What Financial Conversations Could Be…It’s About More Than Money

PenniesAt our most recent board meeting for Creating the Future, we took time to deeply explore the role financial management, reporting, and leadership should play in the organization. As a demonstration project exploring what could be possible for all boards, we spend a fair amount of time engaged in a process talking about process. I personally think this is at the heart of leadership and creating space for process is essential to organizational success, but I found it particularly relevant here.

Many of us come to financial issues, be they our own personal ones or those of an organization with which we are involved, from a place of reactivity. We get a report or a statement showing us what has transpired and are asked to react. Let’s look at how different people react:

  •  For those who consider themselves “not numbers people,” fear and embarrassment are the first reactions as they confront something unfamiliar and intimidating. Fear and embarrassment don’t generally lead to engagement and inquiry. These folks are hoping that we can quickly move on and begin talking about something else that they understand.
  • For those who understand the accounting side of things, they see transactions showing how money came into and went out of the organization and what the “bottom line” looks like with regard to being in positive or negative asset to liability ratios. If things are not balancing, these people look to solutions that effect one side of the equation or the other. We cut expenses or we increase revenue. The focus is on balancing the books.

So we end up with either an ostrich, head-in-the-sand, or a terrier, going-down-the-rabbit-hole/head-in- the-dirt, response. In both cases the conversation or lack thereof being all about money.

Here’s the thing, when we lead with money (or financial reports), we predispose ourselves to thinking about the work we do as just transactional. We think in terms of buying solutions. Think about the language we hear – “what will it cost?”, “do we have enough to pay for?”, “how much do we need to raise?” This thinking separates us from the process of actually creating community benefit. Rather than “being” part of the work we are simply agents “buying” the work.

To me, leadership is a “being” activity embedded in creating change. If we are not working to change something, we don’t need to lead. We can just manage. Through my work, I’ve had the privilege of talking with many executive leaders. When asked what they believe would support the success of the organizations they serve, nearly all of them say more leadership from staff and board.  So what would make financial work less reactive and managerial and more leaderful?* Context and Process!!

Context and process are the foundations for leadership. Leaders envision something different from what it is today, consider what would make that possible, take stock of where we are today, take ownership and responsibility for making things happen, and create space for the process to play out. For financial work, this requires establishing the context and identifying the process that makes leadership possible.

So consider what financials would be the response to. What leaderful conversation would you want staff and board to be having that would naturally lead them to ask about resources – how they are engaged, how well an organization stewards them, and what it would take to grow and sustain them. In this scenario, financials are the result of active inquiry not a requisite reporting and oversight response.

For this to happen we would allow for process and would structure our conversations differently so the context gives meaning to the response. Consider a board meeting driven not by reporting, but by the following questions in the following order

  • We had a hypothesis about how we could create change in our community
    • First, is everyone clear on what that is?
    •  Great, what are we seeing as results?
  • Do the results and observations warrant revisiting the hypothesis?
    •  If so, what will make it more successful?
    •  What can we (those of us in this room) do that draws on our strengths to make that change possible?
  • How are we doing with sustaining the work and/or allowing for change as we look to the future?
    •  Are we engaging resources (staff, volunteers, revenue, in-kind assets, board, etc.) as we expected?
    •  Are we expending resources as we expected?
    •  What can we learn about our business model (how we work to create our intended benefit/impact) from how resources have been engaged and used?
    • Do we need to adjust our model in order to maintain a healthy, sustainable organization?
      • If so, what can we do that draws on our strengths to make changes possible?

Through this line of inquiry, we continue to reinforce what all of our work is intended to make possible for our community. We are ensuring that everyone understands how we thought we could do it. Then s we delve into how well it is actually going. Asking these questions naturally leads us to asking about resources, of which money will likely be an important one. Furthermore, it will also shape how we want to see that information in order to support the questions we have. So we have created a context for the financial discussion that everyone can be a part of and we are shaping the mechanics of our reporting to be responsive to the conversations we want to have.

So it’s not about financial conversations, it’s about unleashing leadership opportunities by providing context and allowing the process to happen. In doing so, we engage more people and lead ourselves to meaningful conversations that include money, but also so much more…

* I know this is not a word, but it captures the essence of something filled with leaders and leadership.

(Note: This blog is cross posted on orgforward.net/blog)

4 thoughts on “What Financial Conversations Could Be…It’s About More Than Money”

  1. Justin, a great conversation starter. The work I do with boards about reading and using financial statements in a totally different way to what is usually conducted, is to have the conversation around “here is what we thought we would do (based on strategy and vision), here’s what we actually did, here is the reason for difference, and here are the strategic implications to consider” Which is what a Profit and Loss should tell you, but people refuse to use it that way. We also deal with Balance shets and cash flows in a different way also, but that is another conversation….Thanks for raising ths takes on financial conversations

    Steve Bowman, ConsciousGovernance

    • Steve,
      Your approach certainly reinforces the name of your practice “ConciousGovernance.” You bring in the importance of the other financial activities, especially the budget. If people aren’t aware of the strategy/plan the budget represents, and weren’t a part of the process of discussing and evaluating the approaches behind the numbers, it is hard for them to know what any report is telling them since the reports are just that – reports about what transpired.
      And of course the thinking expands to all those other financial tools which capture different parts of the full story arc of your organization.
      Thanks for sharing

  2. I’m reminded of Vonnegut’s “Harrison Bergeron”, in which every body and mind is dumbed down such that no one is superior to anyone else. This is a key challenge of leadership: we lead when we clear a path and we lead when we follow it. Clearing the widest possible path towards a common goal would include room for all philes and phobes, and also requires getting out of the way, which means we don’t follow it: the leaders contribution as a trailblazer is identifying the goal and clearing the path; then whoever shows others how to follow the path also leads.

    • Kevin,
      Love the “philes and phobes” description. I may have to borrow that one. I agree that engaging is the priority and is what most leaders are asking for. Sometimes there is a disconnect between including and engaging. Too often, I see leaders call for engagement and then say they have little time or patience for the process of including people or committing to finding ways to include those that feel excluded. So what would it look like to support those leaders so that they can create opportunities for others to support them in decision making, evaluation, and oversight.


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