Do As I Do

Creating the correct ''tone at the top'' is as much art as it is science.

Spreading the right ethical tone throughout the organization, however, requires extending communication efforts beyond the finance department, says Shallcross. He and his finance team meet monthly with development staffers to discuss budgets, deadlines, and forecasts. And they’re not the only ones talking: managers meet every month, vice presidents meet weekly, and the senior managers meet with the CEO three times a week. Nasdaq-listed Advancis also has a disclosure committee that meets twice a quarter to review financial reports prior to their release. With such constant communication, there are plenty of opportunities for staff to raise questions or point out difficult issues, says the CFO, and plenty of opportunities for him to reinforce the importance of honest reporting, transparency, and openness.

Brandt Allen, dean of executive education at the University of Virginia’s Darden Graduate School of Business Administration, recommends that at such meetings CFOs raise the topic of ethical behavior. “From time to time, you have to make sure these issues are on the agenda,” he says, adding that simply having an ethics policy isn’t enough. Allen suggests talking through different scenarios and asking staffers how they would react. “You need to prepare people for some of the most common kinds of issues,” he says, “so they’re not totally caught off guard when something happens.”

Positive Reinforcement

Ultimately, creating an environment where employees feel free to challenge finance decisions is the essence of tone at the top. And it’s up to the CFO to hire staff with the confidence to ask tough questions. After all, says Allen, while senior executives can draw on past experience to handle sticky situations, younger managers may simply “turn around and go back to work” even if they suspect something is wrong, out of allegiance to their superiors.

Reinforcing that confidence also requires emphasizing the importance of finance’s contribution. Hilleman, for example, even encourages a positive attitude about Sarbanes-Oxley requirements by urging staff to look at how the tightened controls, particularly the internal-controls documentation, help the company perform better.

In the end, though, setting the right tone requires a clear vision of the basic values under which you operate, says Shallcross. “One of the big reasons companies with difficulties have failed is that they lacked that basic discipline of understanding where they’re going, how they’re going to get there, and how much it’s going to cost. But well-run companies do that day in and day out,” he says. “It really isn’t tricky.”


Your email address will not be published. Required fields are marked *