Staying Relevant: The Relationship between the CEO and CFO

Gary Cuccia
Gary Cuccia, CFO

Organizations can have very complex structures where the Company’s policies and politics affect employees with their individual personalities in various roles, which can make the environment complicated and dynamic. All relationships in an organization are important, but perhaps the most important and dynamic is the relationship between the Chief Executive Officer/President and the Chief Financial Officer. For the success of the Company, it must be a strong and brutally honest relationship. The CEO is receiving input and information from all the different departments of the company and as such can easily become inundated and at times overwhelming. The CFO must make sure the information he/she presents is accurate, timely, concise, to the point and, most of all, relevant. There is the old joke about a balloonist who lands on a farm in France and he sees a man walking with his son. He asked the man where he was, and the man said you are in France, standing in a basket in a field. The balloonist stated to the man you are an accountant, aren’t you?  The man said yes how did you know? The balloonist responded the information you presented is typical for an accountant, accurate and useless. The point is, we live in a dynamic environment in which the metrics and data presented by the CFO must be updated to the changing world in order to be relevant to the CEO and the business. The information presented must not only be from a finance point of view. The data/metrics must also reflect a business perspective with a focus on trends and variances that impact the business and must be presented to the CEO, in a format that highlights both the opportunities and challenges. Financial information by its nature is historical and the CFO must find a way to translate historical data into future projections to be relevant. Although it is important to know where you have been, it is also important to know where you think the firm is going.  If the CFO successfully performs these responsibilities, there is a strong foundation between the CEO and CFO and an opportunity to further enhance the relationship. 

Go-To Person – All too often the CFO finds out about a decision made by the CEO and management team after it has been made and therefore, he/she can add little or no value at that juncture.  In order to become The Go-To Person, the CEO must have significant trust and respect for the CFO as a person and in their abilities to be effective. Virtually every decision the CEO makes has a monetary impact on the business. When the CEO has an idea that will impact the business, a structure needs to be in place where one of the first people the CEO calls to discuss the initiative is the CFO. If this type of environment can be established, the CFO can be much more effective in his/her role and have a significant impact, not only on the current operations of the business but also on the future direction of the firm. He/she can be a contributing force in shaping the company’s future. To be successful, this relationship between the CFO and the CEO, as stated previously, must be brutally honest. If the CEO presents an idea to the CFO and it doesn’t make sense from his/her business, economic or social point of view, the CFO must be able to communicate to the CEO in no uncertain terms (hopefully diplomatically) that it is a bad idea and thoroughly explain the reasons why. If the parameters of the idea can be changed to meet business economic and social requirements, the CFO must also be able to effectively communicate these changes and the potential impact on the proposal. In effect, there must be a partnership between the CFO and the CEO where there is effective communication and discussion of the company’s current state, challenges, opportunities, and future direction. If the CFO is successful in establishing this type of relationship with the CEO, the Chief Financial Officer’s impact and benefit to the company expands exponentially.

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