After 15 years as chief financial officer of $5 billion 3Com Corp., Chris Paisley faced a simple decision last year: take a lucrative job heading finance for the promising Palm Inc. hand-held computer spin-off, or teach school instead. Simple indeed. The 47-year-old starts this winter at Santa Clara University, in 3Com's California hometown. "I don't even know what my pay will be," he says with a shrug. "What I really want is a classroom of bright, energetic people."
Paisley — whose parents were teachers, and who taught accounting in his early years at 3Com — had been thinking about switching to academia for years. But not because he missed helping people learn about finance. That's something he believes he did routinely in his corporate role, while 3Com was riding to glory with its computer networking services. "The need for the CFO to be a teacher has always been there," he says, "but as companies have tried to instill more performance metrics lower in the organization, they have found that some of those metrics are not intuitive, and require instruction."
While few CFOs take a step as drastic as Paisley's and leave the corporate ranks entirely, nearly all are finding reasons to add "finance teacher" to their job description. Whether it's briefing the workforce about economic-profit-based compensation, bringing nonfinance managers up to speed on corporate strategy, interpreting the nuances of an Internet business model for customers, or answering ever-more-sophisticated shareholder questions at the annual meeting, CFOs are being called upon to impart their financial expertise.
"We are missionaries," is the way former R. R. Donnelley & Sons Co. CFO Cheryl Francis puts it. The place where finance executives often have the greatest value, she adds, is "in the broader context of educating the community." And that community includes employees, customers, other executives, Wall Street, and the public in general.
How the finance lessons are imparted, however, varies widely. Much formal training is done in-house, of course, including through an increasing number of "corporate universities." In addition, many finance executives, such as Paisley, are signing on with a business school in their so-called spare time — boosting their companies' exposure to a valuable pool of young finance employees in the process. But finance executives insist that the bulk of the lessons occur on a daily basis as they try to explain how each individual's work affects company performance. "You do it in many forms, and very rarely in a training environment," says Francis.
Breaking the Mold
Finance executives have always been called upon for certain educational functions, such as researching items for the CEO and explaining company maneuvers for Wall Street. Still, they haven't always enjoyed a stellar reputation for their teaching skills. In fact, says Stern Stewart & Co. senior partner Bennett Stewart, CFOs can sometimes "ruin finance trainings [by] over-engineering them." Consequently, he says, the lessons they try to pass on to others are sometimes "too technical, and don't resonate."
But forces have been emerging to correct this problem. The spread of financial responsibilities throughout the organization, for one, has changed the relationships among CFOs, operating managers, and other employees.
"The idea that you have to ask the CFO or the controller for the information is a thing of the past," says David Greene, former finance chief of advertising giant Young & Rubicam Inc., and now a professor at Indiana University's Kelley School of Business. Instead, says Brian Walker, president of Herman Miller Inc. North America, and former CFO of the Zeeland, Michigan, office-furniture manufacturer, "you've got to be out there arming people with the techniques you want to use, because you just can't wait for the finance people to do it all."
Such assistance can occur on many levels, says Francis, "You've just got to be open to the opportunities." Francis, who once created her own graduate class at the University of Chicago, called "Finance as a Catalyst for Change," recalls an opportunity she had to spread the finance message while visiting a telephone-directory plant in Dwight, Illinois, early in her tenure as Donnelley CFO. "I was a neophyte, and these people were so excited" at the chance to convince the touring CFO that Dwight needed a new paper-storage facility — one that Francis didn't want to authorize.
Instead, she inquired of the local management team how many separate types of paper they were storing, to which they proudly answered, 650. "The problem," she then advised them, "is that you're not managing your inventory the right way." Customers care little about the various types of paper that are used. "So your objective should be to keep fewer and fewer paper varieties in the plant." Soon after, Francis says, employees started sending her notes about their progress: "Cheryl, we're down to 500; Cheryl, now it's 250."
Bob Goldman, CFO of Houston-based energy giant Conoco Inc., adds that finance executives have numerous vehicles at their disposal for communicating such lessons. "Recently, we were announcing the building of a plant, and it was a very well-written press release, but it was very plant-focused," he says. "It seemed to me that we were missing the boat; we were entering a new product field with tremendous opportunity for the future — and, by the way, we're building a plant." He edited the release to that effect.
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