Are Presidential Concerns and the Finance Department really on the same page?

Are Presidential Concerns and the Finance Department really on the same page?

Even though I specialize in one department of administration within higher education I try to keep up with other areas as well. I like to see the current issues in all of higher education. I read different journals and publications about all topics of administration for higher education – from the president’s letter, the mission statements of universities, student enrollment activity, and concerns about facilities, budget issues, technology changes and tuition discounting.  I try to tie them all together so that I know my industry.

I recently came upon three different surveys, though, that are at the heart and soul of what I do for finance departments. The first was a survey by University Business Magazine (Jan 2015 issue). The survey listed the top five “leadership priorities of presidents and other top officials:

  1. 83%. Student success initiatives.
  2. 75% controlling cost
  3. 45% raising non-tuition revenue
  4. 30% change management
  5. 22% reinventing the institution.

These all appear to be very worthy priorities with which many institutions would be in agreement.

Then I reviewed the other two surveys, but I had difficulties connecting the dots. The second survey ranked the areas holding the greatest potential for causing the institutional, financial, or reputational harm (as answered by presidents and other top officials):

  1. 75% enrollment declines.
  2. 46% national financial outlook.
  3. 35% of federal college rating system.
  4. 23% cyber security.
  5. 23% academic program cuts.

Things began to get “curiouser and curiouser” after reviewing the results of the seven top finance priorities which show the following:

  1. 60%. Keeping student tuition down.
  2. 58%. Addressing administrative efficiencies.
  3. 56%. Keeping up with technology.
  4. 47%, tapping philanthropic and corporate funding resources.
  5. 29% controlling health benefit cost.
  6. 27%, improving procurement practices.
  7. 24%. Finding a way to share services with other institutions.

I reviewed all responses from all three surveys again looking for a cohesive, connecting thread between the leadership priorities and the finance priorities.

Are we really on the same page?

In my advising and consulting with colleges and universities I do my research so that I can get as much information as I can before I work with them. This often includes reviewing the five-year plan or the strategic plan as well as the president’s statement and the mission statements of the administration division and the departments within. There is still a lack of clear connectivity between at least some of the goals of the presidents office and the business and finance department.

This is even more confusing to me when I find, in my own informal surveys, the VPs of Business and Finance are the most often consulted cabinet member by the president. One VP indicated to me he speaks to the president several times a week and often several times a day!

So what does this mean?  The stars are not aligned.

The survey results show me the priorities of the president and other top officials are not the priorities of the finance department. There I’ve said it. Until the priorities are aligned with each other universities will continue to act in the same incoherent way they have in the past. I believe part of the difficulty is the language used by finance when communicating with others throughout the university.

When finance people speak ‘their’ language of spreadsheets, balance sheets and other financial data to executives and academics it’s like using words such as “fetch, sit, shake hands, roll over to a cat”.  The cat looks at you and then usually strolls off and does whatever it wants to anyway.  When reviewing financial documents, budgets, expenses and revenue the eyes of some individuals just glaze over. I’m known as the “tax translator” because of my ability to explain complex tax law and commonly understood English and I use real-life higher education.

I’m not saying that all presidents or executives outside of finance are unable to read a financial report. I will say though, that when financial reports are distributed and ‘reviewed’ it’s easy for me to spot the financially savvy people out from the ones who look at it for 30 seconds and pronounce their agreement with – right before their eyes glaze over.

What do I suggest?

There are some ways I believe to bring the presidential and financial priorities closer together.

For finance.

  1. Know your audience. If you are aware of particular persons’ difficulty with financial statements, I suggest using more graphics – pie charts and bar charts (avoid graphics filled with too many data points though). For instance, show past years and future year projections in a graphic that quickly allows them to see comparisons figuratively rather than literally.

 

  1. Tell a story. Relate the numbers to something ‘real’ to your listener. For instance, tell how an increase of 3% in revenues would fund scholarships of 24 students or how a dormitory could house 300 students if debt were incurred. Connect trends in one financial area to another financial area with the story that shows the impact of a continued trend.  Don’t just show future declining enrollment possibilities, tell a story of how a first generation college graduate feels upon graduation and why it’s important to focus on this area as an example.
  2. Listen to what is said and unsaid. Determined the motives and the fears and the hopes behind the conversations. It’s not just about the numbers. It’s about the students and their education and how the university can respond to be a viable institution and always seeking excellence in what is done and how it is done.

For presidents executives and other leadership;

  1. Make your intentions clear to all and remind him daily what they are. In every meeting, in every presentation, at all gatherings of staff, students, faculty and others, keep repeating your message and your vision for the future.
  2. Be the “General” by providing the “Commanders Imperative” only. The Commanders Imperative is a military term I recently discovered and is applicable to leadership of universities. Prior to the commanders imperative, extensive battle plans would be drawn up to include tactics and strategies for success. However, Commanders realized that ‘battles” do not often go according to plan, and results and actions of the enemy cannot be predicted. The extensive battle plans were of little value. Thus, the Commanders Imperative became “win the battle”. Do what is necessary at the time to win the battle. I relate this to higher education by recommending to only micromanage those areas that are of the highest importance (a leadership trait practiced by the Disney Company).
  3. Avoid the “Lonesome End” offense. The Lonesome End offense was used by the West Point football team. The Lonesome End never came to the huddle. He just stayed out at the line of scrimmage when his teammates huddled together to determine the next play that would be called. This confused the defense as they never knew what the Lonesome End was going to do – was he going to have the ball passed to him, was he going to block?  Don’t confuse your staff and keep everybody in the huddle, call the plays and let the team execute the play (Commanders Imperative).
  4. Same as above for the Finance professionals. Listen. Listen to what is said and unsaid. Determine the motives and the fears and the hopes behind the conversations. It’s not just about the numbers.

A couple of other observations about the surveys:

In one survey, 58% of the respondents indicating finance priorities were concerned with addressing administrative inefficiencies.

If the thought process behind this was to continue to seek to computerize or automate steps to address or reduce administrative efficiencies, then I submit to you that the concern should be addressing administrative “effectiveness”. Most colleges and universities have already put into place Workflow approvals, electronic delivery of various forms for employees and centralized human resources, payroll and accounts payable activities. Now it is time to improve “effectiveness” by better utilizing these efficiencies.

Ways to increase effectiveness include managing the change process (one of the leadership priorities), clearly communicating the benefit of the change to the users, written policies and procedures and providing training to obtain better effectiveness

In another survey, 22% indicated ‘reinventing’ the institution. I relate this priority to branding and marketing. The public’s perception of your institution can be modified by applying branding and marketing techniques as employed by many large organizations.

Yet another priority identified and with 27% responding wanted to improve procurement practices.  One way this was done in the past was the use of a ’P card” or procurement card.  A Procurement Card is filled with many potential areas for fraud and abuse. One University pays out over $3 million per month to the bank for the P card. They literally have thousands of transactions and do not reconcile the purchases on a regular basis to seek out fraud and abuse. They simply receive a file electronically and pay the amount due to the bank.

I’ve often heard it said you cannot be efficient and effective at the same time and I believe this is an example.  It’s time that we stopped relying on technology to be the ‘silver bullet’ that will cure all the problems.

Steve Hoffman, The Tax Translator, is a trusted advisor to Chief Financial Officers in Higher Education.  Known for translating complex tax law into understandable English and actions he works with colleges and universities to improve tax compliance and reduce the financial and reputational risks of an audit.  He may be contacted at Steve@TheTaxTranslator.com

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