5 Steps to a Healthy CEO-CFO Relationship

August 1, 2023 Theresa Rex

CEO and CFO having a conversation about how their relationship affects their company

Between role creep, uncertain economic conditions, holding a relationship with everyone in an organization including the CEO, and shifting priorities in the boardroom, there's no getting around it: being a CFO is tough. It's a job you do in a pressure cooker, and one that can feel overwhelming, increasingly stressful and at times, frankly, a little thankless.

Just ask your CEO.

In modern C-suites, that's often where the buck truly stops — right under the Sword of Damocles. For so many executives, being a Chief Anything Officer means finding themselves simultaneously more isolated than ever just as they're reaching the pinnacle of their career. That's especially true for the Chief Executive Officer.

The fact that the CFO-CEO relationship has evolved into more of a strategic partnership lately is important — it positions two of a business' most influential leaders as collaborative rather than unilateral. That means CEOs and CFOs are more equipped to support one another and present a united front to further the best interests — and bottom line — of the organization they lead together.

Of course, that requires CFOs to take steps to build a healthy CEO-CFO relationship that delivers on the promise of effective, innovative and efficient outcomes. Building the trust required for a strong working relationship doesn't happen overnight, but you can start today.

Here's how a CFO can help a CEO — and build a mutually beneficial, long-term working relationship:

  1. Create a Shared Vision

  2. Establish Trustworthy & Transparent Communication

  3. Build Mutual Respect for Collective Expertise

  4. Take a Collaborative Approach to Strategy & Decision Making

  5. Maintain Trust by Remaining Flexible

A United Voice in the C-Suite: Unpacking the CEO-CFO Partnership

CEO and CFO analyzing vendor partnership results

The CFO and CEO role are separate but complementary with one thing in common — they're each absolutely critical to the success of any company. As the steward of an organization's hard-won financial assets, you have access to insights the CEO needs to make a strategic plan that enables the entire organization's success and affects all areas of the business — from technological and market investments to employee engagement initiatives and hiring decisions.

Read More: How The CFO Role Has Evolved: Becoming a Comprehensive CFO

It's not hard to see why a strong foundation is so important to the business partnership that CEOs and CFOs are tasked with developing. Understanding how that relationship is structured allows financial leaders to lay that foundation and set appropriate expectations from the outset.

How Does a CEO Work With a CFO?

Typically, the Chief Financial Officer reports directly to the CEO. This isn't a technicality — in most cases your CEO has final say on business-critical decisions, period. Of course, even the boss has a boss and the CEO is in turn answerable to the Board and Stakeholders. But within the C-suite, the chief executive officer has terminal authority.

A CEO that's taken care in their own career to build leadership skills focused on empowering and legitimizing their reports' competencies rather than intimidate and lord power over them will focus less on a reporting structure and more on a supporting structure.

When CEO-CFO trust has been built, the big boss will see the CFO's role in supporting CEO initiatives as symbiotic — not second-string. They will actively seek the guidance, judgement and expertise when taking on important business and financial decisions.

What Does a CEO Want From a CFO?

When it comes to what CEOs want from the CFOs — and other chief executives — there is more than one bucket to fill, including desired outcomes, desired interpersonal dynamics and of course, a CFO's desired leadership and operational skills. When it comes right down to it, CEOs expect a CFO to:

  1. Understand the business and knows its goals inside and out

    In a lot of ways, the CFO holds the highest rank after the CEO role and as such is expected to partner with them to build a strategic plan and oversee its execution. That requires a shared fluency in the language unique to the company.

    What are its challenges, untapped opportunities, goals and priorities, for instance? A thorough understanding of the business and an ownership mentality allows CFOs to apply their skills to important business decisions.

  2. Provide skilled financial stewardship and accounting expertise

    Those skills will vary, but every CEO needs a knowledgeable CFO with fundamental accounting know-how: credible financial modelling, a firm grasp of data and analytics and the wherewithal to protect cash flow.

    CEOs need CFOs and the finance teams reporting to them to provide a timely and accurate picture of the company’s overall financial health, assess its risk and provide scenario planning for a range of market conditions. Financial planning and analysis initiatives are taking center stage as new technologies come into play and a lot of CFO-CEO teamwork revolves around the modern FP&A function.

  3. Drive organizational transformation and challenge the status quo

    Where new technologies are concerned, CFOs are increasingly adding "pioneer" to the growing list of responsibility the role requires — new tools and software are being introduced every day, and CEOs need their CFOs to bring worthwhile ones to their attention and in many cases, coordinate the implementation of everything from new ERP modules to novel AI tools.

    Ask the CFO: Help! My Team is Still Using Excel for Everything

    The ability to lead through change isn't limited to headline-grabbing technology, though. Oftentimes CFOs come on board to optimize systems and processes for better financial outcomes and that requires securing buy-in for transformational initiatives and, crucially, seeing them through.

5 Steps to a Healthy CEO – CFO Relationship

cfo and ceo reviewing organizational performance and relationship with other departments

That's all great in theory, but what does it look like in practice? It's a process. Like all relationships, the one you have with your CEO will require flexibility and a commitment to putting in the hard work of staying in harmony.

No two CEO-CFO relationships are the same, but they all share a core set of steps you can take to ensure yours is healthy and productive:

Create a Shared Vision Between CEO and CFO

This is where developing a thorough understanding of the business is critical. It's not enough to be looking at the big picture. You have to be sure you're both looking at the same big picture. Make sure you're aligned on what the goals, challenges and vision of the organization are and you'll be off to a strong start.

Establish Trustworthy & Transparent CFO – CEO Communication

It takes time to develop trust in relationships — even when the relationship in question is a business partnering. Being transparent and proactive in your communications — even when you don't have good news to deliver — is only half of the equation. You have to consistently demonstrate that your words and actions are in alignment.

Build Mutual Respect for Your Collective Expertise

The CEO has to trust that they can lean on the CFO's skill set, experience and expertise to maintain efficient and effective finance function. The CFO, in turn, has to trust that the CEO will bring their own perspective and prowess to the relationship. Each of you will need to respect the other's aptitudes and expertise to foster CEO-CFO teamwork. It's just not possible for one person to know everything and trying to be that person is why the term "micromanager" was coined.

Take a Collaborative Approach to Strategy & Decision Making

With a shared vision at the center of a mutually respectful relationship built on trust, you'll be better equipped to work together toward the overarching organizational goals and strategy. It enables the CEO and CFO to work together to solve problems and celebrate wins.

Maintain CFO-CEO Trust by Remaining Flexible

CFOs know all too well that change isn't just inevitable, it's critical for growth. Over the course of your working relationship, you'll have to remain flexible to keep from burning out, succumbing to stress or harming your professional partnership.

Read More: How CFOs Can Master Change & Build the Future

Executive (Dys)Function: How to Manage Conflict Between CFO and CEO

CFO and CEO learning best ways to manage conflict within an organization

Even the best working relationships bump up against obstacles sometimes, and as a financial executive, that's true of your relationship with the CEO as well. That's not necessarily a bad thing: savvy CEOs don't want so-called "yes men" because they know the value of leaning on their team's expertise, especially where difficult issues are concerned.

That doesn't mean you won't have to back up your assertions when what you think is best for the bottom line is divergent from — or in direct opposition too — your CEO's. Don't let conflict in CEO-CFO strategic planning sessions derail the relationship you've worked hard to build.

Instead, foster the partnership when you:

  • Keep it constructive: Opposition for its own sake is counterproductive and undermines trust, so make sure that you can clearly communicate your argument and bring evidence to back up your reasons for making it.

  • Stay focused on solutions: Don't come to the conversation without having a workable solution in mind and be ready to communicate how the alternatives you suggest will improve the outcome you're both hoping to achieve.

  • Bring it back to best interests: The CEO is the boss, and the boss likes to look good. We all do. Don't make it a CFO vs. CEO issue — you are partners, not opponents. In the end, the CEO must center the business' best interests to be successful. When you can show how your approach helps them do that, securing buy-in gets much easier.

How CFOs Can Build Better Stronger Partnerships With CEOs

CFO in meeting with CEO talking about ways to improve their relationship and business partnerships

Successful business outcomes and the innovations that enable them happen when a CFOs financial acumen and business expertise support the CEO's vision, leadership and competencies. When the two roles are in sync they enable the company to meet its strategic goals, gain a competitive advantage and stay in sound financial health. That's why the CEO and CFO relationship is so important.

To do that, CFOs need time to focus on strategy, and that's a coveted resource. In fact, 78 percent of the CFOs we surveyed said they wished they had more time to devote on strategy instead of the transactional work they're often tasked with completing.

Personiv has you covered. We partner with CFOs to deliver efficiency and results with our virtual accounting solutions. See how our solutions make it possible.

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