The CFO and the President
It was an interesting exchange when I gave a brief presentation at a seminar for new presidents of theological seminaries in December of 2017. As part of a panel, each of us on the panel were asked to speak about recruiting and working with a senior leadership team [i.e. vice-presidents]. I noted in my comments that, on the one hand these kinds of decisions are among the most if not the most important decisions that a president makes. On the other, I also observed that the working relationship with each is quite different, varying to the role or sphere of responsibility [of course].
It was the interaction about the president/Chief-Financial-Officer relationship that garnered the most conversation – questions, comments and responses. Most had already been presidents for upwards to six months, and what they noted as a common theme in these comments is that as a rule it seemed that both the board and the CFO pretty much made the assumption that the Board would approve a budget proposal that came to the board from the CFO. That is, the budget belonged to the CFO. The final decisions on the budget were made by the CFO. And that in the end the CFO was ultimately responsible for whether the budget would be balanced at year end.
I suggested that to the contrary, while the CFO position is critical to the effectiveness of the institution and that the alignment of the CFO and the president was crucial to the functioning month to month of the university, that budget decisions were, it the end, mission decisions. The budget, aside from senior leadership appointments, is the most crucial way that the president fulfills the mandate to the president to deliver on the mission. The board need to endorse the budget; and the CFO has to be deeply involved in the development of the budget. But in the end, the budget is the president’s. With an astute CFO in hand, advising the president on the implications of the decisions that need to be made, at some point the CFO says: “in the end, Mr. or Madam President, it is your call.” And it comes down to mission: the budget is a tool, a means by which the mission happens. The president is ultimately responsible for whether the mission happens and the tools at his/her disposal are the capacity to make the crucial personnel appointments and the capacity to present a budget to the board that the president indicates will be the means by which the mission will happen.
If the president is truly a leader it will be evident, at least in part, in the commitment the president has to make the hard budget related decisions and not delegate those away. And the CFO will let the president be the president and make those calls.
Then also, of course, the president knows not only that “the bucks stops here” but that she/he is now accountable before the board for whether the mission happens in a way that is financially sustainable.