What’s Missing in Controller Education?

Often, it's the teacher, as online learning takes over. We report on one of the last bastions of classroom training in this area, and examine its a...
Roy HarrisApril 15, 2008

The subject was Bear Stearns. The audience was controllers and aspiring controllers.

Out by Chicago’s O’Hare Airport at the American Management Association Center, a dozen of them — from lines of business including healthcare, retailing, banking, and the garment industry — were engaged with veteran instructor Robert Rector in a discussion about the investment banking firm’s problems, and what controllers could learn from them.

Over five modules in the three-day training, the class delved into how to apply information in a range of areas, from reporting to IT to time management to leadership. On numerous occasions, Bear Stearns came up. And class questions, along with Rector’s answers, helped explain how the firm got in so much trouble: “They went into a particular product line, and it became too big a part of their portfolio,” says the teacher. “The market looked good at the time, but it didn’t have sustainability.”

The course, called “The Controller’s Job in Today’s Environment,” costs $1,895 for members of the American Management Association, which teaches it more than a half-dozen times a year as part of its busy instruction schedule. Overall, AMA offers more than 170 open-enrollment seminars in 20 subject areas, with finance and accounting representing a major slice. Last year, the AMA registered more than 43,000 participants in 3,000 separate sessions, according to John Canniffe, portfolio manager for AMA’s finance and accounting seminars.

Inflection and Nuance

Rector is one of about eight instructors teaching this course, along with “Advanced Strategies for Controllers” and other finance-oriented seminars. He has strong views about finance training, and one is that real, live classroom participation is too often giving way to online learning.

Rector laments that online finance training often is geared to providing the minimum information necessary to give a controller — or other finance executive — the basic Continuing Professional Education (CPE) credits or Continuing Education Units (CEUs) needed to remain compliant under corporate standards.

Online education certainly has a role in transferring basic information — especially in an environment when taking three days off to travel to a seminar seems luxurious, compared to sitting at one’s office computer and getting the “same” information.

But many companies don’t consider what qualities can be lost when a course is delivered online, says Rector. “When you’re in an interactive class with a human being as your instructor, you get the inflection; you can understand the nuance,” he says. “And the focus in the subject matter can be directed to the group.”

The Eggs in Bear’s Basket

That’s what Rector was doing in his recent Chicago “Today’s Environment” session, with a rapt audience of finance executives focused on dialogues that seemed ripped from the headlines.

In leading classes, he tries to localize the discussion to the group in attendance, as well as to tie the instruction to what’s going on in the news. When he’s in Seattle, with so much interest in aerospace, for instance, he often cites aviation issues. One such topic often is how manufacturers and airline customers — and their controllers — need to consider seating capacity, the mix of business travelers and tourists, and amenities on board.

“If you look in any academic book on controllership, at some point you’re going to talk about product lifecycle,” he notes. And lifecycle decisions enter into all the smaller choices that are made about the design of planes, and the plane that customers need. One big question an airline-industry controller can help with: “How much should we spend on existing aircraft, realizing that we have to retrofit it again for the next cycle?”

In the Chicago case, the timeliness of Bear Stearns’s problems presented itself as an example. Its concentration on the subprime market, he says, exposed the bank far beyond what most competitors faced. Plus, the bankers “got far too exuberant, and failed to respond to their clients.” It is “a perfect example of putting too many eggs in one basket,” he adds.

The point has relevance far beyond banking in the hands of an instructor with his 35 years of management, consulting, and finance teaching experience. With a number of health-care employees in this class, hospital analogies came easily, as those institutions, too, can expose themselves to risk by being too narrowly based.

In addition to operating income, “hospitals also need endowments, and money for research and grants,” he says. “The question, no matter the industry, is where do you get your funding?” But, like bankers forced to sell inflated products to support a too-narrow product line, hospital owners shouldn’t “want the whole place to be obstetrics, or nuclear medicine,” according to Rector. “If something happens in the market, you need to make sure you can sustain the cash flows and your power to borrow.”

Who Has Time?

Likewise, any educational program that consisted purely of teaching finance in a classroom started heading for trouble a few years ago, with the rise of web-based teaching tools.

Several universities even had controller-based executive education programs back then. In fact, Rector taught at one that Vanderbilt University’s Owen School once offered, called “The Changing Role of the Controller.” But that program, along with the University of Pittsburgh’s similarly titled program, haven’t been offered for years.

Both apparently suffered the fate of many live finance courses: They couldn’t draw sufficient attendees to multiday programs.

“Over the past few years, finance executives just haven’t had time to go and do formal, longer programs because of all the work they’ve had to do implementing Sarbanes-Oxley, for example,” says Colleen Cunningham, former CEO of Financial Executives International. “That was clearly a distraction.”

FEI itself had a joint controller-based program with Harvard University. “The last one was in 2003,” she says. “We had to stop doing it — we had only five people sign up for the last one. Controllers just didn’t take the time to come for them.”

A number of organizations, including FEI, the American Institute of Certified Public Accountants, and the Institute of Management Accountants still offer controller and other finance training programs, usually granting CPE credit. But the classes are largely web-based.

Trainers, including classroom specialist Rector, agree that certain types of information can indeed be delivered well — and to many more people — through those online programs.

“Some of ours are ‘lunch and learn’ programs, if you will,” says Jack Fingerhut, whose Smart Pros organization produces programs for FEI. “Over the last seven or eight years, the whole online, e-learning delivery phenomenon, combined with other drivers like Sarbanes-Oxley and global competitiveness, have caused companies to become aware of the need to educate the finance department.” That that has caused the rush to “alternative delivery methods” like those programs offered by FEI and Smart Pros.

But Fingerhut and Cunningham both lament the decline of classroom education for certain types of specialized finance training for controllers and others. “I think live classes can be incredibly valuable from a couple of perspectives,” says Cunningham. “You have a network of people you can reach out to, after the fact. And, of course, you can deal more with current issues.” Conferences — still popular, even if they’re less targeted than classroom programs — offer some of those benefits, she notes.

Outward and Upward

While the AMA will continue to offer classes for controllers, it too is reacting to the decline in interest in narrower in-person programs by aiming more of its live training to functions rather than job descriptions. “Driving Organic Growth” is one new program, says AMA’s John Canniffe, and another is “Financial Modeling.” Says Canniffe, “We’ve seen a big jump in registrations. People see that it’s not just a spreadsheet model. It has a strategic side.” He expects about 350 people to attend live AMA programs in that area this year.

But Rector still likes delivering programs specifically for controllers, whom he considers a special breed that thrives on education. “As a controller you’re concerned with the internal activities of the company, and whatever has to be filed externally. You generate the reporting, and you work with IT,” he says. A strong CFO “will get a good inside person — a good controller — to make sure everything’s in place.”

Will that controller then be in the best place to move up to CFO one day?

Not so fast, Rector cautions. To the ancient question of whether treasury or controllership is the best route to finance chief, he answers: “I’m afraid I don’t think either one of them is best.” Being a CFO requires “a sensitivity to what’s going on in your market, and as a controller, typically you don’t have that.”

Of course, some controllers are good CFO candidates, but they often display personal qualities that are not hallmarks of the typical controller. “You can instantly tell by their conversation whether somebody is honestly a CFO,” he says. Most controllers, because of the nature of the job, “look inward and downward.” By contrast, “CFOs, when they talk, are looking outward and upward.”