Strategy & Operations » Leadership & Management » CFO-CEO synergy: Navigating the blurred boundaries 

CFO-CEO synergy: Navigating the blurred boundaries 

The previously distinct roles of the CFO and CEO are converging, blurring  responsibility boundaries like never before. But is the CFO gradually stealing the spotlight and have they encroached to far upon the CEO's domain?

In November 2022, then-CEO of Disney – Bob Chapek – was fired from the company after the organisation’s CFO said he was unfit for the role.

Christine McCarthy aired her concerns to Disney’s board of directors, along with a few other senior members of the entertainment giant’s leadership team. A few weeks later, Chapek was gone.

The relationship between CFO and CEO can often be a difficult one to navigate. One is charged with setting the direction and vision, while the other is responsible for managing the financials and mitigating risk.

Effective communication, mutual respect, and trust are essential to navigate potential conflicts and ensure that both parties are working towards the same goals.

However, in the last few years, the role of the CFO has evolved to the extent that some have argued it now approaches that of the CEO. The once well-defined boundaries that separated their roles have blurred, giving rise to a new paradigm where the CFO’s responsibilities transcend conventional financial reporting.

Today, these finance leaders have emerged as strategic partners, donning the metaphorical ‘CEO hat’ to steer their organisations through turbulent times, including challenging downturns and a looming recession.

But what does this evolving dynamic truly mean for organisations? And are we at a stage where two positions could morph into one?

“Increasingly, the role of the CFO has become that of a strategic partner to the CEO, helping to craft and define the vision for the company. That’s becoming a CFO’s responsibility in today’s organisation,” remarks Jared Hyatt, CFO at Globality.

Hyatt, however, believes that despite the blurring lines, organisations still need a CEO to “set the objectives, motivate troops, identify, and track resources to invest in achieving the business targets.”

“The CEO plays the key role in organising and motivating, and while a CFO can be an influence in that strategy – helping to quantify, measure, and guide – I think the CEO will continue to be responsible for dictating it,” says Hyatt.

The makings of a harmonious CFO-CEO relationship

Studies have shown that the CEO and CFO working relationship has a direct impact on the success of a company.

The CEO and CFO are like the yin and yang of a company. The CEO is the visionary, the one who sets the company’s direction. The CFO is the pragmatist, the one who makes sure the company stays on track financially.

When these two roles are in sync, it can be a powerful force for good. But when they are not, it can be a recipe for disaster.

In the Salveson Stetson Group’s CFO career survey , John Touey, a principal at the executive search firm, notes that over the past two decades, “the CFO has truly become the CEO’s co-pilot in running a company.”

He warns that “if the relationship between these two leaders is not strong, the risk of CFO flight increases dramatically.”

According to Touey, so crucial is the partnership that the CEOs need to “continually seek advice and input from their CFOs to create stickiness in the relationship. Conversely, CFOs [must] continue to up their game by leveraging available data to provide more specific and strategic business insight.”

Trust and respect are ingredients that also strengthen the CFO-CEO relationship, forming a critical foundation for organisational success.

There are several areas the two will need to work collaboratively. They must work closely to align a business’ financial goals with its strategic objectives.

Without collaboration, a business will be unlikely to execute a financial strategy that supports the overall business goals, nor ensure that appropriate financial resources are allocated and in line with the various priorities of the business.

Marie Speakman, fractional CFO and founder of consulting firm Automation Lady, says having a CEO who understood finance helped her succeed in her role as CFO.

“Trust and respect are always crucial in any role, but more so in the C-suite because without the right partnerships, these can be very lonely roles. Having a CEO with a deep understanding of finance made my role easier, and I felt supported in my decisions,” says Speakman.

When collaboration crumbles

According to Gartner, 80% of CFOs have strong relationships with the CEO. But what are the consequences if the CEO/CFO relationship goes ‘sour’?

Unsurprisingly, when the CFO and CEO relationship breaks down, it can result in conflicts, barriers in communication, and impaired decision-making processes. It can have far-reaching consequences for the organisation’s overall performance and its ability to accomplish strategic objectives.

The risk of relationship breakdown has arguably been exacerbated in the last three years, as the role of the CFO has evolved and gradually come to encroach upon the traditional responsibilities of business leaders.

One could argue that in fulfilling their new responsibilities, CFOs may be overstepping their bounds and asserting authority in areas beyond their financial expertise.

That is not to say CFOs cannot disagree with their CEOs. According to research from Russel Reynolds, 98% of CFOs with “very strong” CEO relationships say they are comfortable bringing difficult issues to their CEOs.

CEOs must trust their CFO with extremely important and often highly confidential information. The two must be able to express their opinions openly and talk about company issues with mutual trust and respect.

Whether it is a fractional CFO, a visionary CFO steering a tech start-up to its heights, or a seasoned executive at the helm of a multi-billion-dollar organisation, the current economic downturn and uncertainty require the partnership between CFO and CEO to be solid.

The importance of fostering a harmonious relationship between the CEO and his co-pilot, the CFO, cannot be overstated.

Both leaders must recognise the value of their collaboration and continually seek to strengthen their bond. By doing so, they can harness the full potential of their partnership and drive organisational success in an increasingly complex business landscape.

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