Public-company CFOs are on the edge all the time. There is daily, scalding scrutiny from shareholders, Wall Street, banks, customers, the chief executive, the board, their staffs, and even their own consciences. At the same time, many talk about “the rush,” the acute excitement of pulling the strings, maneuvering to hit the numbers, and orchestrating the deals.
A person’s nervous system might not have infinite reserve capacity, though. There may come a time to let both the pressure and excitement go in favor of a more relaxed environment. Some find their way to smaller private companies. But others go even further, opting for what they see as the ultra-sedate world of not-for-profit organizations.
In the first of two profiles of finance chiefs who have made the switch from the commercial to the nonprofit side, Laura Bartlett, CFO of the American Association of Advertising Agencies, tells her story. She has been with the 4A’s, as the association calls itself, since May 2008 after 14 years with worldwide ad agency Foote, Cone, & Belding and its successor companies. Throughout the 1990s she was a CFO, first of the company’s New York operation and then for the worldwide company from 1995 to 1999.
As the worldwide CFO, Bartlett was on the road 80% of the time, suffered the loss of a marriage, and finally asked to step out of the role. She moved into mergers-and-acquisitions work, which still kept her moving around quite a bit, doing deals in India, Brazil, Hong Kong, London, and the Middle East. She eventually quit and did some consulting, but fairly soon a new opportunity came along.
Even without a lot of travel, I wasn’t sure I wanted to go back to work in New York. I live pretty far out in Connecticut. I had three stepchildren who were triplets and were at the end of their high school years, and while I was at FCB I was never home. One day I bumped into the outgoing CEO of the 4A’s, who told me his CFO was retiring too.
After looking at my resume, he said, “Laura, this job isn’t going to interest you, because you’ve had all this international experience.” I said, “I’m done with that. I’ve been working for 40 years.” Then I met the new CEO, Nancy Hill, and we were very like-minded on many things.
I like that the job is more controllable than what I had before. There’s limited travel. I can determine what my work hours are, and I also can work at home some days. I can get home for dinner, which means leaving the office a little after 5 PM. That never happened in the for-profit world. And now I don’t have a CEO calling me at night and telling me we’re having a budget meeting at 7:30 in the morning. That kind of thing wreaked havoc in my life.
I did have some concern that the job wouldn’t be challenging enough. It was a $15 million revenue organization with 65 employees, while I had worked at places with hundreds of millions in revenue, 800 employees domestically, and 8,000 worldwide.
Also, my predecessor had been there for 26 years, and when I started in May of 2008, the organization was in good shape financially. It didn’t look like the job was going to be too tough.
Then a few months later the world changed. The advertising industry suffered greatly. Ad clients cut spending, which meant agencies scrutinized every discretionary expense, and 4A membership was one of those. I was facing huge revenue declines. I had to fire people, which was very challenging; the staff was very stable and had been around forever.
I also had some issues with my direct support staff and the controller, so we didn’t get a clean audit my first year. My thought going in — that the job was going to be easy — changed in a hurry.
Plus, Nancy relied on me for more things than what the previous CEO had relied on my predecessor for. In fact, the role was really more CFO and COO, which was fine with me. A couple of years ago she gave me the second title. That gave me board governance issues, board agenda setting, and other things that were more challenging and interesting.
Going back to the staff issues, it was a big challenge getting them to understand that even though we were a nonprofit organization, we had to be accountable to our members, the board, and ultimately the organization’s sustainability.
At for-profits, especially publicly held ones, the accountability issue faces you daily. FCB was owned by a publicly held holding company, so I wasn’t directly involved with the financial community. But I was very geared to reporting, accountability, contractual relationships, and revenue recognition. Businesses revolve around all of those accountabilities.
In the nonprofit world, things are much “squishier.” You certainly have reporting, you report to a board, and you file a federal Form 990, which is very much like a tax return even though you pay no taxes. But there is no day-to-day pressure of accountability. How we are measured, and by what metrics, is not clear. So it’s hard to go up to people and say, “You didn’t do your job today, we need revenue but you didn’t get this or that done.” It’s very difficult to hold people accountable in an association.
I don’t have other nonprofit experience, but I’m a member of the American Society of Association Executives, and a lack of urgency seems to be common. How do you implement a strategic plan, and give people objectives and hold them accountable to those, in an environment where profit is not the driver? How do you keep a sense of urgency to deliver things? It’s not like you have clients or board members or shareholders banging on the door saying where’s this and where’s that.
For us on the financial side, some of the lack of accountability is understandable. Eighty percent of our revenue is from dues, and if an ad agency decides to quit the 4A’s, most often it’ll be because the agency is having financial issues. It’s difficult to hold somebody accountable for that.
What I’m focusing on is creating good business processes that hold people accountable for internal things, like assigning people authority for meeting budgets. I’m also making people more cognizant of how they’re spending money, holding back travel – all the standard things you do in a for-profit business that frankly hadn’t been done in this organization to any great extent before I came.
For the first three or four months we were here, I kept saying to Nancy, “Who do we have to get to approve this?” She’d say, “Laura, just do it.” Our board is made up of CEOs of ad agencies, many of whom are global travelers who have 24/7 jobs. It’s hard to get them to come to board meetings, let alone spend a lot of time poring through financial records and other things. So the leeway I have as an executive is considerably more than in the for-profit world, especially in a public company, where you have to go through lots of layers before money can be spent.
Tomorrow, we’ll look at the transition from industry to nonprofit for Bob McLean, CFO of the Promotional Products Association International.