Featured image for A Boss On a Spending Spree
Crucial Conversations QA

A Boss On a Spending Spree

ABOUT THE AUTHOR
Joseph Grenny is the author of the New York Times bestsellers, Crucial Conversations, Crucial Confrontations, and Influencer.

Joseph Grenny is the author of three bestselling books, Influencer, Crucial Conversations, and Crucial Confrontations.


READ MORE

CrucialConversationsQDear Crucial Skills,

I am the CFO of a small business. Our president spends money in a way that many of the employees see as wasteful—for example, a landscaping project at the back of the parking lot. Most of the projects relate to the importance he places on the image of the business such as landscaping, updates to the interior, etc. I think this is due in part to a level of affluence and prestige he is accustomed to.

How do I talk to my boss about an issue he feels is very important but that lowers the morale of many employees? Ideally, I would like to see a process implemented where the top management team approves expenditures in excess of a set amount, but I don’t think he would be willing to go this direction.

Signed,
Following the Money

A  Dear Following,

Your question brought back memories—both good and bad. Good because I can relate to your issue. Bad because my advice might be colored by the specifics of my own situation. So with that warning, here goes my walk through memory lane with you!

I once consulted with the president of a very large organization who was accused of the same thing. After taking charge, he began a major face-lift of the company’s facilities at the same time the organization faced major revenue declines and likely layoffs. While people speculated about how many thousands of employees would lose their jobs, they watched the company lobby become a marketing masterpiece of high-tech interactive displays and pricey designer appointments. While they worried about paying their mortgages, they saw the simple greenery lining the approach to the facility torn out and replaced with full-grown, non-native, high-maintenance flora. The parking lot was spruced up, the guard booths redesigned, and on and on. Employees began bitterly describing the effort as a pure ego trip for the sophisticated boss.

While your crucial conversation may have much different issues at play, I’ll offer a few things I learned from this similar situation.

One person’s story can be another’s strategy. The first is a caution. The problem here could be less your boss’s ego than your judgment. It could be that, in his mind, these investments are a very smart decision for the company that he believes will provide a great return to shareholders. In my situation, this was exactly the case. High-end customers regularly visited the facility and the president concluded it was important to create an image that supported their high tech and sophisticated brand. A frumpy lobby and weedy grass conflicted with this image. In fact, the president argued the only way to save jobs was to increase revenues—which meant, in part, positioning the company as a leading-edge player. He felt that if they had not made these investments, they would have appeared to be on the decline.

Now, reasonable people can disagree on either this principle or on the amount spent on the principle. But if you tell yourself a story that the primary reason for your president’s expenditures is ego or detachment from the way real people live, you might feed conflict and resentment rather than understanding and unity in how you influence others who are critical of the president’s policy. I worry you are heading down this path when you attribute his fiscal bias to his personal affluence. Choosing to see it this way sets this up as a character issue when it doesn’t have to be.

Likewise, when you hold this crucial conversation, if the story in your head is that this is about ego, your resentment and sense of moral superiority may color your approach and undermine your effectiveness. It’s much better to come from a story that says, “I think there is merit in this strategy, but there is more merit in spending elsewhere.” This will tend to make the conversation about different assumptions rather than different values—a much easier conversation to hold.

Dialogue is not decision making. I applaud your desire to be a good CFO. I assume from your description of the size of the company that you report to the president, not to a board. If that is so, then your job is to be a strong financial partner to the president, so your question is a mark of your integrity to that role. Being a great CFO means challenging his judgments at times—which is precisely what you are preparing to do. However, be sure you prepare for the fact that you may need to change if he doesn’t. Ultimately, this decision is his and not yours. In fact, if you make a strong case for redirecting capital in other directions and fail to persuade him, there is a risk that your judgments about his motives for the spending policy could subtly mix with your disappointment at “losing” and cause you to feel even more judgmental about his legitimately different point of view. You risk making it an issue of “who is better and who is worse” rather than “what policy is best for the company.”

Before you begin the conversation, Start with Heart. Erase any hope of “winning” or “being right” from your gut. Go in for the sole purpose of providing honest counsel, then be a loyal subordinate if he disagrees. Drop your judgments and accept that you are reasonable people who disagree. Getting to dialogue does not mean you get to make the decision.

Motivate with natural consequences. It sounds like you have two reasons for speaking up. The first is that you disagree with the president’s judgments. The second is that you see it having a negative effect on morale. If the second is truly an issue, that is an entirely separate but equally crucial conversation. If the spending policies are alienating staff, the president should be aware of that. In fact, if you share this information in a safe way with him it may also persuade him to temper his policy. But do not “use” this information to get him to do that. This second conversation is not about whether the policy is right or not. Strategy is not a popularity contest with employees, it’s leaders’ judgment about what is best for the company. And at times (as in my case above), that means doing things people don’t like in order to produce the best long-term result. This second conversation is about leadership not spending. Your goal is to bring the moral issue to his attention and make recommendations for influencing people to help them understand and support the direction more willingly. Period. If the president uses this issue as a reason to question his decision, that’s his personal prerogative.

Call foolishness “foolishness.” Finally, if after reflecting on all these points you truly believe his policy is damaging and self-serving, then you need to have two conversations. The first is with him. You need to make the strongest case possible about demonstrating why this spending is measurably damaging the company.

The second conversation is with yourself—about whether you’re willing to be part of incompetence or malfeasance if this issue rises to that level. From your question, it doesn’t sound as though it does—but I’d be letting you down if I didn’t challenge you to call it what it is if this is the proper characterization.

In my honest consideration, one of VitalSmarts’ greatest assets is our CFO, Yan, who I believe is the best CFO we could possibly have. She has created a culture of financial accountability that has fueled our success for fifteen years. It sounds like you are working to play the same role in your company and I applaud your integrity.

Joseph

Headshot

Joseph Grenny

Joseph Grenny is a New York Times bestselling author, keynote speaker, and leading social scientist for business performance. For thirty years, Joseph has delivered engaging keynotes at major conferences including the HSM World Business Forum at Radio City Music Hall. Joseph’s work has been translated into twenty-eight languages, is available in thirty-six countries, and has generated results for three hundred of the Fortune 500. read more

7 thoughts on “A Boss On a Spending Spree”

  1. Joseph,

    Good call. I have seen it and been in the CEOs position before. It seems the leader might take a lesson from some of your other play books and communicate what is motivating his decisions.

    I am enjoying your book Change Anything – after reading Influencers I was left wanting more and this new book does it. Hope you will do another interview with me on my blog?

    Gary

  2. Boss on a spending spree reminded me of a story that goes back more than 25 years. I worked for a large state facility. The State had, in my opinion, an unusual way of ordering. They ordered quarterly. At the end of the quarter there was often a shortage of some item and overage of somthing else. This particular year, the facility ran out of napkins in the cafeteria before the end of the quarter. The cafeteria began putting out stacks of paper towels but alas, the paper towels also ran out. This left us with rolls of toilet paper next to the silverware in the cafeteria and anywhere else paper towels would have been stocked. At the same time, employees had to walk past a construction site at the entrance to the cafeteria where an expensive modern sculpture was being erected. There was much grumbling every day about why management was spending all this money on a silly statue when they couldn’t even buy napkins and paper towels. What the employees didn’t know was that the money for the statue came from a grant and the money had to be specifically spent on art. Unfortunately, the statue will now probably be a constant reminder of the time the hospital almost ran out of all paper products. Luckily, the quarter ended before the toilet paper ran out.

  3. I think the CFO may be telling himself a negitive story on his boss’s motivations for the landscaping and other aesthetic improvements going on around the office. The President may feel these improvements would make the employees feel proud of where they work and boost moral. I think your boss would be surprised to here about the reaction of distain from some of your businesses employees. He would probably want to know about their reactions.

  4. I was re reading parts of my crucial conversations book last night and it is good to be reminded of new examples. It isn’t about who’s right and who’s wrong Its about what’s best for the company. I doubt very much that the boss really wants to ruin his company by spending too much money. But apperances make a difference. It reminds me of my son-in-law making trying to make big deals in his thread bare suit. I told him to either buy a new suit or close his doors. Well, it was something like that but his business did improve after that.

  5. Interesting question. Great and very informative answer. I agree with the points you have made. When your boss spends money on what you think is wasteful and you are not comfortable with it, then talk to your boss. Ask what benefits this spending spree would give to the company. If he can’t give a reasonable answer, then tell him you could just use the money for something that could actually increase the company’s revenue. Before jumping into conclusions, know the facts first.

  6. Joseph – I liked your line of reasoning, but it would seem that one could add that the CFO should simply gently probe and find out what the president’s motives are. If they are sound (which you raised as a possibility) the CFO could suggest that these sound reasons could be communicated to the workforce.

    The CFO might be faced with a simple answer which simply has to be communicated. Instead he and his staff are creating their own stories for which there might be no substance.

Comments are closed.