DON’T SHOOT THE MESSENGER
Subjects: finances, CFOs, accounting
In our industry the accounting function is not given the status and significance it should have. In more than half of the construction failures I dealt with, the following scene played itself out over and over:
I would ask the Chief Financial Officer (CFO) how his company failed without anyone realizing it was about to falter.
He would answer something like, “Oh, I knew we were in trouble.”
Then I would ask, “Why didn’t you tell management?”
He would say, “I did, but they wouldn’t listen.”
In fact, to my astonishment, more than once I was told, “The CFO I replaced told them…he got fired.”
I suddenly realized that the old cliché “Don’t Shoot the Messenger,” was playing itself out right in front of me in my own industry.
A Stranger in Our Midst
These experiences inspired me to begin a study of the CFO’s role in the construction industry. My findings made me realize that our industry was making a big mistake.
- In many of the failed companies I worked with, the CFO was not even on the organization’s executive committee or included in senior management team meetings.
- The failures I was dealing with weren’t caused by mistakes in accounting, but by mistakes in the reaction to the accounting.
- CFOs in many of these companies were not considered construction professionals. In discussions with contractors about the CFO function, I would hear: “They don’t know anything about construction.”
- People who study accounting and finance often have a view of life different from the risk-takers who start construction enterprises. Perhaps it is no surprise that these divergent personalities have trouble communicating.
- In our industry some managers consider CFOs “naysayers”. On the contrary, the science of accounting produces accurate data essential to the management of complicated construction enterprises. Numbers don’t lie. They tell the entire financial story. Words don’t change mathematics. Accounting “news” is neither good nor bad. It simply is.
The Science of Accounting
Our industry needs to adopt a new perspective in order to continue to develop the advanced management skills it takes to successfully run a complicated and highly volatile construction enterprise in the 21st century.
Meet Your CFO
Your CFO is a scientist trained to use the principles of mathematics to deconstruct and quantify the complex activities of construction.
His or her function is in no way different from the engineers and architects that populate the construction industry. Just like them, he or she is a scientist, and functions with equal impact. We do not have “feelings” about our engineer’s computations. They are either accurate or inaccurate; arrived at through the proper application of scientific principles. So why do we sometimes second guess what our CFO’s are telling us?
The CFO is a “business engineer.” It does not serve us to have “feelings” about their computations. They are either accurate or inaccurate according to the proper application of the scientific principles of accounting. It is time to respect their computations and their opinions; build out our businesses on a scientific foundation. In fact, it is long overdue.
Read More: Financial Risk