Everything moves so much easier in an organisation when the CEO and CFO work well together. In many ways, people will look at the relationship between the two as a bellwether for the culture and long-term health of the business.
Anthony Fletcher, CEO of Graze, comments: “I think a CEO is lost without a good relationship with their CFO. Often in businesses, the finances are quite complicated and you need a CFO’s view on what’s going on. The CFO is also key in terms of helping you to control the business, putting the processes in place that help you do things day to day.”
Similarly, Paula Dowdy, SVP and General Manager for EMEA at Illumina, feels that the partnership with her finance leader is absolutely crucial for her own success. “In many ways, he is the one that keeps me honest; he’s the one that challenges me,” she comments, noting how the relationship has changed over time.
“[My finance leader] is now spending much more time in the business, with our customers, with our new markets, understanding the potential. And so, I think this mutual understanding of our roles, and bringing them closer to both our employees and our customers, has taken that partnership to the next level.”
The alliance between the two parties works best when they have complementary skill-sets and can talk openly and honestly about what they believe is best for an organisation. Julian Goldsmith, Senior Relationship Manager at Criticaleye, says: “Conversations between the CEO and CFO need to be open and honest. That’s why mutual trust and respect are essential if the partnership is to be successful.”
Tony Hayward, Chair of Glencore, says: “The CFO is the custodian of the balance sheet. It’s good if they are a little risk averse, particularly if you’ve got a less risk-averse CEO. Often, it’s about having the right team – if you’ve got a pretty bullish, gung-ho CEO, you would want to match them up with a more conservative, risk-averse CFO.
“It’s rare that it happens the other way round, but sometimes it does, so I think it’s about finding the balance.”
Paul Cardoen, CEO of First Bank of Nigeria (UK), says: “It depends on the leadership style of the CFO. I’ll give you an example – I’m more of a visionary, strategic and dynamic CEO. The CFO that works best for me is one that’s more calm and composed and counselling, but both of us should be obsessed with strategy and being forward looking.”
View from the Board
In some ways, Chairs’ and Non-executive Directors’ expectations of the CFO haven’t changed. They want reliable, transparent financial information, combined with a pragmatic approach to supporting and driving the strategic agenda.
However, the very best CFOs will provide a whole lot more. Phil Smith, Chair of Innovate UK and a Board Mentor at Criticaleye, says: “They’re great at handling the investors and the market generally… I think, like any leader, I expect them to build good teams, to bring people up inside their organisation as well.
“Often, they are some kind of hybrid business development person, always thinking about opportunities: how the company can grow; how it can engage in different markets; how it’s financed and supported and so on." Phil says it’s important that a Board doesn’t just see the CFO as the person who provides monthly flash reports or an annual review, but as “someone who understands the financial underpinnings of the company”.
Dame Alison Carnwath, NED at BP, says: “They can add value by effectively just looking at all the numbers through a different lens. A new CFO coming in and looking differently at the way management information is provided [such as its KPIs and on risk]... can change the debate around the boardroom table.”
It’s evident that CEOs and independent directors recognise that a good CFO is an integral player within a high-performing leadership team.
These comments were taken from two recent Criticaleye films: