Article by Jim Pugh, James Pugh & Associates
From the March/April 2018 Net Assets magazine
Just as the position of interim head of school has become a familiar part of the independent school landscape, the role of interim CFO is becoming increasingly common. Ideally, a long-serving CFO provides stability and continuity. But sometimes an interim CFO is just what a school needs for this critical transition period. When might such a scenario strike? What can the interim CFO accomplish?
I began exploring these questions last winter, as I was driving to and from my fourth school as an interim CFO, after serving as a business officer or teacher at six other schools since 1973. In developing this story, I reached out to 11 women and men who had been or were at the time an interim CFO at a wide variety of independent schools (they are listed on page 23). Due to the sensitive nature of their work in some cases, I purposely kept their quotes anonymous. These contributors approved the use of their unattributed quotes.
Retirements: Trickle or Tsunami for Our Profession? (July 2016, web-only)
Anticipating Retirements, Gleaning Institutional Knowledge: One School’s Approach (Jan/Feb 2017)
The New Guard: Profiles of 12 New Independent School Leaders (Jan/Feb 2017)
Smooth Moves: Orchestrating a Successful Head of School Transition (Jan/Feb 2015)
I also spoke with several heads of school who have worked with interim CFOs. I think this quote nicely sets the stage for the broader summary of what I learned. It comes from Antonio Viva, head of school at Walnut Hill School for the Arts (Natick, Massachusetts).
“Independent schools have become increasingly more complex organizations. As a result, finding the right CFO requires time and patience. Without question, the best decision we made was to slow down the search process and find the right candidate without the distractions of worrying about day-to-day operations and the need to run a finance department. Utilizing an interim CFO gave us the opportunity to take our time and find the right candidate who fit our needs and brought the skills and talent needed to transition smoothly into this critical position.”
Any number of circumstances might prompt a school to look for an interim CFO, but under no circumstances can a school ever afford to suspend business operations. In my opinion, the interim CFO with solid independent school experience can be the right person, at the right time, at the right place. This person can be a “three-fer,” providing leadership in the business office, the perspective of a consultant and guidance in the hiring of the new CFO.
Here are a few of the situations that drove the schools I worked with to hire an interim:
In each of these situations, the school had to maintain the day-to-day operations of its business office in the absence of a permanent CFO. Moreover, each school’s seasonal projects (budget, hiring, re-enrollment, audit) needed an experienced manager.
“Our interim CFO achieved more than I can imagine any full-time CFO would have, at a time when the school’s finances were just starting to recover from a severe crisis,” said Larry Weiss, head of school at Brooklyn Friends School.
“The interim CFO brought stability to our finance department,” added Donald Zimring, retired head of school at Brandeis Hillel Day Schools of San Francisco. “This person’s background and expertise allowed the school to deal with a multitude of outstanding issues quickly and effectively, [and] introduced a variety of ‘best practices’ to our organization that had heretofore been missing. But this has to be the right person.”
As for the person serving as interim CFO, the opportunity to work in a new school can be energizing. Here’s how a person who has served as interim CFO in five schools put it: “After 25 years at one school, it is fun to ‘look under the hood’ of another school and see new possibilities for helping it.”
The approach of an interim CFO is different from that of a permanent CFO. While the successful interim will have the versatility to help the organization where needed — from spreadsheets Tuesday morning to a board meeting Thursday night — by and large the work she or he does is more focused in scope.
In their limited time at a school, the interim CFOs I spoke with found it important to focus on core projects. This meant pushing to the back burner the kinds of pesky, time-sink matters that can consume a school administrator. In support of this focus, several noted the importance of the head communicating to the school community that the interim’s job is to “keep the school moving forward, not to solve everything,” as one interim put it.
Charles Armstrong School (Belmont, California) had three back-to-back interim CFOs in the space of one year while searching for a permanent CFO. “It was like having three consultants/audits on all of our policies,” said Jessica Miller, head of school. “I got a great evaluation of what was and wasn’t working, and developed a growing list of priorities for the permanent CFO.”
In addition, the interim can have a higher-level viewpoint. As one told me, “I have a better vantage point because I am not in the day-to-day weeds. I don’t have any agendas that might affect my decisions, and I can be more objective about the issues I see, whether they’re in the systems, people or processes.” Sometimes the job can even seem like a consulting gig. “In the two schools where I was an interim, both of the heads were relatively new to the job,” said another. “They were comfortable asking me a lot of questions.”
One person describes the interim role as “liberating.” In theory, at least, an interim CFO can deliver advice and assessments straight, without having to worry about the long-term politics. “If the school doesn’t want me to return next week, that is fine with me.” On the other side of the coin, the interim may need to put a clamp on his or her tongue. “It was sometimes difficult not to offer unsolicited advice to the head and fellow administrators,” said one. “To be most effective, I had to pick my shots.”
Of the many factors that can advance or impede the success of an interim CFO, above all stands his or her relationship with the head of school. These two individuals must be on the same page from the start. Likewise, the head’s communication of the interim’s limited and focused role to the rest of the school community is important for the interim’s success.
For instance, is the interim expected to change things or to leave things the way they are? What is the most important work to focus on? Are there any sacred cows to leave alone (or to challenge)? Regular communication is key. Whatever game plan is initially agreed upon is likely to change after the interim CFO kicks over a few stones. The head must be continually informed about the direction and purpose of the interim’s work.
Also essential to the interim’s success is good communication with the board of trustees, in particular the chair of the finance committee. Trustees “can be very appreciative of the simple fact that the interim is just keeping day-to-day operations going,” said one. Another: “The head and the board can take solace in the fact that they have a professional who is minding the books, and that is huge in terms of peace of mind.”
Presenting to the finance committee can give the interim CFO a chance to shine. Trustees always welcome clearer and more thorough financial statements. Some interims may be able to bring new perspectives or bags of tricks to meetings. One mentioned presenting the independent school financial equilibrium model developed by Sorrel Paskin (a simple tool for looking at the school’s financial sustainability). Another used a waterfall chart to introduce the following year’s operating budget. (For more on effective board discussions, see “In Trustees We (Must!) Trust.”)
Interim status can also give the board of trustees an extra measure of assistance. One person, with the head’s support, tackled issues that were less of a concern to the administration than they were to individual trustees. “Because I was new (and not concerned about job security), I was able to meet with the chairs of trustee committees and listen to their concerns and priorities. They were quite candid with me,” this interim said. “Not surprisingly, they were not all in alignment. I pointed this out, and tried to get the full board to focus on a few of the most critical items.”
It’s not always easy being interim CFO. While most of those I interviewed said they felt warmly welcomed by the new school community, especially by the head and the finance committee, this wasn’t always the case. One interim was surprised to find a degree of exclusion from the senior management process, noting feeling marginalized and underutilized because of the interim status. Similarly, vendors and other external audiences “may not take you seriously and think they can wait you out,” said another interim.
From the strategic to the trenches, these 11 interim CFOs completed tasks that collectively approach the full job description of an independent school CFO. In some cases they inherited their tasks, essentially carrying the ball for many projects that were already underway. In other cases they spearheaded new projects from scratch.
Relationships within the business office may prove the most challenging terrain. Business office staff may feel threatened by the new leader or resistant to change. Important changes are most likely to stick when they have buy-in from staff, who of course must execute them going forward. A healthy dose of diplomacy is required.
Be sure the CFO’s direct reports understand the purpose for the interim and what is needed from them during the interim’s time on board. At Charles Armstrong School, Miller said the business office staff felt affirmed knowing that “we were waiting for the right candidate, and also that we brought in trained leaders during this period. The direct reports (IT, HR, finance and facilities) learned from each of the interims. It helped them to understand what we should look for in a permanent candidate.”
When the business office staff is competent and needs little guidance, the interim CFO can best serve the school by taking care of external work: attending administrative meetings, working with budget managers around the school, reporting to the board — the kind of outside coordinating work others within the business office are typically happy to hand off.
When the business office is dysfunctional, the interim may feel inundated with requests and pleas, and pressured to fix everything — immediately. In this situation, an interim may be able to stabilize the business operation, but the school needs a complete rebuild of its finance operation. This requires a full-time CFO who is willing to commit to the years of work that are needed to develop a new structure. It takes time for things to fall apart. It takes time to put the system back together again.
As a five-time interim CFO put it, “It is easier to ask questions and consider turning things on their head as an interim. All changes that we put in place allowed a new permanent CFO to come in and build on the shoulders of that work. The new CFO had a smooth entry without having to make major changes or make anyone angry or nervous. That definitely helps.”
Thanks to the following for generously sharing their insights and experiences as interim CFOs:
John AldenStephen CarterRick EnglandPaul GalvinKaren MayedaChristine MillerSusan MunnKathy PetersGretchen ReedVanessa WassenarRichard Yarborough
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