Creating a Strong Head/CFO Partnership

Part One of a People Talking interview with Tom Gorman, CFOO at Foxcroft School

Aug 25, 2023

Greetings TOOS readers -

It’s the August People Talking interview!

This is the first part of a conversation with Tom Gorman, Chief Finance and Operating Officer at the Foxcroft School. Tom and I worked together for six years at Westover and I found his partnership in that role critically important. As a head, in matters of finance I also often felt like a car owner dealing with a mechanic - I had no idea how to evaluate the information being given to me. I’m not a finance person, I wanted to protest, just tell me what to do. And you can’t do that as the head. I learned a ton working with Tom and we created a relationship where I asked a lot of questions and wasn’t worried about looking undignified or dumb or “not the boss” and he gave it to me straight, even if it wasn’t pretty. That kind of relationship creates the space to create solutions. But first…

Stony Creek Strategy updates/New NAIS research on Hot Issues for 23-24

School Solutions to Meet the Moment

(that’s the headline on the website home page and I love it so I keep repeating it…)

Communications Directors 23-24 cohort - more information here - great response to this and we look forward to moving this program forward - we’ll be in touch very soon if you fill out the interest form.

New NAIS research indicate 100% of heads are worried about hiring. As independent schools, we really need to start thinking differently about hiring.

SCS has hiring solutions that can help.

This NAIS research also reveals 97% heads are concerned with conflict management.

SCS offers conflict management/crisis prevention coaching.

And here’s a guide to crisis prevention communication and here’s ten tips for managing difficult dilemmas.

Set up a time to chat. We know running schools is hard and we’re here to help. And sometimes even a twenty minute chat just helps.

And the SCS website is coming soon - working with the amazing Blazar Design Studio on some final edits.

The People Talking interview - August, 2023

Creating a Strong Head/CFO Partnership

I originally invited Tom to do a People Talking interview, which is geared towards the underappreciated or novel ideas that can move schools forward, with the goal of discussing the importance of cash management. But we also ended up having an interesting discussion about the head/CFO partnership. Given the time of year and the number of new heads of school out there, I thought this part might be helpful to readers. So I broke this interview into two parts. Below is our conversation about the head/CFO partnership and a bit later this fall I’ll publish the conversation about cash.

Julie Faulstich

In terms of the financial matters of the school, you've got the CFO/COO and you've got the head of school and you've got the board finance chair and the board chair. Who leads and who follows?

Tom Gorman

I think the boards and the committees that work the best are, in the common phrase, “noses in, fingers out.” They need to be appropriately involved and aware of what's going on. But let's face it, they rely on the information that the person in the CFO chair is giving them.

So that doesn't mean they take everything at face value and they need to ask the probing questions. In the auditing world, there's a standard that's “healthy professional skepticism.” It doesn't mean you question everything, but you need to have a certain amount of questioning and skepticism. I'll believe it, but I want you to prove it. You tell me we have a balanced budget. Well, can you show me how we get there? And what are all the elements, what's missing? It's not always what's in the budget, but what's not in the budget.

It's critically important that the CFO be capable and strong enough to have open, honest conversations and speak truth to power because there are times when it’s not good news. Especially when you're coming into a new situation, you may be peeling back layers of expectations that, yes, you bring your own spin and your own style, but at the same time, there are some fundamentals of good practice that should be universal. Looking at this with a fresh set of eyes you need to communicate these are the things that jump out at me.

I'm comfortable having these conversations with my head of school, my finance chair, any of them, because we're all here to make the school stronger and so we can execute on our mission. I go back to the departments that fall under the CFO are usually a service organization. And that's true even dealing with your board and your head.

And as the CFO/COO, what do you need from a head of school to succeed?

I think a head that is willing to listen. The most important thing for the head is having a vision for the potential of the school and the direction we're heading. And then the head understanding he doesn’t have all the answers, because if he acts as if he does, people will defer to the head. That’s human nature.

And you need a head who genuinely is looking for your opinion as the person with expertise. Even if he pushes back at you when you give your opinion, the senior team gets the vibe when the leader really wants a genuine answer and is ready for some true back and forth and possible disagreement. And when he actually just wants you to fall in line and then align their comments or their thinking to what they think the head wants to hear. So a head that is able to be open, be inquisitive, and be willing to receive information is important.

Being honest about what you don’t know is important.

If I went into a classroom, would I know how to teach a class? I can maybe muddle through, but it's not going to be the same experience. And so I know where my limits are. It's the same with the head of school. You create a structure of a senior team around you, let them do their jobs. And be clear about what information you need to move the school forward and push for that information.

And who's the boss? I’ve seen situations where the CFO is a “no” person and the head is interested in moving a program or initiative forward, or spending more on a hire than was budgeted because the person could make a specific impact and the CFO is all, nope, nada. I always appreciated the fact that if I said it was important, you made it happen.

Other than a bounce house, which is still a hard no.

JF (laughs)

Respect. You were the risk manager.

Saying no, that's the easy answer. Because it doesn't require any creativity in trying to achieve what it is we're trying to do. You can just say no. No, we can't afford it. No, it's whatever. How do you get to yes knowing that we have a finite pool of resources? So if we say yes to this initiative or this salary - and salary expectations across the board with faculty, administrators, staff - they are at a whole different level now…

I don't know how people are doing it, frankly. I really don't.

So what you budgeted for a position, the market is going to tell you something very different. But then it comes down to trade-offs. Okay, if we do this, then we can't do something else, or we need to do it, but in a different way, or how do we piece together something? To me, the fun part of this job is how do you get to yes. Because it’s very easy to say no. I used to jokingly say, the sign on my door was the office where good ideas go to die. But it's not moving the school forward. Now, if I had somebody come to me with just a completely bonkers idea, yeah, I'll say, Are you sure that's really the best idea? But if there's some value to the idea, then let's figure out how we get to yes knowing that it's going to be more work.

I think what I miss most about headship was that creative problem-solving, figuring out the options. Even when it was hard and challenging and tiring, we could figure out a way to keep moving the mission forward. But once the pandemic hit, it just felt like our reasonable options got fewer and fewer and there were so many bad options.

Good decisions are rarely made under duress or as I like to say, decisions should not be binary decisions. Oftentimes, they are. But if you need to make a binary decision, then have you really explored all possibilities?

Because there could be a third option. I loved when the third option came into view.

Yeah, often it’s there. But you're right. When you feel that you have no choice but to spend money on something you’re not excited about but it's the best of a lot of crummy options, it doesn’t feel great.

What advice would you give for a new head of school to become knowledgeable enough to ask those skeptical questions of her CFO?

It's really sitting down and turning your phones off and spending a couple of hours with the CFO and just walking through the financial statements, the audited statements, and also walking through the budget... It's almost like walking through the trial balance. I mean, you're getting into some granular detail, but when you look at the detailed budget line by line and just understand the thought process on how we develop the budget. How do we get here? What did we actually spend money on? Once you start looking at it. It's pretty revealing what you start to see.

The budget tells a story about a school’s priorities.

I also think back to that first interview you and I had back in 2017. I had recast the 2016 statement of activities and we had a conversation about the problems that needed to be fixed. That's the type of conversation that if you have upfront and just talk about the reality, and it's like the Get Smart cone of silence. It's like everything has to be on the table because if you can't have an open, honest conversation with your head of school, then maybe that's not the place you need to be.

That was like a good teaching moment. Sometimes you're a student and you might have some general thoughts about a thing, and then the teacher will present a concept and it all makes sense. You weren’t wandering in the darkness after all. It all fits under this theory. I felt like when you presented that information. Yes, these are the essential problems. It was such a relief.

What I'm compelled by both in my administrative jobs in schools and now in creating this consulting firm are these diagnosis moments. Because once you diagnose the issue, you can start to make progress towards solving it. But if you never diagnose it because it's too scary to contemplate, you can't make any progress at all.

And it's going to probably become a crisis at some point. And then the question is how do you create the environment in which all stakeholders, trustees, senior admins and faculty, how do you get them to open up and admit that, yeah, you know I've always questioned this. I've always wondered why we do X. Because they may have those questions, but either they're afraid to ask or don't feel empowered to speak up. And who do they share that with?

I think that often, especially with money but also in other areas faculty and staff feel are beyond their expertise, people have what they think is a stupid question but it’s a very valid and valuable question. They’re worried the question itself reveals their own ignorance but they're probably getting at something that is indicative of a larger issue. And they don't even realize the power of their questions.

Yeah, they're identifying the symptom, not necessarily the disease, but if they can at least articulate what they're seeing, then the administrator or consultant or whoever is trying to get their hands around the problem can start to diagnose the underlying issue. And then you can make progress.

Thank you to Tom - best of luck starting the school year! Maybe someday I will figure out how to turn the “bounce house rental as risk management opportunity” into a larger essay.

I really look forward to sharing the second part of this interview where we get into how the head and senior admins need to get off only focusing on “budget, budget, budget” terminology and think and talk openly about cash. A cash management problem can really sneak up on you, impacting your ability to make strategic investments even if you have some solid revenue lines and leading to some dire consequences if you don’t have the ability to play cash musical chairs.

Next week in Talking Out of School - “You Need Strategy But Do You Need A Strategic Plan?” The answer may surprise you…

Enjoy that beautiful sense of hope and possibility that comes as the kiddos return to campus!

Julie