Charting an association’s future increasingly means knowing its numbers as well as its operations. Brenda Hargett, CAE, has mastered a dual role—CFO and COO—and saved millions.
In 2010, Brenda Hargett, CPA, CAE, left her job as VP, Special Programs and CFO of the American Petroleum Institute, where she spent 17 years, to work at the American Academy of Otolaryngology—Head and Neck Surgery. On the surface, this seemed like an unusual move. API is a trade organization that represents the world’s major oil companies. AAO-HNS serves a specialty group of doctors and surgeons and has a tenth of API’s budget.
But the opportunity to lead is much deeper. And keeping the books is more fun.
“API is a large trade association, but the accounting of it is relatively simple: Six members paid 98 percent of the dues,” she says. “The organization I am with now, with both a (c)(3) and a (c)(6) entity, is much more complex, accounting-wise. We own our own building, with municipal bond financing and an interest rate swap, we have endowments.”
An aspiring CFO today really needs to know more than just accounting.
Hargett has a dual role at AAO-HNS: Though she began the job as COO, she quickly acquired her familiar role of CFO as well. Much of that is a tribute to her talents, where she’s proven capable of saving millions of dollars by identifying inefficiencies and correcting them. But she also represents a role that many associations have adopted in recent years and that others might seriously consider. As the business of running an association grows more complex, understanding an organization’s operations is inseparable from understanding how its money moves.
Whether the blended CFO-COO role is a trend is hard to say: There’s no hard data on the number of associations that have pulled those two top positions together in one executive. But Laura L. Lott, CPA, COO of the American Alliance of Museums (and who also plays the CFO role), says the last recession forced many organizations to streamline operations, making CFO-COO combos a natural fit.
“Increasingly, CFOs aren’t just the scorekeepers who tell you the numbers and then walk away,” she says. “CFOs have been playing a more operational, strategic role. Even if the title isn’t COO-CFO, they’re still playing both of those roles.”
For her part, Hargett has seen the change at work in a networking group of CFOs she’s known for years. “A lot of our titles are CFO-COO, or something that shows that it’s a broader role,” she says. “Fifteen years ago, we were all just CFOs.”
One of the hallmarks of Hargett’s tenure at API was efficiency: She streamlined its electronic payments and payroll systems and presided over an outsourcing plan that reduced accounting and facilities management staff by 40 percent. The layoffs were a tough call at what was a large, healthy trade group. But efficiency means clearing budgets to do what you want to do, not just what you’ve done before. “Sometimes you make cuts because you can’t afford what you’re doing, but sometimes you make cuts because you want to do more but you can’t fit it in because you’re inefficient,” she says.
Hargett brought that focus to AAO-HNS practically from the moment she walked in the door. She recalls being aghast at an email she received on one of her first days on the job: It scheduled a finance meeting in June, at the end of the association’s fiscal year, to discuss January statements. “If we were overspending in January, we couldn’t have made a change at that point that would have a positive impact on the end of the year. So what is the purpose of talking about statements that are so old?”
Another red flag for Hargett is invoices, which have a habit of needlessly passing through multiple departments. “If it’s touched three times, there’s got to be an easier way to do it,” she says.
Yet another: Staff keeping “shadow” spreadsheets for departments because the accounting system does not allow them to access the financial information they need. At API, Hargett implemented a system where senior staff could access that data: “Instead of having to call accounting, they can drill down and find [account figures] themselves. They’ve avoided a phone call, and the accounting folks can be more proactive and do more analysis, providing more real value instead of just being reactive.”
Not Just Numbers
For all her skill at rooting out accounting inefficiencies, Hargett points out that an effective CFO-COO needs to keep a certain distance from the numbers.
“I can’t spend all my time in the accounting world,” she says. “If I’m going to have the title of CFO, [we] have to have a strong leader running that business unit, so I don’t have to feel like I need to go and double-check everything.”
Susan W. Medick, CPA, CAE, CFO-COO at the Automotive Aftermarket Industry Association, concurs. “I know a lot of very good CFOs who like to be bogged down in the details. A [CFO-COO] can’t be bogged down in the details. You always have to be looking at the bigger picture.”
Lott stresses that the dual role demands leadership as well as accounting chops. The CFO-COO, she says, “is really a partner with the CEO. You’re playing a really strong leadership role in the organization. Being able to understand broader business management and needs and corporate culture and how you lead an organization is really key.”
One place where Hargett has brought that focus at AAO-HNS is in education, where she’s worked to find partners to produce education programs instead of having the organization handle production duties (and expenses) by itself. “Look for the areas you can build on, and you can bring your core competency to it and they can bring theirs,” she says.
Hargett says she thinks today’s CFO needs an operations mindset, even if that person isn’t in a formal dual role.
“An aspiring CFO today really needs to know more than just accounting,” she says. “They need to have a good understanding of whatever business type they work for. In associations, it is critical that CFOs understand the value of membership and how value is added. Not just the debits and credits.”