Well Equipped?

The Australian Financial Review publishes an ongoing theme of Leadership articles. The authors in this section have a wide remit. Anything from business fashion to consulting trends, entrepreneurs, and just generally big personalities. Recently, they highlighted findings from a survey done by Ernst&Young. The punch line: CFOs and accounting/finance professionals, in general, feel they lack the skills for- and too much is asked of them regarding- setting strategy, planning and even operational management for their companies. In short: decision making.

The AFR’s Agnes King says, “EY finance management consulting leader Donal Graham said it was concerning that more than half of Australian CFOs surveyed did not have the right mix of capabilities in their finance teams to execute and support the organization’s strategic decision making.” A  more scathing remark on the state of decision making is difficult to fathom: half of those tasked with doing so felt under- or ill-equipped. Others have noticed similar anecdotal trends and commented upon them; written books about it even.

CFOs are not the CEOs. The roles are different and they should be. They might not even be the most important decision maker in an organization. They are almost always on the Decision Team. When CEOs start to rely on CFOs & their teams to do more of the things CFOs feel scarcely able to do, one has to wonder at the cause. Do the CEOs (shorthand here for Board / Chairman / CEO / Other Executive Who Might Be Qualified to Do That Work) themselves feel unable? Do they lack the headspace? Skills? Time? Resources? Support? Perspective? Capacity? Or are those rare CFOs who can actually able to do those things asked of them making it harder for their peers (and/or neglecting their other CFO duties)?

It is no secret there is a lack of global-class expertise on the Australian Management bench. Training in MBAs and other management programs abound, but don’t seem to penetrate Boards. I’m generally ambivalent quotas of any kind for Boards (gender or otherwise). I prefer to believe that any group with that much intellectual horsepower is aware of the pitfalls of having a team of carbon copies & group think. They will self-select appropriate diversity (or perish if one is not afraid to put too fine a point on it). If I had to favor a quota system it would definitely include significant depth in DA/DQ, formal management training and diversity of all kinds (cumulative experience, industry, a range of experience, business cycle(s), gender, profession, etc).

Again according to Ernst&Young it was much more common for CFOs outside of Australia to have the general Management training an MBA confers. (The general comments about the lack of ongoing professional training is disturbing in itself.) Extending that line of thought to the formal decision training undertaken by Executives in Australia and its small wonder at the consequences that dearth of knowledge enables in the real world.

A number of MBA programs (AGSM at UNSW, MBS, UofA,UniSA, UofS, UofQ, QUT,  and Curtin amongst others) are offered in Australia. Only one (AGSM) appears to have subject focused on decision-making (5374)*. This emphasizes the psychological aspects of decision making rather than treating it as a whole subject which draws on many disciplines. QUT seems to go a step further with separate introduction framing and data analysis, but both appear to focus on only one aspect of DA/DQ.

It has been my anecdotal experience that MBA’s are not highly regarded in Australia. It’s not a stretch to say one (of many) causes might be that none of them really seem to prepare candidates for doing what a manager must: make good decisions for the company. Focusing instead on the skills of managing a more diverse workforce; a more technologically advanced workforce (with associated productivity enhancements right?); and a more restive workforce. These are indeed valuable and complementary skills, but why the neglect for decision analysis?

Certainly, in the Oil and Gas industry in general, they have a somewhat poor return on investment for those who stay with operators (again anecdotally). Even if MBA programs were designed to equip future managers (and leaders) with a thorough and complete skill set in DA/DQ, the benefits of doing so lie well into the future, while difficult decisions arise  with regular immediacy in many parts of the economy. Yes, they must have skills to manage people; even know accounting and strategy and what Big Data really is and why one might need it; to inspire; to promote & market; to transform; to manage change; and all the rest. Tradeoffs in what skills to focus on are inevitable in any education program (and company). All the more reason to underpin, indeed lay the foundation for, making all those tough, agonizing choices with genuine skill.

The combination of Accounting only (or not even that) certification and the call on CFOs to take more general management responsibility has worrying implications for the state of Australian Management (at least with respect to CFOs). I laud the Innovation and Entrepreneurial Spirit that promote failing fast (or whatever ) – there are few things better for building experience.  That failure needs to impart the lessons that come along with it. When failing fast (because we are innovating even faster, presumably), poor decision culture (due to lack of a critical mass of trained persons), more problems and more complex problems with shorter cycle times combined – a sort of perfect storm of social regression might be primed to emerge . Hardly the stuff of legends when faced with the task of preparing Australia for the post-Boomer (and PostBoom) years.

Recently I have begun to notice more and more the prevalence of mention in media related to decision making. I relish this. Awareness of a problem is the very first step in finding a solution. You can find examples of people pointing out…issues with decision-making nearly e v e r y w h e r e. The abundance of advice does not appear to translate well into adaptive behavior [citation needed].

*I’m going to assume that any subject with the word “Accounting” in its title (e.g. Accounting for Decision Making) is really about Accounting rules and concepts, and any discussion of a decision process, frame, quality, analysis, or similar topic receives cursory treatment. If that.