The Curious Double-Act of CEO-CFO

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It doesn’t matter if the CEO and CFO/FD are a dynamic duo or something of an odd couple, what’s important is that they both understand the parameters of what is possible for a business. When the chemistry is right, the CFO will stand up to a CEO’s wilder flights of commercial fancy, while also having the ability to think like a leader who appreciates the need to take risks.

Rene Matthies, CFO at energy company E.ON UK, says: “The role of CEO and CFO is that of pilot and co-pilot [respectively]. It is a make or break relationship for any organisation… In simple terms, the CEO focuses on strategy and the big picture; the CFO is about delivering that vision on the ground, monitoring the situation with the flight instruments and making sure they are all working.”

The skills between the two have to be complementary. Murray Hennessy, CEO of online train ticket company The Trainline, says: “Both CEOs and CFOs need a broad church of perspectives and skills to be truly successful. The CFO needs to view the numbers in the context of operational, HR and commercial concerns, and have a deep appreciation of the long-term strategy of the business.”

Stuart Laird, COO of the Living Space Division of construction company Wates and a former CEO of support service concern Jarvis, says: “The balance of skills between a CEO and CFO is absolutely crucial to the business. The CEO might not necessarily be as numerate as the CFO; likewise, the CFO [may not] fully understand the business development issues.”

Trial balances and tribulations

While the CEO and CFO have to be on the same wavelength, there will inevitably be disagreements between the two. “Think of it like a marriage,” says Guy Strafford, Chief Client Officer at procurement specialists Proxima. “The relationship, like all good marriages, needs to evolve. Everyone gets a better mutual understanding of one another and as you face different challenges both parties adapt in compatible ways to deal with those issues.”

Justin Cochrane, CFO and Development Director at outdoor advertising company Clear Channel UK, comments: “The one thing that makes the CEO-CFO relationship work better is to have a slightly different public and private relationship. Between myself and the CEO, for example, if it’s just the two of us in the room, we’ll have a completely frank discussion and there’s no hierarchy at all. I want complete honesty when it’s just one-to one, then for us to be aligned on wider issues before we go to the board. So, while we might disagree on things privately, once in the boardroom, the CEO and I will have come to a consensus and be completely aligned.”

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Alison Hutchinson, CEO of not-for-profit concern The Pennies Foundation, and a former CEO of financial services company Kensington Group, comments: “The CFO has to be a really strong individual that can help analyse the real implications of what the CEO is trying to achieve.

“The business has got to deliver financially but it’s also got to deliver for customers and staff, so that combination of business objectives and financial achievement need to be knitted tightly together… A healthy tension is created by the CFO questioning some of the investments, making sure the business plan is written down and that it is delivered.”

Gavin Lewis, Finance Director of Royal Mail Estates, part of the Royal Mail Group, says: “I don’t think many boards can afford to carry anyone who is only doing a basic job and not performing a wider role on the board and adding real value. There’s a particular issue in the last five years that the environment is just moving too fast… which is why more than ever you need to be a counterpoint to the CEO as CFO, making sure that you’re covering all the bases, and that is rarely achieved by just making sure that the numbers for last year get produced on time.”

Similarly, Bob Emmins, Finance Director for The Silver Spoon Company, a division of Associated British Foods, reinforces the notion that it’s about being able to see the bigger picture: “The CEO will often be balancing a lot more balls in the air than if you’re the CFO, and you’ll be thinking of other aspects and perhaps giving the other party more of the benefit of the doubt, whereas in finance you can sometimes see things a little black and white.

“For example, as an FD you might feel that there won’t be enough analysis on a particular point, or that the CEO has actually been quite lax on a certain issue. What you’ll find is that the CEO, while recognising that, might choose not to react based on all the other things that are going on.”

In order to get optimal results, it’s actually healthy for there to be a degree of tension between the top two in the executive team. Bob Beveridge, Non-executive Director of mobile technology company InternetQ, says: “On the one hand, [CFOs are] the conscience of a business. You are always aware as a finance person that you are responsible for the integrity and probity of the business as well as the numbers. So you act as a foil to a certain extent to potentially more radical plans… but at the end of the day you are still the number two. The CEO will be the person who drives the decisions.”

Gavin says: “If there’s a difference in styles or a lack of compatibility between the CFO and CEO, one of them will need to go… and it won’t be the CEO. It’s therefore the responsibility of the CFO to make sure they are adapting their style and focus to support the CEO.”

The best CFOs are now leaders in their own right. It can make for a powerful partnership, where CEOs appreciate and respect the opinions, insights and judgements of their second in command… even if they don’t necessarily want to hear them.

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