As someone who tries to stay close to current trends and developments within the finance function, all chatter in the past years has been around the on-going development, some would say evolution, of the
Hold your horses said the CEO
To really answer that question we first need to look at what the CEO actually does in a company and how that compares to the new look CFO role. Below is a short list of some the typical CEO tasks.
- Setting the direction of the company
- Decides on budgets for all departments
- Drive the culture of the company
- Manages senior managers
- Generates and approve new business and projects
- Attend board meetings
Most likely you add a whole range of other activities that a CEO would do but the purpose is not to make an extensive list but rather to look at how the CFO stands compared to some of the typical CEO tasks.
It’s clear that in all areas the CEO has the ultimate responsibility for what goes on the company. Maybe that’s stating the obvious but in relation to the CFO who prepares material for and support the CEO that’s the clearest difference. Words associated with the CEO here are Set, Decide, Drive, Manage, Generate, Attend whereas the associated words for the CFO are Support, Prepare, Implement, Manage. The CEO will have a hard time running the company well without a good CFO or good members of the executive team in general. If the CFO fails to deliver solid budget inputs, makes mistakes in the board material etc. the CEO will make bad decisions and lose respect.
Finance, the ultimate support function
So the CFO is not the CEO nor should (s)he strive to be. Instead, the need is for the CFO and the finance function, in general, to deliver second to none support to the CEO and the rest of the executive team. This will increase the likelihood of good decisions being made all around. Finance will not run the company, not now and more likely than not neither in the future. Finance is a support function that facilitates decision making in the company but it’s the CEO that has the responsibility for the decisions.
Did you think the lines between CEO and CFO were becoming blurry or was this simply a phantom dreamed up by ambitious finance people? The CFO and the finance function still has a lot of ground to cover to provide even better support to the CEO and the rest of the company. Finance is transforming fast though and has taken many steps in the right direction.