Finance is a Vast Universe

In the practice of my profession, my fortes are Financial Accounting, Management Accounting, Management Services, Accounting Administration, etc. These are disciplines that focus on the financial management of an organization, one organization at a time, and does not delve into analyzing entire industries.

In my experience, most people do not realize that Finance is a vast universe, and just like Medicine it has many specializations. When people seek the help of a medical doctor, they know right away that there is a specialization for each ailment, and therefore they seek right away the appropriate specialist.

But in the case of Finance, once you introduce yourself as a Finance Professional, people usually think you know everything and therefore they can ask you anything, from Job Order Costing to Foreign Exchange Management, from Constructive Accounting to Hedging, etc. Even External Audit is quite different from Internal Audit, but most people think Audit is just Audit and that's it.

The funny thing is, many Finance professionals are themselves not aware of -- or refuse to accept -- the forgoing truth and reality. Some of them are even so unenlightened that they quite obviously believe that whatever field of Finance they happen to specialize in is actually that only field that deserves to be referred to as "Finance."

This lack of awareness among Finance Professionals, and/or their lack of willingness to acknowledge the truth, plus the similar lack of awareness among their clients, is perhaps one of the causes of the current dismal state of the global economy. Just imagine a medical hospital where specializations are not clearly identified, and most of the doctors do not honestly acknowledge their limitations and are free and trusted to deal with just about any physical ailment. What would you think is going to happen?

Whenever you seek the help of a medical doctor, you will notice that he or she will readily refer you to another doctor if necessary. But if you seek the help of a Finance consultant, in most cases you will notice that he or she will have an answer for just about anything, and will hardly ever refer you to another Finance expert -- unless that other Finance expert is somehow under his or her control and will not "steal" you as a client.

Leadership and Management in Business and in the Academe

I recently read an article about Cathie Black, former chairman of Hearst Magazines and author of Basic Black (one of my favorite practical books on Management), not quite making it as Chancellor of the New York City Schools. Extremely successful in business but not so in the academe, this just goes to show that the key success factors for leadership and management in business are not quite the same as the key success factors for leadership and management in education.  Indeed I have observed that successful leaders and managers in the business sector don’t necessarily fully understand what would be required of them as leaders and managers if they cross-over to the education sector - Cathie Black would be the perfect example.  The same thing applies to successful leaders and managers in the academe if they cross-over to business.


Incidentally, I don’t recall ever encountering any material that was written on the subject of crossing over between business and academe.  Therefore I hope to do pertinent research some day. After all I can understand and empathize with leaders and managers in  both the business and education sectors because I have operated in both . Indeed this was the first topic I contemplated on when I was about to start work on my doctoral dissertation.

Meanwhile, some of the salient features of educational administration which makes its very different from business administration, as I could theorize offhand, are as follows:

•  THE FINANCIAL GOALS FOR A EDUCATIONAL INSTITUTIONS ARE DIFFERENT.  Profit-Oriented Business Entities always aim for optimum revenue.  The pressure is always great as far as generating sales are concerned.  “Making money,” is the order of the day, and this goal is usually reflected in the materialistic culture of the organization.  However, in the case of an educational institution, the goals are different.  The goals are not to makes sales, but to create as many Centers of Excellence, to assimilate as many qualified PhD-holders in the faculty, to produce the best graduates, and so forth.  Indeed, while business enterprises always aim to increase sales, the best schools on the other hand normally put a ceiling on their sales level by limiting its student intake.  From the Education perspective, it is a wise aim because it preserves the excellent quality of the student body.  However, from a strictly “money-making” Financial perspective, it is simply unheard of. 

•  A SCHOOL IS AN EGALITARIAN ORGANIZATION.  Profit-Oriented Business Entities are authoritarian.  Thus, someone such as the Financial Controller can quite literally “control.”  However, an educational institution (especially if it is a major university) is an egalitarian community of intellectuals, where everyone is perfectly capable of questioning everyone else, especially the administrators. 

•  WORKING FOR A SCHOOL IS AN EXERCISE IN HUMILITY AND ALTRUISM.  In the Business Industry, the Chief Executives (CEO, COO, CFO) are among the most well compensated and respected, not only for the volume and difficulty of their work, but also for the risks they manage.  However, such is not necessarily the case for a School Administrator.  He must prepare to work harder, but for less – both in terms of material rewards, and in terms of power and stature (precisely because of the egalitarian nature of the organization).  It certainly helps therefore, if the said Administrator has the altruistic heart of an educator. 

•  THE ETHICAL STANDARDS OF A SCHOOL ARE HIGHER.  Finally, Profit-Oriented Business Entities are ethical, however educational institutions are even more so.  In the case of a school owned and run by a religious orders, its ethical culture is even amplified by its religious backbone.    Thus, not only must the Administrator have the altruistic heart of an educator as aforementioned, he must also be able to conduct his duties in a manner that is definitely beyond reproach.   

---