CFOs Earn Low Marks as Class Instructors

Their expertise may be in demand at business schools, but finance chiefs often fall flat unless they really work at it, professors say.
Roy HarrisMay 28, 2008

Delivering lectures to a business-school class may sound easy compared to, say, preparing for a sensitive earnings call or improving a sagging division’s ROI. But professors who regularly bring in corporate executives to speak to students say finance chiefs often have a tough time being understood in the classroom.

In fact, CFOs frequently need a bit of schooling themselves before they are able to make a hit at the lectern.

“The challenge with successful practitioners — CFOs or consultants who come to business schools — is that they tend to be extremely knowledgeable about an extremely limited number of issues,” says Gabriel Hawawini, professor of finance at the University of Pennsylvania’s Wharton School, and also chaired professor of finance at INSEAD in Fontainebleau, France. “For teaching an MBA class, you don’t need the depth they have. You need the breadth.”

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“Often, CFOs fall down because they just get too detailed,” agrees William Petty, a former corporate controller who’s now a full-time instructor at the University of Alabama. “Or they have blinders on, rather than getting students to open their eyes to what’s out there.”

That’s particularly unfortunate, he says, because students are predisposed to like visiting finance chiefs, and want to listen intently to their presentations. “They know you’ve got that knowledge [as a CFO] and they want to pick your brain,” he says. But if the style of presentation is off base, students often zone out, despite the enthusiasm they brought with them to the classroom about what they might learn.

Many corporate finance chiefs, for their part, also love the idea of talking to classes, notes Petty, who regularly arranges for people from the business world — often Alabama graduates — to make appearances. But desire, of course, is not enough to make a good lecturer.

Petty’s advice to visiting finance executives in Alabama’s Operations Management class — at least for their first appearances there — is to avoid the temptation to dig deep into specific corporate or finance-department problems. Take a step back and present a simpler, bigger picture, he recommends. “Let the students know what your company is and what it does. And let them know what’s really expected of a person in the finance department.”

Often, the professor says, visiting finance executives present an idealized picture by talking about the way a company is supposed to function, rather than presenting real-world problems that occur from day to day.

Students often worry that the corporate world tolerates no mistakes, for example. “I ask visiting executives to make it clear to students that employees aren’t expected to be gods who come in and save everything,” says Petty. “We want students to be able to think for themselves and to make decisions. They need to know that they can make mistakes in a finance job.

Standing in the Student’s Shoes

For Chris Paisley, a former CFO of 3Com Corp. who now teaches financial accounting at Santa Clara University in northern California, a standard part of his undergraduate introductory course is bringing in a CFO “to describe the process of preparing for, and conducting, an earnings conference call.” Says Paisley, “I have observed that sometimes the speakers have to be reminded to put themselves back in the shoes of a student, who really is a beginner relative to accounting. It’s too easy to assume that the audience is familiar with the earnings-release process, because most everyone else they speak with has that familiarity.”

Paisley says he encourages CFOs “to think back to the very first time they sat in an accounting class, and how it was all foreign to them at the time.”

The appearance of finance executives in classroom settings isn’t something that schools should dispense with, the professor says. He calls it “a pet peeve of mine” that students in the nation’s business schools are exposed to so little realistic corporate experience, and that what exercises are thrust upon them — in the form of case studies — often force them to “make decisions at a VP level or above.” It’s “a little deflating for most of them to find that they won’t make decisions at that level in their companies for quite a long time,” he says. And if a CFO brings that kind of message to a class, and explains what kind of work entry-level finance employees actually perform, it can be a true service.

Another CFO service can involve going beyond the pat textbook business-school concepts. Paisley remembers, when he first moved from the CFO’s chair to the head of a classroom, describing for students his view of why the accounts-receivable/days-sales-outstanding ratio is so important, and a good predictor of future problems for a company. (The formula is A/R, divided by sales, times the number of days in the period.) “I spent a fair amount of time explaining why this ratio really doesn’t tell you much at all about a company’s effectiveness at collecting its accounts receivable, but it tells a lot about how back-end-loaded shipments are at the end of a quarter.”

A longtime faculty member who heard the new professor’s explanation from the back of the classroom came up to Paisley later, remarking that “he’d never thought of it that way,” says Paisley. “Not entirely surprising, since no textbook ever discusses that fact, and that was all he’d had exposure to.”

Learning to Teach

In comparing the various types of presentations CFOs make to students, Wharton’s Professor Hawawini says that things seem to go better if the assigned topic is a narrow one, allowing the executive to explore a situation deeply.

“When I have invited people with corporate finance backgrounds to teach in my classes, I’ve found that there are a few lectures where they were outstanding,” especially when the teacher can be coached in approaching such a more-targeted program. Often, “if you ask finance executives to teach a full course over four months, they don’t have the same [broad] knowledge that’s needed,” he says. “The way to deal with this is not necessarily to ask a practitioner to teach an introductory course, but to teach a particular seminar that goes into detail on one subject.”

Many CFOs do aspire eventually to teach longer courses, and may see an ad hoc classroom appearance as an experiment that could lead to a more in-depth teaching experience — perhaps even in a “second act” after leaving corporate finance.

To those executives, professors recommend that they seriously consider what such a change of professions entails.

“To make the transition, you have to make an investment,” says Professor Hawawini. “You have to learn how to teach. To have this world of experience, and want to share it, is a good thing. But it’s not enough.”

Without going back to a university oneself for an education degree, numerous shorter-term courses are offered to help prepare an executive for time in front of a classroom. The American Management Association, for one, offers at least four relevant seminars, with titles like Training the Trainer, Instructional Design for Trainers, Effective Executive Speaking, and The Effective Facilitator.

But many executives who make the switch do it gradually, through doing instructional programs at their companies, and through on-the-job experience in a school setting.

Alabama’s Bill Petty attended some “Train the Trainer”-type courses offered by APICS, the Association for Operations Management, where he has long been involved. He instructed for some of that group’s certification classes, while also teaching classes during his corporate controller affiliations. (These included ZF Lemforder Corp., from 2002 to 2005, and Club Chef Inc., from 1997 to 2001.) Before moving to Alabama, he taught at a small private college and a mid-sized university.

There are the obvious changes in job description — from learning to develop a syllabus, to understanding university bureaucracies, to dealing with individual student needs — while accepting a far lower level of pay. “The income gap is real,” says Paisley, now an eight-year teaching veteran.He adds that he adjusted relatively easily to the classroom because both his parents had been teachers and he had always been attracted to the profession. He also taught part-time at a local community college for a decade before taking the post at Santa Clara.

Paisley notes that at Santa Clara, a Jesuit school, he’s far from the only finance chief to have made the shift. Two recent additions to the faculty — Marcel Gani, retired from Juniper Networks, and Roger Barnes, a one-time Riverstone Networks CFO — both first visited Paisley’s classes “to get a small sample of the experience” before signing on as lecturers.

Offsetting the pay differential between corporate finance and teaching, says Paisley, is “a much higher quality of life and free time. I’d repeat my choice in a heartbeat.”