Shortly after the New Year parties came and went, the Securities and Exchange Commission slapped Diamond Foods with a $5 million dollar settlement resulting from fraud charges over faulty accounting. Diamond Foods’ CFO, Ray Silcock, is currently in the process of picking up the pieces of the company’s finances and reputation. As he stated in a recent interview, “The things I’ve been working on for the past six months have been to try to correct all of the overhanging issues.” What exactly does a CFO do to build a company back up after such a blow? Let’s take a look at Mr. Silcock’s plans for the future of Diamond Foods.Changes on the Horizon for Diamond Foods
After spending the last six months as CFO in the midst of fraud allegations, Ray Silcock remains diligent about improving the future of Diamond Foods. As he puts it, “The company’s reputation is paramount.” So what does Silcock have in store for Diamond Foods? Here’s a breakdown of his priorities as CFO.
- Repair relationships. One of the consequences of Diamond Foods’ recent catastrophe is its severed relationship with walnut growers. Silcock is placing importance on mending relationships with suppliers and increasing the company’s credibility. According to a recent study, companies that make costly investments in rebuilding their reputation generally achieve better results than those that make minimal investments.
- Redefine the rules. Unfortunately for Diamond Foods, there was not an internal audit system in place prior to Ray Silcock becoming CFO. Most likely, this lack of internal organization and accountability played a significant role in the company’s alleged misallocation of $80 million dollars in payments. As part of Silcock’s rebuilding strategy, Diamond Foods will now seek the services of a private consulting firm to complete regular internal audits. As Silcock said in an interview, “We’re making sure there are rules to follow and we follow them properly.”
- Invest in the future. Finally, Silcock remains optimistic about the future of Diamond Foods in spite of the company’s recently marred reputation. Part of preparing for the future is effectively taking care of the past, and Silcock plans to do so by refinancing the company’s $600 million dollar debt.
By reducing the company’s debt, rebuilding relationships and establishing well-defined rules, Ray Silcock plans to reinforce Diamond’s position as a leading provider of nut products.
What strategies do you think Diamond Foods should employ to rebuild its reputation?