Communication Key to Institutional Change AcceptanceKaren Goldstein | Executive Search Consultant, Witt/Kieffer
1. What role does an institution’s CFO play in determining the efficiency-related changes it must undergo to remain competitive?
The CFO has a very large role in that he or she works to develop efficiencies. The role is slightly different depending on the institution. In small colleges, usually, the CFO has a very broad set of responsibilities that include not just finance but also business services, facilities, auxiliary services and capital projects, sometimes even IT.
In larger institutions, the CFO might have a narrow role and simply be in finance. But as we all know, finance is involved in just about everything at an institution and so the CFO is really always involved in these areas and, certainly since 2008, every institution has been looking for ways to save money. So the CFO is very much involved in working on ways to be both effective and efficient in operations and finding ways to cut costs without disturbing or making less effective the programs that are in place.
2. In your experience, what have some of these changes looked like?
One way institutions have found ways to realize savings is in purchasing. Very often, many institutions have had purchasing that’s decentralized, where the managers of different departments or units in the institution make the decisions about where they buy anything. What institutions have discovered is that if you centralize that purchasing and make agreements with various vendors or agencies on the outside, you can realize significant discounts.
There’s also been a big movement to shared services. Those could be across the institution or between institutions. Any time you have a service important to an institution but a smaller institution doesn’t really need it full time, it’s very useful to have it become a shared service. Sharing of services is also another way to realize efficiencies without really disturbing any of the services and supports you provide for the students or the faculty.
3. Typically, how do efficiency-related changes impact staff and faculty?
With some institutions, it means you have to cooperate with others when making decisions. I can think of the Claremont Consortium of Colleges on the West Coast. They were all using the same outsourced food service between five different colleges, so that meant those five colleges, those five CFOs and the five presidents had to agree on who was the best provider of food services. They could all use the same provider and realize the savings in that way.
It does mean that institutions used to making decisions on their own have to share those decisions. Sometimes it’s hard for independent CFOs to agree to share, but when they see the savings, they find it’s actually worth it. The impact is really on the decision makers and the leaders, whether it’s on the president or the CFO. I don’t think faculty and students necessarily see the impact of that. They’re simply receiving the service and if the presidents and CFOs have made a good decision, the service they’re receiving is fine.
4. How can a CFO convince colleagues and staff of the value of efficiency-related changes?
That’s where the power of great communication comes into play. Especially in higher ed institutions where shared governance is very important, people across the institution think they have the right to be part of the decision making. In order to make efficient and effective changes, the CFO absolutely needs to be a great communicator. You have to be able to go to the different units and present to them what you’d like to do, what impact it will have on them, with both positives and negatives. You have to convince people this is going to be a good idea and demonstrate to them how.
The next thing to do is, if you’re looking at different vendors, you can put together a task force of representatives from those different departments saying, “We’ll do an RFP for a vendor and you can look at different proposals and help us to decide on the best choice.”
It’s a high-level communications job you have to do to make this work successfully.
5. Why is it critical for CFOs in today’s postsecondary environment to be excellent communicators?
CFOs have to communicate in many different ways. Certainly [in the 2008 financial downturn] when endowments went down, when enrollment revenue went down, tuition revenue went down and fees were going up, CFOs had to be very good at communicating with their board members. Whether it’s a public institution or a private institution, the board members became very wary and, at many institutions, they felt a bit guilty that maybe they hadn’t been paying enough attention to the finances before the downturn. And so they became more demanding for detailed information. The CFOs who succeeded in this process were very good at communicating with the board members in their own language.
The CFOs that succeeded were the ones who were completely open and transparent, very collaborative and very non-defensive. If you make people part of a process, they’re more trusting of the process. That’s the important role for the CFO.
6. Is there anything you’d like to add about the role a CFO plays in helping institutions become more cost efficient and more process efficient and how a CFO can actually work with main stakeholders in the institution to make sure these changes are widely accepted and bought into?
Many institutions have had to be more entrepreneurial. On the one hand, they have had to be more efficient and cut costs but, on the other hand, they’ve had to look at other ways of generating revenue. In that situation, the CFO really needs to partner with the academic vice president. They need to be really good partners in looking toward the future.
This interview has been edited for length.
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- In order for institutions to make efficiency-related transformations, institutional leadership must effectively communicate all facets of the change with impacted staff.
- Involving staff in decision-making processes is a great way to achieve buy-in.
Author Perspective: Business