” Reed said. “There are stereotypes of people who are really good with the numbers but not so good with people, or don’t understand how the engine of operations works. People who are wired like I am … spend their time on the shop floor, spend their time in operations, spend their time understanding that finance and accounting is a means to an end and not the end itself.”

That was echoed by McReynolds and Fowler, both of whom spoke of the importance of finding out what you don’t know through interactions with colleagues, customers and employees. As Fowler said, financial data is one piece of a puzzle.

“As a finance person you have to understand and have a passion for the operations,” Reed said. “I don’t think putting somebody who is great at the debits and credits but doesn’t have the appetite to be in the operations day to day is a good solution for most organizations.”