Build trust with a stewardship mindset

Speaker A: Foreigners. Welcome back to the Journal of Accountancy Podcast. This is Neil Amato. This week we're going to share with you a, uh, conversation from the podcast of our global magazine, Financial Management, or FM for short. The episode is a conversation that news writer Steph Brown had with Eric Alexander. Eric is a CPA consultant and author with years of service himself as a cfo. The episode detailed insights from Eric Alexander's book and from his career. The title of that episode, Own youn Results Building Accountability as a cfo. You'll hear that conversation after a brief sponsor message. Blackbaud helps nonprofits streamline financial management with AI powered accounting software built for the social impact sector. If you work with nonprofits, you can earn 25% of first year revenue through qualified referrals as a Blackbaud partner. Visit partnerportal.blackbaud.com to get started.

Speaker B: Hi listeners, welcome back to another episode of the FM podcast. I'm Steph Brown. Today I'm joined by Eric R. Alexander, CPA author, speaker and um, president of Six Arrows Consulting, a company which brings coaching, mentoring and advisory services to leadership teams of community banks and other mid market companies. Listeners who read our features on FM might be familiar with Eric. He has written some feature articles published on FM over the past two years, including an article called Accountability Inescapable, Challenging and Valuable, published in September. Accountability is something we will be touching on in today's episode, along with other advice on stewardship leadership that Eric will share from his career and his book Stewardship Leadership for Stinking Accountants serving as the cfo. Welcome, Eric.

Speaker C: Steph, um, I'm so grateful you have me on for a conversation. Looking forward to this.

Speaker B: You've written a book on accounting and one focus area is stewardship. What in a few words inspired you to explore that component of finance leadership?

Speaker C: That's a great question, Steph. It's really the heartbeat of my book, which comes out end of July. Stewardship Leadership for Stinking Accountants. It's about the role of the CFO and 40 years of finance, 20 years of that, in CFO roles. I realized at one point, um, I'm now no longer working actively in finance. I'm an advisory roles as you described in my new m. My new company. I realized at one point, when I reflected back on my career, the times I've been most effective in my work is when I've functioned as a steward. Meaning I understood things had been entrusted to me to be responsible for. I was accountable to people and fundamentally it was not all about me. I'm a fiduciary. I have these things, significant, consequential things to take care of for the benefit of others. And when I, uh, when I approach my work that way, it ennobles my work, how I think about my work. And it makes me contribute in a way that's much more beneficial and a stronger contribution for the organization and for the people all around me. And I'm not saying I've always done it that way well, but when I reflect back, the stewardship is, uh, right in the middle of what we do as finance people.

Speaker B: That's interesting, because one quote from the book that I'd like to talk about, how you can introduce readers to the book is talking about that. This book is about your role, but it's not really about you. How do you think about and understand your role from that perspective? By taking yourself out of it.

Speaker C: In a sense, that's true for every leader. I'm focusing in the book on CFOs and finance leaders, but it's general principles of leadership. But think about what a, uh, CFO is doing all the time. There's lots of administrative, logistical things going on, but in the core of what the CFO is responsible for and his or her team, there's making sure decision makers have information. It's being involved in strategy. It's protecting a variety of things about the organization. And I'm doing those. Uh, I get a benefit out of the role. I get a lot of satisfaction, sense of accomplishment, helping people grow, watching people grow, the joy of relationships. But I'm doing all those things for somebody else. Yes, I'm part of the management team, but I'm delivering information and strategic insights for the sake of the whole company, the management team, interacting with the board to make sure they have what they need to make decisions. And then as I look at the financials, so a big chunk of my career was in banking. It's easiest to see in banking, maybe compared to some other businesses. Everything on the balance sheet, uh, I look at it and there's a person on the other side of that. Those loans we hold, that's where we extended credit to people for important things in their lives, of their businesses. Those deposits on our books, that's not our money. The whole bank is stewarding that. As a cfo, I'm helping us steward that for other people. And, uh, sometimes it can feel like, well, if it's not about me, then why bother? But there's something powerful about giving my professional talents and my energy and my leadership focus to something that Includes me, but is bigger than me. And that, um, that's a really exciting reason to get up and go to work on a Monday morning.

Speaker B: That's a great summary, I suppose, of the philosophy of what leadership is. But in the book you also set out five essential elements of stewardship leadership. What are those? And briefly, why are they important?

Speaker C: So the five elements, I alluded to them indirectly along the way as I was talking about how I view stewardship. It's me being responsible for what's been entrusted to me. Me m being accountable for the people that have entrusted to me. So I've got my bundle of responsibilities. I have the various people I'm accountable to. There's trust that's embedded in both of those. So trust is an inescapable part of it. I have been entrusted with things by people who are entrusting. So, uh, the sense of which I have to be above reproach. I have to be highly competent. I have to make sure my team is competent. We have to deal in integrity. But then fundamentally, the central thing of it is it's not about me. It's a mindset of service for others.

Speaker B: I'd like to expand on accountability. We've probably, at some point in our lives, all made unnoticed mistakes. But as a finance professional, hiding errors can erode trust, which, as you've pointed, uh, out, is essential for being a stewardship leader. So what steps can professionals take to get better at owning their mistakes? Ah.

Speaker C: Uh, okay. That's a fascinating question. If I could, I'd like to back up for a minute and talk briefly about how I view accountability to give a context for it. Accountability happens when there are expectations that have been communicated. There's a monitoring of performance, and then we take some kind of appropriate action on the gap. Bosses do that with their subordinates. Here's what I need you to do. Did you get it done? If you did, great, here's the pat on the back, the appreciation. If you didn't, how do we adjust? We also can do the accountability upwards of. I need to know what you expect of me so I can perform. Here's how I'm doing relative to that performance. Boss, I'm running behind. Or maybe the branch president at the bank is saying our deposits aren't up to the level we planned for in the budget. And we're working on, uh, there's a sense of what's expected and how am I doing. None of us as professionals, as individuals, like to fall short of appropriate expectations. So I think a couple of things are Important. I need to be monitoring my own performance. I need clarity about what the expectations are for me. And when there's a, uh, problem, I need to bring it to the attention of my boss and not wait for my boss to discover it. I've had this happen several times where something, I've messed up something, or somebody on my team has messed up something, and I'm accountable for my team. I've gone to the boss and said, CEO, I have some bad news. We did not intend this for sure, but here's what happened, and here's the consequences, and here's what we're doing about it. I was fortunate that I had a CEO who regularly would say, eric, I know you didn't do that on purpose. There was no mal intent. Don't do it again. Let's make sure we don't do this again. So part of it is having the humility and the courage to self report and had a colleague who would say, if you let me know when something's gone wrong, I will be your advocate. If we have to find it and then deal with the mess after it got worse, I will not be your advocate. It will feel like I'm your adversary. I don't remember exactly how he said it, but something along those lines. So part of it's the humility and the courage and then also realizing we're humans. We will do that.

Speaker B: Eric, the title of your book is quite provocative, so I have to ask, what is. What is a stinking accountant?

Speaker C: What is a stinking accountant? So you have a colleague. He's. You mentioned that. I've written some for the FM magazine. And the editor that I've been working with on those articles, he said, Eric, I don't remember exactly how he said it, but yes, this. This title is challenging for us. So let me give you some context on it. And first of all, the. The book is not technical. It's about leadership, stewardship, leadership in a technical environment. And I had a CEO I worked for. This is the same one who would say, eric, I know there was mal intent. Thank you for telling me, and don't do it again. He would call me the stinking accountant. Now, it's a disparaging term, but it's not a nasty, disparaging term. It's kind of a, you know, I'm poking fun at you. I don't. I'm pretending like I don't think a lot of you. I could never get him to admit that it was a term of endearment. It may or may not have been. But I use it in the title purposely to be provocative but also to say, and uh, not at all to diminish the role of a cfo. Our role is significant. We are entrusted with vital, consequential, important things. And we need to take our role very, very seriously. And we do as professionals. But I don't have to take myself too seriously. I can understand. Not everybody will understand me. Not everybody will appreciate what a cf, uh, what the CFO is doing, or the whole finance function. But we have a vital role. Let's deliver. Even if they call us the green eye shade cf. No, you know, the, the bean counters, there's, there's a variety of other terms out there we can still steward really, really well, but don't have to take ourselves too seriously. And yes, for marketing purposes. It creates a little bit of, hey,

Speaker B: what's this about you repping some of the sort of stereotypes that maybe are kind of subsiding but are still how some people frame the role of CFOs. In your experience, are there any consistent misunderstandings about what the CFO does, the CFO's role that actually hinder effective collaboration with other business functions?

Speaker C: Yes, there are. And sometimes we will play into those by being the cfo, uh, the cf. No, the person who's always saying no. We have a challenging responsibility where sometimes we are the ones who have to say to the rest of the executive team, no, this won't work and here's why, or here's a serious impediment we cannot ignore. That's part of our stewardship responsibility. But when we wear that as a badge of honor, where I'm always going to be the one that says no, where we don't understand the broader value contribution, the broader value creation that's going on throughout the organization, we hinder strategy. We can dampen and weaken culture if we embrace this. I'm going to be hard nosed and not pay attention to business issues beyond the numbers. I need to know my numbers cold. But if I hide inside those will not collaborate or if I shut down conversations or progress based just on financials, my perspective of financials. I'm not being a good collaborative strategic steward leader. We generally know our numbers really well. We'll know them to more decimal places than a lot of the other people around us. We know the gap better. We know the tax rules. We, we have to. Our technical competence and the competence of our team has to be high. Sometimes when we're reporting to management or we're reporting to the board, I'VE seen this happen where we are, we're so proud of what we know about the numbers. We will go to a level of detail that's not helpful in terms of what's significant at that moment in that conversation or I've seen this happen. You'll see a financial presentation where a billion dollar balance sheet is presented to the nearest penny. Now, US dollars, okay, a big balance sheet presented down to two decimal places. Once you get about 1, uh, billion 368 million, any of those other numbers off there to the right are not material. Often for the discussions, I pride myself in the accuracy my balance sheet balances to the penny. Great. It needs to for the conversations though, if I get too focused on precision at an unnecessary level, I actually can be making it hard for the decision makers to understand the data without having to work harder.

Speaker B: That's a great note about getting to into the technical aspects of our role and not communicating actually in ways other parts of the business can understand what that means. One quote kind of related to this that I'd like to touch on from the book is you write that outcomes are the only things that ultimately matter. Decisions are really only the starting point. And this point brings me to a, uh, technical question around business relationships. Because I guess while financial data can help guide decision making by predicting a range of possible outcomes, people are famously unpredictable. So how can CFOs help organizations assess the cost of stakeholder trade offs against the potential value of decisions?

Speaker C: Okay, so several concepts all boiled together there. Let me talk first about that last part, the trade offs. And, uh, it's interesting you bring that up. I was in a conversation with somebody just yesterday for my own podcast, talking about the various constituencies that we as leaders have to balance. And a big part of that is maintaining awareness of everybody is state the word stakeholder is used for a good reason. Everybody who has a stake in the decision, or at least in the outcome, needs to be considered by the people making the decisions. There may be some waiting we do in our head of what's most important. Is it the shareholders? Is it the employees? Is that the customers? Is it regulatory? Is it our communities? At minimum, we need to maintain an awareness of what the effects are in all of those. And you're right, go into another part of how you set this question up. People are highly unpredictable. Now, people as a group, we tend to see similar behaviors over time, but any individual interaction, there's no telling how it'll go. We love numbers as finance people. One of the harder things we deal with is People and all the complexities of relationships and all the needs and the emotions and the motivations and it makes our leadership hard. It makes our predicting of what could happen in a business outcome hard. We may go into an M and a negotiation and expect a certain path and then somebody loses their temper and a deal falls apart for a non business reason. All kinds of strange things could happen. So part of what we need to do as finance leaders is know our craft, know our numbers, but broaden our view to try to take in these other stakeholders. People, people, issues that are harder to quantify but super, super significant in a lot of decisions. And where you started about outcomes, that really goes back to accountability. I had a colleague, we'd worked together and he heard me talking to a finance team about accountability and I went through my definition of clarify expectations, monitor performance and take appropriate action on the gaps. He said, that's great. Here's how I think about it. Own, um, the results. Don't just tell me what you did. You are accountable for your outcomes. Yes, you're accountable for your efforts, but we're doing the efforts towards outcomes. So don't just try to impress me with how busy you've been. Let me know, um, what you accomplished. That's what you own.

Speaker B: One thing that you highlight in the book is that finance professionals, where they do struggle, can be within what we refer to as soft skills. What would be your advice for finance professionals where that's sort of the one part of the role that maybe is letting them m down and they're really struggling to bridge those gaps.

Speaker C: Realize you're not alone. We talked earlier about some of the stereotypes. One of the reasons stereotypes exist is because we tend to have some shared behaviors. And when we're very, very strong analytically, it's often paired up with we're not as strong relationally, not always, but I think at least an awareness and an honest assessment of I'm not as strong here as some of my peers. I'm an introvert who pretends like he's an extrovert. I will never be a natural extrovert. I've worked for them, I've been around them. We're just different forms of people. Understand that that's who I am. I will not necessarily ever be as personable as some other people, but there are behaviors I can learn. Maybe partner up with somebody else who I see doing it well, how'd you do that? Tell me how you prepared for that interaction. Tell me how you went back and helped deal with that conflict. Find people that you can talk to. There are lots of good resources out there too. We can learn behaviors not to pretend, but to be effective in those softer skills. And that. You're right, that is some of what I talk about in the book. And those are some of our bigger challenges, those human related aspects where we get out of our numerical quantitative comfort zone. We won't change our personalities, we shouldn't have to. But we can learn some behaviors and develop some habits that will help us be more effective.

Speaker B: I think that's a great note. And that self reflection of just knowing that you're not an effective leader, you just lead differently to other people. And that could be, I suppose, part of the value that you add to the, the organization as well. I really enjoyed our conversation about, um, all these elements of stewardship leadership. Is there anything that we haven't maybe highlighted in this conversation that you think is really important to mention?

Speaker C: Oh, uh, there's. There's a whole lot to say. I'll. I'll just say this. I'm a finance person. I have an appreciation and an affection for people like in finance and people in other roles like finance who suffer, who serve in the supporting functions where we often aren't recognized for our contribution. A stewardship mindset can help us do that in ways that are significant. Even if nobody ever knows how well we're doing, how much value we're adding. Let's go add that value. Not everybody will recognize it, but we will still have a sense of accomplishment, of having done something significant for the sake of the organization. We're doing important stuff. Let's do it really well. So grateful. Get to have the conversation.

Speaker B: It's been a pleasure to have you on. Eric, thanks for coming on the podcast.

Speaker C: Thank you. It's been a pleasure.

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