Is The CFO – CEO Relationship The Strongest Around The Board Table?

We see a continuous evolution in the CFO’s remit, which is expanding to become much more about judgement and commercial contribution.

Boards will continue to rely on the CFO for risk analysis, but they will also expect them to see the implications through a commercial as well as a financial lens.

A strong CFO is increasingly seen as a collaborative partner to the CEO, expected both to inform and contribute to strategy. The relationship is becoming one of the closest and most important around the board table, with the two engaging on every element of business leadership. The CFO is not just the corporate conscience, but the advisor and sounding board for all stakeholders.

Given this increasingly symbiotic relationship, we see two main trends: first, a growing transition from the role of CFO to that of CEO; and secondly, a sharper focus among boards on culture and skill fit, to blend complementary strengths and experiences between the two individuals.

“Savvy CFOs ensure they understand the board’s priorities and the value members can bring to their success.”

An Evolving Role for the CFO on the Board

The legacy of the CFO role is a concentration on financial control and process, with a significant amount of time spent reporting historical numbers and controlling risk and cost.

Today that role is almost unrecognisable: it has now become a leadership role, and as such, the CFO is usually one of two executive directors on the board. The role is rightly interpreted as co-leading the business with responsibility for multiple functions – such as IT, Legal, Property, Procurement, Global Shared Services and Operations – as well as overseeing a finance function ever more influential in the management of the business.

We see the CFO increasingly playing a central role in the definition and execution of strategy and the setting and delivery of performance targets, ensuring the company meets its stakeholder obligations. CFOs are often responsible for leading group-wide transformation programs to restructure a business or develop global business services. They are typically the voice of the board among internal and increasingly diverse external stakeholders on both financial and non-financial matters.

A Progressive Approach Adds Commercial Value

The CFO-CEO relationship needs to be strong and clear. CFOs I speak to consider it their duty to provide a voice of reason and be an advocate of the ‘right way,’ rather than just saying ‘no,’ with the courage and conviction to challenge where appropriate. This challenge and input contributes to a healthy and functional board.

Leaders in the finance function are positioned as strategic architects of the business, moving away from classic finance to a more progressive model. This involves leading initiatives based on strategic, macroeconomic and commercial drivers, to evolve from what IBM described as a ‘value integrator’ three years ago to a ‘performance accelerator’ today.
The day-to-day financial focus is still necessary but diminishing in proportion to the demands of business leadership. The value today is provided by thinking about the mid- and long-term future of the organisation.

Recommend
  • Facebook
  • Twitter
Share
Tagged in
Leave a reply

You must be logged in to post a comment.

   enquiries@savannah-group.com
© 2017 Savannah Group Ltd. All rights reserved.