With Julie Faulstich, Stony Creek Strategy
Northampton Academy is a 7-12 day school. The head has been there for 23 years growing the school from 300 to a high of 550 and the campus from nine acres to 21. Unfortunately, the past few years have been challenging for Northampton. The school has a fair bit of debt, no endowment, and declining reserves. The school has been losing enrollment in the past three years going from 550 to 452.
There have been serious challenges in the business office with four chief financial officers in seven years. The school is running a significant deficit for the second year in a row. Over the past two years, the finance committee has turned over and is now populated by four trustees with deep experience in finance and business who have been diligently working with the head and the current CFO to address budget shortfalls and to develop a sustainable business model.
The current CFO recently gave notice that she would be leaving in 4 weeks due to health issues. The committee recognizes that the final CFO hiring decision ultimately belongs to the head, but given the CFO is an ex-officio member of the board; the head’s self-acknowledged weakness in finance; and the current financial situation, the committee has asked to interview finalist candidates. The head agreed to pass finalist candidates by the committee.
The committee interviewed two finalist candidates, finding one acceptable and the other lacking in the skills or experience to meet the challenges ahead or the requirements listed in the job description. Each individual finance committee member wrote up in significant detail their observations and why they endorsed one candidate and not the other. Their opinions were unanimous. Those write ups were submitted to the head. The finance chair expected a call from the head to discuss the finance committee’s perspective and whether the head wanted to move ahead with the candidate the finance committee found acceptable or if the search should be expanded. Instead, less than 24 hours later, the head sent out an announcement to the entire school community that a new director of finance had been hired and it was the candidate the finance committee found unacceptable.
The finance chair is frustrated, angry, and exasperated. She is now considering resigning from the board. She accepts that ultimately the decision is the head’s to make, but believes the finance committee’s opinion was not considered or understood. She feels as though the finance committee’s participation was a charade and that the head is putting the school in peril and that he is not working in partnership with the board.
The Board Chair is now trying to sort through what happened and trying to retain the finance chair. What went wrong at Northampton Academy and how should the school move forward?
Wow, this makes me want to crawl under my desk embarrassed that a head would behave this way.
To begin, I think this is one of those examples of how the “lanes” of governance and operations aren’t really so separate. In my opinion, both a CFO and a director of development search should have some appropriate engagement from the board - it should be a team with the head as the captain. As it’s a core responsibility of the board to steward the resources of the school, it is tying their hands behind their back to hire someone the finance committee considered unqualified. That just floors me. It’s one thing to be choosing between apples and oranges with leadership style where board members or the committee favor one approach and the head and admins another, but a head wants to hire someone board members find unqualified? Where is my Victorian fainting couch? The board needs to support the head, of course, but they need to trust the head is supporting them in doing their job, too!
I would imagine the head is an institutional figure given his tenure, but the board may have to consider a pretty major intervention here. Heads have been fired for much less.
And the board chair has a real “clean-up on aisle five” situation to get that finance chair to stay - and if he has other strong finance people on the board, he may consider trying to both mend fences interpersonally and allow her to step away because this is just terrible and really can’t be explained adequately because there’s an element of just rudeness here. The finance chair is making some assumptions in her appraisal of the situation but I’m trying to see the other side and I’m having trouble!
Situations like this always make me wonder how a school got to this point. Maybe the head thinks the other candidate – the one the trustees thought was qualified – didn’t have the personality to work in a school setting. Maybe the other candidate made some fatal mistakes in interviewing that the head just couldn’t ignore. The problem is we don’t know and it seems the finance committee members don’t fully understand either because the head didn’t articulate his reasoning or give trustees an opportunity to probe that reasoning.
Whether intended or not, the head conveyed that his relationship with the finance committee was transactional rather than relational. It almost feels performative. He “passed the candidates by” the finance committee and met what he saw as his obligation to do so. But clearly the finance committee felt the spirit of the agreement was not met. You have to ask: Can this marriage be saved? The head has acknowledged his own weakness in finance. At a school that is hemorrhaging money with four CFOs in seven years, how do you ignore the unanimous opinion of finance experts who are volunteering their time to help you save your school? I don’t think it’s going out on a limb to call this operational malpractice.
But let's talk short-term damage control because this board chair has a fire to put out. First, he needs to have a frank conversation with the head - not accusatory, but clarifying. What was the head's reasoning? Was there information the finance committee didn't have? Because right now, the optics are terrible and the finance committee's expertise is being completely undermined.
Second, the board chair needs to sit down with the finance chair and acknowledge that this process broke down badly. Whether or not she stays, her concerns are valid and need to be heard. If she does stay, there needs to be a real commitment to different processes going forward.
And third - and this might be the most important - they need to figure out what to do about this new hire. If the finance committee was right and this person truly is unqualified, they could be walking into an even bigger financial disaster. Sometimes you have to admit a mistake and start over, even if it's embarrassing.
I agree that there are a lot of red flags here that the relationship between the board and the head has broken down. I have questions about whether or not there is an annual head of school review (I would say unlikely?). I am also wondering, depending on what the board chair finds out from the head about this specific situation - and maybe there are dramatic mitigating circumstances? - the board chair will likely want to make a call to the school attorney. Because this situation has a whiff of malfeasance and running afoul of duty of care as a fiduciary. You can’t mess with that. The head is a trustee as well, after all. If there wasn’t a good reason for the hire, I can’t see how this head is not put on a performance improvement plan at the very least. The worst case scenario is that the head hired the “less qualified” person because he is afraid the qualified person will unearth something that could range from garden variety incompetence all the way to fraud, even if it’s fraud caused by incompetence or panic. Way back in the 90s, I remember hearing a story about a business manager leaving “IOU” notes about endowment funds used to cover operating in his desk drawer - found after he was fired.
Even if the head survives, from a fiduciary/duty of care perspective I think the board likely must bring in a firm to do a business operations audit. And I would also take the opportunity to review the school’s relationship with the firm that does the yearly audit.
I think getting rid of the new hire would be pretty complicated and I would definitely get legal advice on this. I also think there’s a big range between “unqualified” and “not ideal.” Because there are probably a range of ways to get the work that needs to get done accomplished, including hiring in some expert help to support the new CFO while providing more training. If the new CFO has a minimal finance background or didn’t meet the basic requirements of the job description that’s another thing entirely. If a search consultant was not used, this is an object lesson in why schools should be a qualified search consultant who is vetting these candidates so someone’s loveable cousin who once registered for an accounting course doesn’t end up CFO.
I also find there’s a weird conflict-aversion formality going on here which seems to contrast with a more casual way of operating that seems to be the status quo? Rather than, “let’s form a search committee with trustee representation,” there was this separate part of the process with the finance committee interviewing and then submitting an evaluation in writing to the head. If they were expected to have a meeting and hash it out, maybe this would have been avoided?
But this is an unfortunate pattern in independent school management - setting up structures, gathering feedback but not clearly establishing how the feedback will be used and how the final decision will be made. I really believe this often happens because people are afraid of the conflict that might arise when a decision doesn’t go someone’s way - but the problem is, the avoidance creates the conflict! Clearly, the finance chair had one set of expectations and the head another.
I wonder if we need to also probe something uncomfortable here: this head may be in over his head in ways that go beyond just finance. Sometimes school leaders can develop blind spots, especially when they are feeling defensive about the school’s challenges. The fact that he didn’t even call to discuss the committee’s feedback suggests either poor judgment or poor communication skills – neither of which bodes well for navigating a financial crisis.
I also wonder if this new finance committee sees their role differently than past finance committees. Perhaps past finance committees were much more deferential to the head and based on that, the head feels he’s included this finance committee in the hiring process more than any previous committee. That doesn’t make what happened here right, but it goes to the changing nature of a head-board relationship and what can happen when a board cedes too much to the head. These need to be balanced partnerships and when things swing too much one way, at some point or another, problems arise.
Looking down the road, the school might want to look at their bylaws. Some schools have a section in their bylaws about the hiring of a new CFO. In many cases, the CFO sits on the board in an ex-officio capacity and by having board approval of a short list of candidates the board can ensure fiduciary accountability without undermining the head’s authority.
In the end, here are some things that keep zipping through my mind: When your board offers expertise you lack, embrace it. When you make agreements about process, honor both the letter and the spirit. And when your school is in crisis, every relationship matters - you can't afford to alienate the people trying to help you. And for board chairs facing similar situations, remember that your job is to support both the head and the institution. Sometimes those loyalties conflict, and you have to make hard choices about which serves the school better in the long run.
This case also illustrates why boards need to be proactive about governance structures before crises hit. Waiting until you're in financial distress to clarify roles and processes is like trying to fix the roof during a hurricane. The time to establish clear protocols for key hires, communication expectations, and decision-making processes is when the weather is calm.