Julian Le Vay had an interesting map on his office wall. It was, in fact, a famous map – a 19th century illustration showing Napoleon’s march into Russia, with a broad but narrowing band plotting the gradual decimation of his army through starvation, disease and cold. By the time the army completes its retreat, the band is just a sliver. We point to the map and ask if it is representative of his experience as the finance director of one of the country’s least-loved government agencies, Her Majesty’s Prison Service.
Le Vay laughed loudly; he hadn’t made the connection before. “My colleagues and I don’t pretend there aren’t things that are seriously wrong in the Prison Service,” he admitted in 2001. “Nevertheless, the sense that you only get recognition for poor results is depressing. The job is simultaneously the most rewarding and frustrating I have done. Many public sector managers would agree. It is an odd environment to work in.”
Over the last 25 years, Financial Director has interviewed a huge number of FDs. We confess we’ve probably been more interested in the commercial environment and less diligent in talking with FDs from the not-for-profit sectors, but re-reading our interview with Le Vay reminds us of the very special kind of commitment that finance professionals in those sectors bring to their roles.
“I can see it would be easier to feel that you’ve got a result as the FD of a private sector business,” he said, “but that is not what motivates me.” The stark difference between the two was brought home later in the interview. In almost all organisations, beating a key performance indicator would usually result in big grins, maybe a back slap or a bit of punching the air. In HM Prison Service, one of the board’s KPIs is the number of self-inflicted deaths. “When there is a suicide reported at our Monday meetings it is very real. I myself dealt with an investigation into suicides and it was harrowing. It is, even on the finance side, a very human job.” It was a few moments before we could think of our next question.
Dealing with the problems of society that most of us would rather not think about is obviously what drives so many FDs who shun the private sector. But as we saw with Le Vay, there isn’t much starry-eyed optimism: their experience is grounded in some of the harshest reality you could imagine.
In 1999, we interviewed Alexis Chapman, then the FD of Save the Children. Chapman left a promising career at KPMG after doing some field work with her client, the Red Cross, in Romania, a country whose problems were then being exposed to the world for the first time. “It didn’t take long for it to dawn on me that this was the part of my job I enjoyed the most,” she said. Those experiences helped her bring financial discipline to an operation grounded in compassion, we noted.
Back in Whitehall and our 2004 interview with Richard Douglas, FD of the National Health Service, came at a controversial time. A strategic shake-up resulted in tabloid headlines about the NHS scrapping health targets and abandoning “dozens of key pledges”. In truth, the idea was simply to get rid of 700 micro-management targets and replace them with two dozen “core standards”.
We noted that in our interview Douglas used the word “incentive” more often than the word “target” and in this he was little different from many of the government-sector FDs we’ve met who valiantly tried to build private sector management disciplines into a sector hitherto dominated by bowler-hatted Sir Humphreys.
We sympathised with his plight not least because, as the Commons Health Committee pointed out, the NHS had been through no fewer than 18 major restructurings in 20 years. We also felt for Douglas as he described the problem of trying to spend what was then a £60bn annual budget and spend it in exactly 365 days. “If we underspend by £200m to £300m a year, then we’re crucified for it in the press. The fact that this is approximately a day’s money or whatever, that doesn’t really matter that much. It’s been likened to landing a jumbo jet on a postage stamp.”
His remarks show how accountability and governance issues are just as much at the fore in the government and charity sectors as they are in the private sector maybe even more, because the stakeholders who are often so vocal in their criticism have less interest in the principles and details of sound financial management than shareholders do. There’s also a much greater number of constituencies to deal with: taxpayers and donors, government ministers and the never-ending needs of the people one is trying to serve. Resources are inevitably scarce and the rewards are often outnumbered by the brickbats.
But as Chapman told us, “This isn’t just any FD’s role. It’s a tremendous privilege because of what the organisation does.” It’s a feeling that we dare say is shared by most of her peers in the not-for-profit sector.