CFO Does Not Equal No! A Strategic Approach to Transformative Financial Leadership

Perhaps the most important and dynamic relationship within a business is between the Owner/CEO and the CFO. The Chief Financial Officer is one of the closest professional partners the CEO has, and a strong relationship between these two leaders is necessary to keep a business competitive in an ever-evolving landscape. For the purposes of this article, we are going to refer to the person in the company who is ultimately in charge over all operations as CEO, regardless of whether this person is the Manager, majority shareholder, owner, President, General Manager or CEO.

Together, the CEO and CFO define the strategic, financial, operational, and commercial blueprints for a company, then work in concert to execute those plans. When the relationship is a strong one based on mutual trust and a shared vision for the company, the business grows and thrives. However, the reality of this relationship is rarely so smooth.

CEO and CFO: A Dynamic Relationship

The overall responsibility of the CEO is to make the big decisions that drive the direction and purpose of the company. The CFO’s job is to inform those decisions based on what is in the company’s best financial interest. Sometimes, these responsibilities work synergistically, but other times they can feel at odds with one another. It doesn’t have to be this way!

First, we feel we should outline the importance of a strong, trusting relationship between CFO and CEO. A survey from Russell Reynolds found that the vast majority of CFOs at successful companies trust their CEO, and vice versa.

Of CFOs who said their relationship with their CEO was very strong, 70% said they provide their boards with direct exposure and access to their direct reports, while only 40% of CFOs who rated their CEO relationships as being weaker said the same. This suggests that accountability helps cultivate and maintain an atmosphere of trust, all the way to the C-suite.

Cultivating a Strong, Productive Partnership

When space is created for spirited, respectful debate within professional relationships, it opens the door to innovation and indirectly signals to the team that their opinions are valued. Conflict doesn’t have to be stressful; it can be very productive, provided that both parties are focused on creating the best outcome for the business. Making room for disagreement allows the CFO to function in their fullest capacity and have the greatest positive impact on the business.

Conversely, without a strong strategic relationship, the CFO can become “pigeonholed” into a more transactional relationship that brings about the kind of “naysaying” the position is famous for. Maintaining open lines of communication and space for respectful conflict resolution sidesteps this potential pitfall, for both executives.

Helpful Tips for Building a Positive Working Relationship

We’ve distilled our main tips for CFOs to set good foundations with their CEOs, then build upon those foundations to create a beneficial and helpful partnership. It’s true that, like all interpersonal relationships, it takes two to do the proverbial tango. That said, it’s surprising how much one party can affect the relationship with the right actions.

• First, both parties need to communicate openly with one another. They should also share a vision for the company, and there should be a mutual trust and respect between the two executives.
• The best partners possess skill sets that complement one another, and this is especially true of the CEO-CFO relationship. For example, if the CEO is more big-picture focused, than the CFO should be a detail person.
• The CFO, in particular, needs to be self-aware. As people who deal largely in concrete terms that can be delineated in spreadsheets and algorithms, it’s easy to sacrifice diplomacy for directness. A good CFO will know how to communicate with others who are not as logical or fact-based.
• Remain on the same page, especially publicly. Spirited discussions have their place, but keep them behind closed doors. When addressing the rest of the company, the CEO and CFO should present a strongly united front.
• A CFO is a business partner and strategic advisor to the CEO, not a “bean counter” bound to ledgers and spreadsheets. A CFO is not a glorified accountant. A CFO is paid to make strategic decisions to benefit the company in both the short and long terms.
• The CFO needs to be independent, courageous, and possess outstanding character.
• The role of CFO is one focused on delivering results, not managing day-to-day reporting and organization of the company’s finances. The CFO should not be bogged down with managing the minutiae of the accounting department in order to be most effective.
• An excellent CFO can offset the cost of their own position by finding direct cost savings, mitigating risks and creating new value. A CFO is generally a highly-paid, high-powered position, and it’s for good reason: he or she wields a lot of power within the company.

In all but the most unusual of cases, the CFO will report directly to the CEO. For this reason, it’s important for new CFOs to get it right from the get-go — a period of floundering could lead to failure on more than a personal level.

Takeaway

When it’s working correctly, the CEO-CFO relationship can transform a company and produces greater value than either executive would be capable of independently. These relationships are crucial to the continued growth and success of a company — without the trust, respect, and honesty foundational to a strong partnership, the entire venture can fail. Cultivate an atmosphere of collaboration, cooperation, and trust (a dose of amiability never hurt anyone, either!), and the rest will follow suit.