RESEARCH ARTICLE
Chief financial officers’ perceptions of their roles inside nonprofit organizations
Lyn Daff,
Corresponding Author
Lyn Daff
School of Commerce, University of Southern Queensland, Toowoomba, Queensland, Australia
Correspondence
Lyn Daff, School of Commerce, University of Southern Queensland, West Street, Toowoomba, QLD 4350, Australia.
Email: lynette.daff@usq.edu.au
Search for more papers by this authorLyn Daff,
Corresponding Author
Lyn Daff
School of Commerce, University of Southern Queensland, Toowoomba, Queensland, Australia
Correspondence
Lyn Daff, School of Commerce, University of Southern Queensland, West Street, Toowoomba, QLD 4350, Australia.
Email: lynette.daff@usq.edu.au
Search for more papers by this authorAbstract
Chief financial officers (CFOs) are a vital support to the effective management of organizations in all sectors. The focus of this study is the role CFOs play in nonprofit organizations. Nonprofits have unique features impinging on CFOs’ roles. The study analyzed interviews with 15 nonprofit CFOs, drawing on role theory. Participants’ role perceptions clustered around four significant themes: “protector,” “supporter,” “innovator,” and “strategist.” The protector role tended to moderate the innovator role so innovations attempted were low risk. Those who embraced innovation tended to be strategists. Challenges nonprofit CFOs faced owing to the unique features of their sector were found to influence role perceptions and lead to role conflicts and extra-role activities.
CONFLICT OF INTEREST
The authors declare no conflict of interest.
Open Research
DATA AVAILABILITY STATEMENT
The data used for this study are not publicly available due to confidentiality agreements.
REFERENCES
- Aberbach, J., Putnam, R., & Rockman, B. (1981). Bureaucrats and politicians in Western democracies. Cambridge, MA: Harvard University Press.
10.4159/9780674020047 Google Scholar
- Ahmad, Z., & Taylor, D. (2009). Commitment to independence by internal auditors: The effects of role ambiguity and role conflict. Managerial Auditing Journal, 24, 899–925. https://doi.org/10.1108/02686900910994827
10.1108/02686900910994827 Google Scholar
- Ahrens, T., Ferry, L., & Khalifa, R. (2018). The hybridising of financial and service expertise in English local authority budget control: A practice perspective. Qualitative Research in Accounting & Management, 15, 341–357. https://doi.org/10.1108/QRAM-09-2017-0085
- Baxter, J., & Chua, W. F. (2008). Be(com)ing the chief financial officer of an organisation: Experimenting with Bourdieu's practice theory. Management Accounting Research, 19, 212–230. https://doi.org/10.1016/j.mar.2008.06.001
- Beck, T. E., Lengnick-Hall, C. A., & Lengnick-Hall, M. L. (2008). Solutions out of context: Examining the transfer of business concepts to nonprofit organizations. Nonprofit Management and Leadership, 19, 153–171. https://doi.org/10.1002/nml.213
10.1002/nml.213 Google Scholar
- Biddle, B. (1979). Role theory: Expectancies, identities, and behaviors. New York, NY: Academic Press.
- Bremer, D. (2010). The effect of stakeholder influence on CFO and CEO turnover in German corporate governance. Remshalden, Germany: Pressel.
- Brown, T. Sr. (2015). Rankings of CFO responsibilities: Leadership perceptions in North America. Mustang Journal of Accounting and Finance, 7, 108–115.
- Burkert, M., & Lueg, R. (2013). Differences in the sophistication of value-based management—The role of top executives. Management Accounting Research, 24, 3–22. https://doi.org/10.1016/j.mar.2012.10.001
- Burns, J., & Baldvinsdottir, G. (2005). An institutional perspective of accountants' new roles—The interplay of contradictions and praxis. European Accounting Review, 14, 725–757. https://doi.org/10.1080/09638180500194171
10.1080/09638180500194171 Google Scholar
- Byrne, S., & Pierce, B. (2007). Towards a more comprehensive understanding of the roles of management accountants. European Accounting Review, 16, 469–498. https://doi.org/10.1080/09638180701507114
- Byrne, S., & Pierce, B. (2018). Exploring management accountants’ role conflicts and ambiguities and how they cope with them. Qualitative Research in Accounting & Management, 15, 410–436. https://doi.org/10.1108/QRAM-11-2016-0083
- Chahyadi, C., & Abusalim, B. (2011). The role of education and experience in CFO career and compensation. Journal of Accounting and Finance, 11, 26–35.
- Chang, C., & Tuckman, H. (2010). Income diversification. In B. Seaman & D. Young (Eds.), Handbook of research on nonprofit economics and management (pp. 5–17). Cheltenham, UK: Edward Elgar Publishing Limited.
10.4337/9781849803526.00010 Google Scholar
- Cheng, M., & Coyte, R. (2014). The effects of incentive subjectivity and strategy communication on knowledge-sharing and extra-role behaviours. Management Accounting Research, 25, 119–130. https://doi.org/10.1016/j.mar.2013.07.003
- Chenhall, R., Hall, M., & Smith, D. (2016). Managing identity conflicts in organizations: A case study of one welfare nonprofit organization. Nonprofit and Voluntary Sector Quarterly, 45, 669–687. https://doi.org/10.1177/0899764015597785
- Child, C., Witesman, E., & Spencer, R. (2016). The blurring hypothesis reconsidered: How sector still matters to practitioners. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 27, 1831–1852. https://doi.org/10.1007/s11266-015-9564-4
- Clerkin, B. (2017). Management accounting at international development NGOs (Unpublished PhD thesis). Dublin City University, Dublin, Ireland.
- Cordery, C. J., & Sim, D. (2018). Dominant stakeholders, activity and accountability discharge in the CSO sector. Financial Accountability & Management, 34, 77–96. https://doi.org/10.1111/faam.12144
- Daum, J. H. (2008). The evolution of the role of the CFO in European enterprises. Retrieved from http://www.iioe.de/fileadmin/files/publications/Evolution_CFO_role_JDaum_ZfCM_06_2008_en.pdf
- De Cooman, R., De Gieter, S., Pepermans, R., & Jegers, M. (2011). A cross-sector comparison of motivation-related concepts in for-profit and not-for-profit service organizations. Nonprofit and Voluntary Sector Quarterly, 40, 296–317. https://doi.org/10.1177/0899764009342897
- Dees, J., & Anderson, B. (2003). Sector-bending: Blurring lines between nonprofit and for-profit. Society, 40, 16–27. https://doi.org/10.1007/s12115-003-1014-z
- Dolnicar, S., Irvine, H., & Lazarevski, K. (2007). Mission or money? Competitive challenges facing public sector nonprofit organisations in an institutionalised environment. International Journal of Nonprofit and Voluntary Sector Marketing, 13, 107–117. https://doi.org/10.1002/nvsm.311
10.1002/nvsm.311 Google Scholar
- Eagly, A. H., & Johannesen-Schmidt, M. C. (2001). The leadership styles of women and men. Journal of Social Issues, 57, 781–797. https://doi.org/10.1111/0022-4537.00241
- Erhemjamts, O., Gupta, A., & Tumennasan, B. (2009). The effect of Sarbanes-Oxley Act on CFO compensation and rank. Retrieved from http://www.fma.org/Reno/Papers/Effect_of_SOX_on_CFO_Comp_and_Rank.pdf
- Ernst & Young. (2010). The DNA of the CFO. Retrieved from https://www.consultancy.nl/media/Ernst%20&%20Young%20-%20The%20DNA%20of%20the%20CFO-1228.pdf
- Ernst & Young. (2012). Views. Vision. Insights. The evolving role of today's CFO. Retrieved from https://www.cfoinnovation.com/views-vision-insights-evolving-role-today-s-cfo
- Ernst & Young. (2016). Do you define your CFO role? Or does it define you? The disruption of the CFO's DNA. Retrieved from http://www.ey.com/Publication/vwLUAssets/EY-the-disruption-of-the-CFOs-DNA/$FILE/EY-the-disruption-of-the-CFOs-DNA.pdf
- Fabich, M., Firnkorn, L., Hommel, U., & Schellenberg, E. (2012). The strategic CFO: New responsibilities and increasing job complexity. In M. Fabich, U. Hommel, E. Schellenberg, & L. Firnkorn (Eds.), The strategic CFO: Creating value in a dynamic market environment (pp. 1–5). Berlin, Germany: Springer.
- Ge, W., Matsumoto, D., & Zhang, J. L. (2011). Do CFOs have style? An empirical investigation of the effect of individual CFOs on accounting practices. Contemporary Accounting Research, 28, 1141–1179. https://doi.org/10.1111/j.1911-3846.2011.01097.x
- Gendron, Y., Suddaby, R., & Qu, S. Q. (2009). Professional–organisational commitment: A study of Canadian professional accountants. Australian Accounting Review, 19, 231–248. https://doi.org/10.1111/j.1835-2561.2009.00060.x
- Goretzki, L., & Strauss, E. (2018). The role of the management accountant: Local variations and global influences. London, UK: Taylor and Francis.
- Goretzki, L., Strauss, E., & Weber, J. (2013). An institutional perspective on the changes in management accountants' professional role. Management Accounting Research, 24, 41–63. https://doi.org/10.1016/j.mar.2012.11.002
- Graham, A., Davey-Evans, S., & Toon, I. (2012). The developing role of the financial controller. Journal of Applied Accounting Research, 13, 71–88. https://doi.org/10.1108/09675421211231934
10.1108/09675421211231934 Google Scholar
- Guest, G., Bunce, A., & Johnson, L. (2006). How many interviews are enough? Field Methods, 18, 59–82. https://doi.org/10.1177/1525822X05279903
- Han, J., Zhang, J., & Han, J. (2015). CFO as a strategic partner of the CEO: Relational demography and firm financial performance. Journal of Business & Management, 21, 59–76.
- Helmig, B., Jegers, M., & Lapsley, I. (2004). Challenges in managing nonprofit organizations: A research overview. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 15, 101–116. https://doi.org/10.1023/B:VOLU.0000033176.34018.75
10.1023/B:VOLU.0000033176.34018.75 Google Scholar
- Henderson, E., & Lambert, V. (2018). Negotiating for survival: Balancing mission and money. The British Accounting Review, 50, 185–198. https://doi.org/10.1016/j.bar.2017.12.001
- Hiebl, M. (2013). Bean counter or strategist? Differences in the role of the CFO in family and non-family businesses. Journal of Family Business Strategy, 4, 147–161. https://doi.org/10.1016/j.jfbs.2013.02.003
- Hiebl, M., Gärtner, B., & Duller, C. (2017). Chief financial officer (CFO) characteristics and ERP system adoption: An upper-echelons perspective. Journal of Accounting & Organizational Change, 13, 85–111. https://doi.org/10.1108/JAOC-10-2015-0078
- Hiebl, M., Neubauer, H., & Duller, C. (2013). The chief financial officer's role in medium-sized firms: Exploratory evidence from Germany. Journal of International Business and Economics, 13, 83–92.
10.18374/JIBE-13-2.8 Google Scholar
- Hilger, S., Richter, A., & Schäffer, U. (2013). Hanging together, together hung? Career implications of interpersonal ties between CEOs and top managers. Business Research, 6, 8–32.
10.1007/BF03342740 Google Scholar
- Holmgren Caicedo, M., Mårtensson, M., & Tamm Hallström, K. (2018). The development of the management accountant's role revisited: An example from the Swedish Social Insurance Agency. Financial Accountability & Management, 34, 240–251. https://doi.org/10.1111/faam.12156
- Hope, J. (2006). Reinventing the CFO: How financial managers can transform their roles and add greater value. Boston, MA: Harvard Business School Publishing.
- Hopper, T. M. (1980). Role conflicts of management accountants and their position within organisation structures. Accounting, Organizations and Society, 5, 401–411. https://doi.org/10.1016/0361-3682(80)90039-2
10.1016/0361-3682(80)90039-2 Google Scholar
- Horton, J., Macve, R., & Struyven, G. (2004). Qualitative research: Experiences in using semi-structured interviews. In C. Humphrey & B. Lee (Eds.), The real life guide to accounting research: A behind the scenes view of using qualitative research methods (pp. 339–348). Amsterdam, the Netherlands: Elsevier.
10.1016/B978-008043972-3/50022-0 Google Scholar
- Howson, K. (2005). The Salvation Army aspects of their financial administration: Success and failure. Managerial Auditing Journal, 20, 649–662. https://doi.org/10.1108/02686900510611203
10.1108/02686900510611203 Google Scholar
- Hudson, M. (2009). Managing without profit: Leadership, management and governance of third sector organisations in Australia. Sydney, Australia: University of NSW Press.
- Hume, C., & Hume, M. (2008). The strategic role of knowledge management in nonprofit organisations. International Journal of Nonprofit and Voluntary Sector Marketing, 13, 129–140. https://doi.org/10.1002/nvsm.316
10.1002/nvsm.316 Google Scholar
- Ibarra, H., & Obodaru, O. (2009). Women and the vision thing. Harvard Business Review, 87, 62–70.
- IBM. (2010, January, 14). The new value intergreater: Insights from the Global Chief Financial Officer Study. Retrieved from https://www.ibm.com/downloads/cas/VVAEMAKR
- IFA. (2013). The role and expectations of a CFO. Retrieved from https://www.ifac.org/sites/default/files/publications/files/Role%20of%20the%20CFO.pdf
- Irvine, H. (2011). From go to woe: How a not-for-profit managed the change to accrual accounting. Accounting, Auditing & Accountability Journal, 24, 824–847. https://doi.org/10.1108/09513571111161611
- Irvine, H., Mack, J., Ryan, C., & Tooley, S. (2016, July). Accountants’ contribution to the operational sustainability of Australian not-for-profit organisations. Paper presented at the APIRA Conference, Melbourne, Australia.
- Jackson, R., Drummond, D., & Camara, S. (2007). What is qualitative research? Qualitative Research Reports in Communication, 8, 21–28. https://doi.org/10.1080/17459430701617879
10.1080/17459430701617879 Google Scholar
- Jäger, U., & Beyes, T. (2010). Strategizing in NPOs: A case study on the practice of organizational change between social mission and economic rationale. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 21, 82–100.
- Järvenpää, M. (2007). Making business partners: A case study on how management accounting culture was changed. European Accounting Review, 16, 99–142. https://doi.org/10.1080/09638180701265903
- Järvinen, J. (2016). Role of management accounting in applying new institutional logics: A comparative case study in the non-profit sector. Accounting, Auditing & Accountability Journal, 29, 861–886. https://doi.org/10.1108/AAAJ-07-2012-01058
- Joannides, V. (2012). Accounterability and the problematics of accountability. Critical Perspectives on Accounting, 23, 244–257. https://doi.org/10.1016/j.cpa.2011.12.008
10.1016/j.cpa.2011.12.008 Google Scholar
- Kahn, R., Wolfe, D., Quinn, R., Snoek, J., & Rosenthal, R. (1964). Organizational stress: Studies in role conflict and ambiguity. New York, NY: Wiley.
- Kenilworthy, R. (2012). Working for a charity. Financial Management. Retrieved from http://www.fm-magazine.com/feature/depth/working-charity-sector
- KPMG. (2015). The view from the top. Retrieved from https://assets.kpmg.com/content/dam/kpmg/pdf/2015/11/view-from-the-top.pdf
- Lašáková, A., Bajzíková, Ľ., & Dedze, I. (2017). Barriers and drivers of innovation in higher education: Case study-based evidence across ten European universities. International Journal of Educational Development, 55, 69–79. https://doi.org/10.1016/j.ijedudev.2017.06.002
- Lee, A., & Zhang, T. (2012). Building the CFO function: Roles and responsibilities. Retrieved from https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1923&context=soa_research
- Lightbody, M. (2000). Storing and shielding: Financial management behaviour in a church organization. Accounting, Auditing & Accountability Journal, 13, 156–174. https://doi.org/10.1108/09513570010323245
10.1108/09513570010323245 Google Scholar
- Lightbody, M. (2003). On being a financial manager in a church organisation: Understanding the experience. Financial Accountability and Management, 19, 117–138. https://doi.org/10.1111/1468-0408.00166
10.1111/1468-0408.00166 Google Scholar
- Maas, V. S., & Matejka, M. (2009). Balancing the dual responsibilities of business unit controllers: Field and survey evidence. The Accounting Review, 84, 1233–1253. https://doi.org/10.2308/accr.2009.84.4.1233
- Mahlendorf, M., Kleinschmit, F., & Perego, P. (2014). Relational effects of relative performance information: The role of professional identity. Accounting, Organizations and Society, 39, 331–347. https://doi.org/10.1016/j.aos.2014.05.001
- Maier, F., Meyer, M., & Steinbereithner, M. (2016). Nonprofit organizations becoming business-like: A systematic review. Nonprofit and Voluntary Sector Quarterly, 45, 64–86. https://doi.org/10.1177/0899764014561796
- Marginson, D., & Bui, B. (2009). Examining the human cost of multiple role expectations. Behavioral Research in Accounting, 21, 59–81. https://doi.org/10.2308/bria.2009.21.1.59
10.2308/bria.2009.21.1.59 Google Scholar
- Menz, M. (2012). Functional top management team members a review, synthesis, and research agenda. Journal of Management, 38, 45–80. https://doi.org/10.1177/0149206311421830
- Messner, M. (2016). Does industry matter? How industry context shapes management accounting practice. Management Accounting Research, 31, 103–111. https://doi.org/10.1016/j.mar.2015.09.001
- Morehouse, M. (2007). An exploration of emotional intelligence across career arenas. Leadership & Organization Development Journal, 28, 296–307. https://doi.org/10.1108/01437730710752184
10.1108/01437730710752184 Google Scholar
- Naranjo-Gil, D. (2009). The influence of environmental and organizational factors on innovation adoptions: Consequences for performance in public sector organizations. Technovation, 29, 810–818. https://doi.org/10.1016/j.technovation.2009.07.003
- Naranjo-Gil, D., Maas, V., & Hartmann, F. (2009). How CFOs determine management accounting innovation: An examination of direct and indirect effects. European Accounting Review, 18, 667–695. https://doi.org/10.1080/09638180802627795
- Neu, D., Rahaman, A., & Everett, J. (2010). Accounting for social-purpose alliances: Confronting the HIV/AIDS pandemic in Africa. Contemporary Accounting Research, 27, 1093–1129.
- Nyland, K., Morland, C., & Burns, J. (2017). The interplay of managerial and non-managerial controls, institutional work, and the coordination of laterally dependent hospital activities. Qualitative Research in Accounting & Management, 14, 467–495. https://doi.org/10.1108/QRAM-08-2017-0076
- O'Reilly, C., & Chatman, J. (1986). Organizational commitment and psychological attachment: The effects of compliance, identification, and internalization on prosocial behavior. Journal of Applied Psychology, 71(3), 492–499. https://doi.org/10.1037/0021-9010.71.3.492
- Odia, J. O., & Oke, R. S. (2018). Change in management accountant roles: A comparative study of two public sector organizations in Nigeria. Journal of Accounting, Finance and Auditing Studies, 4, 198–222.
- Organ, D. (1988). Organizational citizenship behavior: The good soldier syndrome. Lexington, MA: Lexington Books.
- Paulsson, G. (2012). The role of management accountants in new public management. Financial Accountability & Management, 28, 378–394. https://doi.org/10.1111/j.1468-0408.2012.00552.x
10.1111/j.1468-0408.2012.00552.x Google Scholar
- Pavlatos, O. (2012). The impact of CFOs' characteristics and information technology on cost management systems. Journal of Applied Accounting Research, 13, 242–254. https://doi.org/10.1108/09675421211281317
10.1108/09675421211281317 Google Scholar
- Podsakoff, P., & MacKenzie, S. (1994). Organizational citizenship behaviors and sales unit effectiveness. Journal of Marketing Research, 31, 351–363. https://doi.org/10.1177/002224379403100303
- Prime, J., Carter, N., & Welbourne, T. (2009). Women “take care,” men “take charge”: Managers' stereotypic perceptions of women and men leaders. The Psychologist-Manager Journal, 12, 25–49. https://doi.org/10.1080/10887150802371799
10.1080/10887150802371799 Google Scholar
- Puyou, F.-R. (2018). Systems of secrecy: Confidences and gossip in management accountants’ handling of dual role expectations and MCS limitations. Management Accounting Research, 40, 15–26. https://doi.org/10.1016/j.mar.2018.01.001
- Richards, L., & Morse, J. (2012). Readme first for a user's guide to qualitative methods ( 3rd ed.). Thousand Oaks, CA: Sage Publications, Incorporated.
- Rizzo, J., House, R., & Lirtzman, S. (1970). Role conflict and ambiguity in complex organizations. Administrative Science Quarterly, 15, 150–163. https://doi.org/10.2307/2391486
- Ryan, J. (2002). Work values and organizational citizenship behaviors: Values that work for employees and organizations. Journal of Business and Psychology, 17, 123–132.
- Saldaña, J. (2009). The coding manual for qualitative researchers. London, UK: Sage Publications Ltd.
- Taylor, J. (2013). Beyond Eeyore: Growing your influence as a charity finance director. Retrieved from http://www.cfg.org.uk/~/media/Document%20library/08%20Leadership%20and%20Management/09%20Finance%20Directors-%20Charity%20Management%20Accountants%20and%20Internal%20Auditors/J_Taylor_Clore_Research_report_May_2013.ashx
- Unerman, J., & O'Dwyer, B. (2012). Accounting and accountability for NGOs. In T. Hopper, M. Tsamenji, S. Uddin, & D. Wickremasinghe (Eds.), Handbook of accounting and development (pp. 143–161). Cheltenham, UK: Edward Elgar Publishing.
10.4337/9781781002605.00014 Google Scholar
- Valentinov, V. (2010). Internal organization and governance. In B. Seaman & D. Young (Eds.), Handbook of research on nonprofit economics and management (pp. 208–219). Cheltenham, UK: Edward Elgar Publishing Limited.
10.4337/9781849803526.00023 Google Scholar
- Voogt, T. (2010). An exploratory study of the focus areas of South African top 40 company CFOs. Meditari Accountancy Research, 18, 76–92. https://doi.org/10.1108/10222529201000006
10.1108/10222529201000006 Google Scholar
- Wisker, G. (2008). The postgraduate research handbook: Succeed with your MA, MPhil, EdD and PhD. Hampshire, UK: Palgrave MacMillan.
10.1007/978-0-230-36494-3 Google Scholar
- Yang, C., & Northcott, D. (2017). Unveiling the role of identity accountability in shaping charity outcome measurement practices. The British Accounting Review, 50, 214–226. https://doi.org/10.1016/j.bar.2017.09.010
- Zhai, R., Watson, J., Gilchrist, D., & Newby, R. (2017). Non-profit vulnerability: An exploratory study. Financial Accountability & Management, 33, 373–390. https://doi.org/10.1111/faam.12129
- Zoni, L., & Pippo, F. (2017). CFO and finance function: What matters in value creation. Journal of Accounting & Organizational Change, 13, 216–238. https://doi.org/10.1108/JAOC-12-2014-0059
- Zorn, D. (2004). Here a chief, there a chief: The rise of the CFO in the American firm. American Sociological Review, 69, 345–364. https://doi.org/10.1177/000312240406900302
