By David Beroth
Admit it – you like the box. The box is comfortable, safe, and secure from a world of unknowns. After all, it can be scary and seemingly dangerous outside the box. If you are like many financial leaders you have grown up in a system that has forced you to focus on the box of reconciliations, monthly closings, payroll reports, audits, and tax returns. As important as those are, if we are to be highly effective financial leaders we need to think beyond these matters. Peter Drucker (1994) in his book Post-Capitalist Society said that in the current era there is a need to acquire new knowledge every five years or risk becoming obsolete. If this is true in the society at large, how much more important when serving as a CFO of a Christian ministry where the landscape is constantly changing and the pressures are regularly shifting. There is a need in our day to embrace these challenges as a CFO and provide God-honoring financial leadership by not simply residing in the box. We need to go beyond the box.
Have you ever wondered who the accountant was in John 21? Imagine this – you have been following Jesus for three years and your hopes are completely wrapped up in Him. In what seems to be an inexplicable turn of events, your Master is taken to the cross and crucified. Not knowing how to respond Peter finally says, “I am going fishing,” and the others say, “We are going with you also.” Jesus shows up on the shore in His resurrected state causing John to exclaim, “It is the Lord!” As the disciples gather around Jesus one of them apparently takes the time to count the fish and make sure that John has an accurate reflection – precisely 153 fish. Imagine it…the majority of the disciples are savoring the Lord’s presence while one disciple counts 1,2,3,4 fish. Can you not see it? About the time he hits 20 fish one of them jumps out of the net causing him to start over. Instead of focusing on this ultimate mission accomplishment in the fulfillment of God’s promise from the foundations of the earth, one of them appears to have been distracted in counting the fish. Could that have been you?
As we think about this illustration we do not want to minimize the need to have an accurate counting of “fish”, however, as a CFO it is problematic if we are so consumed with the fish counting that it takes us away from the accomplishment of our organization’s mission. To quote Peter Drucker (1990) again in his opening sentence of Managing the Non-Profit Organization “The non-profit organization exists to bring about a change in individuals and in society” (p. 3). If we want to be a strategic executive giving financial input into accomplishing our ministry’s vision we need to be most consumed with how those fish will result in missional impact, not just ensuring that there are 153 of them. We need eyes focused ultimately on the Fisher and not the fish. We need the ability to function within the historic CFO box but the courage to also function beyond the box.
To function beyond the box as a ministry’s CFO it requires you to evaluate 4 key aspects.
1) Who you need to Be.
If you are content with debits and credits, you can thrive in the role of an accountant which is a critical role in any organization, but if you want to blossom as a Chief Financial Officer it takes a different mentality. Here are a few of the functions you must eagerly embrace:
a. Explorer –
Do you enjoy the idea of navigating uncharted paths? Would you have enjoyed the expedition with Lewis and Clark as they left St Louis to explore the Louisiana Purchase? Would the thrill of the discovery process invigorate you or horrify you? A CFO in a Christian ministry needs to have this explorer mentality that says we don’t know exactly what the terrain will be, which path we will take, or where our final destination will be. And that is okay. We must stand by the leaders in our organizations who are seeking the Lord like Joshua when He told him in Joshua 3:4 “…the way by which you must go, for you have not passed this way before.”
b. Architect –
In his book The First 90 Days Michael Watkins (2003) says, “The higher you climb in organizations, the more you take on the role of organizational architect, creating the context within which others can achieve superior performance. No matter how charismatic you are, you cannot hope to do much if the key elements in your unit are fundamentally out of alignment” (p. 130). As a CFO your job in part is to be an architect to give input and counsel as to how organizational structures can produce optimal financial outcomes.
c. Translator –
To be an effective CFO you must be an effective communicator. Your job is to analyze and synthesize your organization’s financial information in such a way as to convert the data into meaningful information for your audience. I have the privilege of serving as a CFO in a large Bible translation organization. What is very clear is that you can’t hand a Greek New Testament to a tribal group in Papua New Guinea and expect it to be meaningful to them. Your ministry’s financial information is like a Greek text, and your job is to translate it into a meaningful language for your audience.
2) What you need to Build.
After you embrace a proper mentality to be a strategic CFO you need to begin building a Finance Team that will meet the needs of your ministry. Jim Collins (2004) in his classic book Built to Last makes this case persuasively. He says, “In the first pillar of our findings we demonstrate how the builders of visionary companies tend to be clock builders, not time tellers. They concentrate primarily on building an organization – building a ticking clock – rather than on hitting a market just right….” (p. 23). Though we are not leading our entire organization we need to think carefully about the team we are building to support the financial infrastructure. What are ways that you can begin strategically building your team?
a. Inputs, Outputs, and Outcomes –
You need to prayerfully and intentionally think through these three categories. Too often we are focused exclusively on standard accounting transactions and reports, but to add value to our organizations this is a critical area in which to think beyond the box. What is the most efficient way to gather information (inputs) and process transactions? What kind of reports and information do the leaders in your organization desire (outcomes)? Can you convert standard financial information (outputs) into graphic, customizable, real-time reports that answer specific questions that are often asked? By planning backwards you can evaluate what type of information is desired and in what format in order to design the necessary systems to support this.
b. Focus on results and not activities –
There are a lot of activities required to process an organization’s income and expenses. However, as Stephen Covey (2004) recommends in his book 7 Habits of Highly Effective People the point is very relevant here. He says that the second habit of being effective is to “Begin with the end in mind” (p. 95-144). You need to know what results you want from all the activities and then design the activities to most efficiently obtain those results.
c. “Lean” accounting –
The manufacturing industry has made tremendous strides in process efficiencies. They have pursued methodologies such as Six Sigma and lean productions. Have you considered how this could be relevant to your Finance Team? What time and cost savings could you obtain by charting each step in your financial processing and removing unnecessary or non-value- added activities? This should be done within the framework of adequate internal controls, but there are often technological or other improvements we can make to save time and money.
3) What you need to Believe.
Are you known as the bean counter? If you are, it is time to change your reputation. Let the accountants on your team do the counting. You need to believe that your role is vastly different now; it is that of calibrating. For the CFO the coalescence of resources, strategies, and plans is more critical than merely counting. Your role is to connect the dots between the organization’s goals and the available financial resources. You must evolve from staring at the rearview mirror (historical data) to looking out the windshield (futuristic orientation) when driving the car. Instead of looking backwards you must understand that your organization needs you to look forward through your financial lens.
a. Integration of budget with strategic plans –
Proactively pursue a process where the budget is supporting and not driving the strategic plans. Evaluate ways where the budgeting process can be a close ally and not an adversary to the missional goals. It is true that the budget will help highlight priorities but do your best to use this process as a way to pursue strategic plans not a way to close the door on them. This will add significant value to your role.
b. Effective reporting and variance analysis –
Jeremy Hope (2006) in his book Reinventing the CFO states, “Finance managers are trained to handle lots of raw data and make sense of it. But these streams are overflowing and flooding the channels of information and knowledge. Context and meaning are being lost in a fog of detail and complexity” (p. 23). He goes on to say with all this information “it is understandable that the average manager has little time for thinking, analyzing, and planning” (p. 26). One of your functions is to help determine what information is insightful, what reports are enlightening, and what variance analysis is truly critical. Make sure the managers know this information and do not overwhelm them with excessive data.
c. Integrate charts and graphs –
One has said that if you want to enlighten your audience, use a chart, but if you want to obfuscate your audience, use a table. Your role is generally to bring clarity to financial matters, so as a rule try to use insightful charts. You will need to process the data to extract the critical elements, but then present it in a palatable fashion. The golden rule applies to your presentations – present unto others as you would want them to present to you.
4) What you need to Become.
Do you really want to bring value to your organization as a CFO? If you do, then your fellow leaders need to see you as a strategic partner and not a naysaying policeman. Focus on partnering and not just policing or policymaking and see how much more they will value your input. Here are a couple practical ways to do this.
a. Scenario planning –
Strategic plans are often made based on inadequate or uninformed assumptions. Serve your organization by evaluating the key underlying assumptions and assembling a quantitative model before you show up for the planning meetings. You can then be a welcome contributor to the process by helping the team clarify the assumptions. You can then assist them further by populating the assumption fields through their input and immediately showing them the resulting outcomes. In real time you can process different assumptions to show what the resulting effects would be. That is what strategic partnering looks like in order to help your organization evaluate and hopefully accomplish its goals.
b. Financial projections –
Projections can be helpful for multiple reasons: income, expenses, cash flow, reserves, board financial governors, and grant compliance to name a few. You can be a key partner by initiating calculations in which you can see the results over a number of future months, quarters, or years based on trends and projected activities. This allows action to be taken before problems occur which is always better than simply announcing the problems which just occurred. In addition, you will be in a place to offer alternative strategies to achieve more optimal outcomes. Hope (2006) writes that the CFO of American Express once said, “If a train-wreck happens it is important to know and report why it happened and this means doing all the forensics around it. But it’s a lot more important if you can anticipate that the train-wreck will happen and take action to avoid it” (p. 223).
c. Developing insightful answers to financial questions –
Do your donors periodically say that your fundraising expenses seem too high or wonder about your reserve balances? You have access to all the information you need to answer these questions. You need to proactively consider these actual or potential questions which might arise and think through a meaningful apologetic for them. Your other leaders will look to you with tremendous appreciation if you can handle financial inquiries with grace, wisdom, and winsomeness. It is also exciting to see a large donation come to your ministry for a project when you know that you helped convince the donor of your ministry’s financial integrity.
Being, building, believing, and becoming are all areas where you need to thrive in order to become an effective and valued CFO at your organization. In Philippians 1:9 Paul prayed that their “love may abound still more and more in knowledge and all discernment.” God wants our love to grow for Him, for our colleagues, and for those whom our mission serves. He wants this love to grow in conjunction with our expansion of knowledge and discernment which means that our love and aptitudes should grow side by side. As you pursue abounding in God’s love, may you simultaneously pursue strategic growth as a CFO – not just within the box, but beyond the box.
References
Collins, J. (2004). Built to last: Successful habits of visionary companies. New York, NY: Harper Business Essentials.
Covey, S.R. (2004). The 7 habits of highly effective people: Powerful lessons in personal change. New York, NY: Simon and Schuster.
Drucker, P.F. (1990). Managing the non-profit organization. New York, NY: HarperCollins Publishers, Inc.
Drucker, P.F. (1994). Post-capitalist society. New York, NY: Routledge.
Drucker, P.F. (2006). The effective executive: The definitive guide to getting the right things done. New York, NY: HarperCollins Publishers, Inc.
Hope, J. (2006). Reinventing the CFO: How financial managers can transform their roles and add greater value. Boston, MA: Harvard Business School Press.
Watkins, M. (2003). The first 90 days: Critical success strategies for new leaders at all levels. Boston, MA: Harvard Business School Press.