Trust and Confidence: Establishing Foundations for Success
- By Margot A. Surridge
- July 1st, 2003
In the wake of the Enron and Arthur Andersen scandals, we are more aware than ever of the dishonest bookkeeping and back-room deals made by big-business CFOs. Such abuses of power, revealed by external audits and independent research, have marred public perception of financial officers, but provide an opportunity to reevaluate ways to build foundations for success in the form of trust and confidence.
While big business has received most of the media hype, they are not the only segment of the economy susceptible to broken trust. Any institution — a large corporation, small business or university — that places its financial security in the hands of a few trusted administrators is not immune to catastrophic financial mismanagement. Since opening their eyes to the possibility of fraud, organizations with vigilant leadership have begun taking steps and implementing policies to safeguard against similar occurrences in the future.
Whether your organization is looking to improve the workings of its internal department of finance or its dealings with outside consulting firms, I suggest the following strategies.
1. Evaluate the chain of command. Who is involved in watching funds travel in and out of your institution? Ensure that conflicts of interest don’t get in the way of monitoring your organization. Take a close look at who supervises the CFO and other key financial leaders. As the vice president for Finance and Administration at Finch University of Health Sciences/The Chicago Medical School, I am in a position of both responsibility and accountability. The workings of my office are accountable to the university’s director of Compliance, general counsel, president and CEO, and its board of trustees. The very structure of an organization can safeguard against negative outfall.
Financial leaders and, therefore, the organization, will find themselves in trouble if they allow their thinking and behavior to assume power and authority that is not within their purview. It is their financial responsibility to effectively manage the resources of the organization by advising the president/CEO and board of trustees of the financial impact of decisions. It is not within the authority of financial leaders to determine the programmatic initiatives of the organization.
While some financial matters are certainly sensitive, there should be a concerted effort to provide transparency of finances. Since instituting ano secrets approach to fiscal transparency at Finch University, we have enabled all of our stakeholders to be integral players in evaluating our bottom line. It keeps us working as a team to find new solutions to age-old challenges and makes all of us (from board to CFO to staff) accountable for the way we allocate funds.
2. Back up words with actions. Positioning your organization as trustworthy requires more than just a good marketing campaign and empty promises. Five competencies that help build trust, as outlined by Stephen M. Dent of Partnership Continuum, Inc., are commitment to agreements, competency in skills, consistency in output, making contributions and the willingness to collaborate on projects.
3. Make efforts to boost confidence in your administration. Remember that the trust factor is a cycle. A recent ABC News/Washington Post poll indicated that 82 percent of workers distrust corporate financial reports, while 46 percent of workers express agreat deal of trust in their companies’ accounts and 39 percent express such trust in their companies’ leaders. We can do better. Invest not only dollars, but human resources, wisely. Hire CFOs and accounting firms dedicated to establishing open, honest relationships; remember that genuine good will translates into trust and confidence.
4. Be honest with stakeholders. Above all, communicate. Establish your own credibility, explain problems honestly, communicate your values and let people know how you operate. A survey conducted by SRBI concluded that 82 percent of senior financial executives at America’s 1,000 largest companies feel that scandals, such as the Enron bankruptcy, have significantly impacted the overall credibility of the auditing and accounting industry. Given a skeptical climate, it’s crucial that financial officers get out in front, tell the truth, make themselves available, and demonstrate the ways in which they rise above the controversy and prove the exception to the stereotype.
In the end, recall the words of Thomas Jefferson: When a man assumes a public trust, he should consider himself a public property. To be worthy of such trust, you must handle accounts, as well as people, with delicacy, honesty and integrity.
Margot A. Surridge, M.A., is vice president for Finance and Administration at Finch University of Health Sciences/The Chicago Medical School.