The Politics and Leadership of Financial Distress

Government Finance Officers Association

November 17, 2010

What is Leadership?• Doing the right thing

• “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” John Quincy Adams

• “The quality of a person’s life is in direct proportion to their commitment to excellence regardless of their chosen endeavor.” Vince Lombardi

• “What makes leadership is the ability to get people to do what they don’t want to do and like it.” Harry Truman

What is Leadership in Politics?

• “To be able to lead others, a man must be willing to go forward alone.” Harry Truman

• “In matters of style, swim with the current;In matters of principle, stand like a rock.” Thomas Jefferson

• “The best executive is the one who has sense enough to pick good men to do what he wants done, and self-restrain to keep from meddling with them while they do it.” Theodore Roosevelt

Politics in Fiscal Distress

• Issues

– Declining revenues in real terms

– Inability to fund key projects, initiatives, and services

– Disbelief, Shock

– Lack of consensus on direction

– Lack of creative solutions or flexibility

Politics in Fiscal Distress

• What it looks like…– Anger by citizens, officials, and employees

– Fear in citizens, officials, and employees

– Seeking to blame someone or something

– Contentious discussion

– Silence

– Shifting the problem to other agencies, programs, …• Hoarding or turf wars

– Seeking a target other than services or projects, i.e. “cut the fat,” “employees have it better than I do,”…

What is Leadership in Fiscal Distress?

• “The ability to summon positive emotions during periods of intense stress lies at the heart of effective leadership.” Jim Loehr

• “Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.” General George S. Patton

• “All of the great leaders have had one characteristic in common: it was the willingness to confront unequivocally the major anxiety of their people in their time. This, and not much else, is the essence of leadership.” John Kenneth Galbraith

Keys to Leadership in Fiscal Distress

• Clarity• Credibility• Confidence• Conviction• Compassion• Commitment• Patience• Flexibility

Making the tough recommendations objectively, clearly, and with total focus on the

best interests of the organization and community.

Clarity

• clearness or lucidity as to perception or understanding; freedom from indistinctness or ambiguity.

• The ability (and habit) to clearly communicate issues, options, and ramifications as well as recommendations is essential to guiding an organization through fiscal distress as well as any other time.

Credibility

• The quality, capability, or power to elicit belief: "America's credibility must not be squandered, especially by its leaders" (Henry A. Kissinger).

• The organization, its employees and leadership, must be able to rely on the accuracy of the financial information provided.

• “Accuracy before Balance” leads to better decisions and lasting solutions.

• Communications need to be consistent and clear to maintain credibility.

Confidence

• full trust; belief in the powers, trustworthiness, or reliability of a person or thing:

• Citizens and the organization need to know that someone knows what’s going on and what it means.

• The finance officer is relied upon for information and responsible recommendations for action.

Conviction

• a fixed or firmly held belief, opinion, etc.

• “Leadership comes from integrity…” Scott Berkun

• Acting upon one’s principles is a foundation of successful leadership in a fiscal crisis, or any other time.

Consideration

• thoughtful and sympathetic regard

• Also spoken of as having compassion, good leadership is the consideration of one’s employees and customers and how recommended actions will impact them.

• This is the focus on the best interests of the organization and the ability to communicate impacts with understanding.

Commitment

• engagement; involvement:

• One cannot be on the sidelines of an issue and be a leader.

• The Finance Officer is now involved in nearly all aspects of local government management and can provide key leadership in integrating solutions throughout the organization.

Patience

• the bearing of provocation, annoyance, misfortune, or pain, without complaint, loss of temper, irritation, or the like; 2. an ability or willingness to suppress restlessness or annoyance when confronted with delay; 3. quiet, steady perseverance; even-tempered care; diligence:

• What doesn’t kill us, makes us stronger OR these are the best of times as well as the worst of times.

Flexibility

• the range of different appropriate behavioral responses a person can make in situations that he faces:

• As the primary consultant to operating departments, the finance officer needs to be able to adapt to changing information, demands, and participants throughout the decision process.

Clarity

Credibility

Confidence

CommitmentConviction

Patience

Flexibility

Consideration

Leadership

Leadership in Financial Distress

• As the Finance Officer and leader of an organization undergoing change and stress due to fiscal strain, your role is one of focus, continually bringing the conversation and actions back to the focus of managing through financial distress, of thriving through the process, and of committing resources to the goals and priorities of the community.

Questions?