How the CFO Influences a Presidential Search and Transition in Higher Ed

Other than an institution’s president, there may be no more important position in academia today than the chief financial officer or VP of finance. As the academy considers its future, the CFO is central to its most important discussions—especially around financial planning, budgeting, capital planning, and more. The CFO, therefore, plays a critical role in the hiring of a new president. In the interview below, Witt/Kieffer senior partner Zachary Smith considers the direct and indirect involvement that the campus’ top finance leader should have in a search and transition.

[This interview is included in the new Third Edition of Best Practices in Higher Education Presidential Search.]

In the eyes of a college or university president, what is the CFO’s role today?

Smith: Most of the presidents I know really want a partnership with the CFO, to have someone to help them identify new revenue streams and help build external alliances with other entities in the community. It is so much more than just finance – the CFO role is also about operational efficiency and effectiveness. Today’s CFO is an essential and visible partner to the president.

During the recruitment of a new president, then, what role should the current CFO play?

Zachary Smith, PhD

Smith: Ideally the CFO (or their designee) would serve on the presidential search committee because of the fundamental link between the institution’s financial viability and vision to a successful presidency – and thus the critical importance of hiring a president with financial savvy and enthusiasm. Having a CFO or top finance executive on the committee ensures that each serious candidate is asked tough questions and “gets” the fiscal and financial necessities of running a very complex institution, whether a smaller private school or major state campus.

If not on the committee, the CFO or top finance executive still fulfills a critical role in determining what to share with finalists about the underlying health and outlook of the enterprise. The financial state of most institutions is generally known to the public, but there may be issues (such as anticipated major capital projects and expenditures) that the CFO will want to work with the committee to convey to preferred candidates so that they have a realistic understanding of the institution’s financial position.

Should the CFO expect to meet with the two or three finalists?

Smith: Yes, absolutely. In a presidential recruitment, both parties – candidates and institution – are selling themselves to each other. Allowing candidates a meeting or phone conversation with the institution’s top finance executive will build rapport and allow frank discussion of the general state of the institution and its outlook. It’s a trust-building opportunity all around. Furthermore, candidates should want to speak with the CFO prior to accepting a presidential position. A lack of candidate interest about the budget, assets, capacity for growth and development, and other key matters may indicate a red flag and demonstrate a lack of financial acumen. The CFO should be prepared to outline the institution’s fiscal situation, including short- and long-term debt obligations, revenue sources and projections, capital plans and financial stress points, among other things. Candidates should seek this information for their own due diligence and the CFO should be prepared to respond.

Is there a way to spot candidates who will embrace and address in earnest the financial challenges ahead? 

Smith: Yes, look first to the candidate’s track record. If they’ve been a past president, provost or major department dean, then there will be ample evidence of their success and support regarding financial planning and vision, community and corporate partnerships, fundraising campaigns, donor engagement, and so forth. Of course, “nontraditional” candidates who may hail from the corporate sector (typically still with close ties to the academy) tend to have a financial framework to their leadership. The consideration for these candidates is often whether they live and breathe the mission of the school and truly understand the nuances between running non-profit academic institutions and for-profit corporations.

For candidates without significant finance-related responsibility in their pasts, consider whether they’re asking the right questions. Are they enthused about financial matters and the fundamental link between institutional strength and the value proposition for students and families? Candidates should engage in an entire line of questioning around, “How are we going to thrive in order to fulfill our mission in the next five, 10 and 20 years?”

A new president may want to bring in a new head of finance, particularly if there is the expectation that the new leader will be a change agent. How does the CFO manage this possibility during the search and after the hire?

Smith: Yes, it happens and in some instances the president may want a new team around him or her. Most savvy CFOs understand this. Regardless, each CFO can remember that one’s relationship with a new president often begins on the day you both meet. It’s an opportunity. No matter the underlying conditions, the emphasis for the entire institution is on moving forward and the CFO has the chance to contribute to a vision for what the future can hold. Institutional goals, objectives and its long-term sustainability should drive be the driving force behind financial decisions, regardless of who’s in charge. If the president still brings in a new finance executive, the outgoing CFO should, in good conscience, serve the new president as the institution’s financial steward until the transition takes place. Doing so will keep one’s trust, integrity and reputation solidly intact.

What should a CFO expect from the president in the first months on the job?

Smith: The two executives need to form a strategic partnership, not just an informational exchange. They don’t need to be close friends but they’ll need to align around the president’s vision and engage in what’s possible. Again, the CFO needs to focus on the future. He/she may know the entire financial history of the school, but the president will, more often than not, want to charge ahead. The CFO can do many things to prepare for a presidential leadership transition. For example, he/she should develop a report that includes a high-level overview of the budget situation year-to-date and projections for the next fiscal year; financial stress points that may need immediate attention; and campus-wide financial trends that should be discussed as future budgets are developed. Furthermore, beyond data points, the report should include a historical overview of the institution’s finances and budgeting process so that the incoming president has a sufficient amount of context that explains the institution’s current financial situation.

Finally, a new president may ask for a succession plan or overview of the finance department’s team. Who are the rising stars? Where are the talent gaps? Are you resourced at an appropriate level, or running too lean? Who is ready to step in and serve as CFO if you’re hit by a bus tomorrow? How transparent is the budgeting process? Are you the sole gatekeeper of funds? These questions are not only important to answer for a new president, but equally if not more important to answer for the long-term financial stability of the institution.

Zachary A Smith, PhD is a senior partner and deputy managing director for Witt/Kieffer’s Education Practice. Based in Irvine, California, he conducts nationwide searches for C-suite and other leaders within education, healthcare, and the non-profit sector.

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