CEO & CFO: A Strategic Relationship
In a company’s infancy, a CEO and CFO may be the same person, but as a company starts to grow and take on more employees, customers, etc., the financial and management responsibilities start to pile up, making it necessary to divide the two roles. The strategic relationship between a CEO and CFO is critical to the health and growth of a company. First, we’ll discuss the difference between the CEO and CFO and then how the two roles interact.
Responsibilities of the CEO
It can sometimes be difficult to put a finger on the responsibilities of the CEO. That, however, does not mean that the role is a simple one. Peter Drucker defines the primary responsibilities of the CEO as follows: shaping the values of the organization, balancing the present and future yield of the company, continuously defining the scope of the business, and lastly, defining the company to the outside world. The CEO is responsible for the organization’s big picture and how it relates to the outside world. This includes the organization’s community involvement, relationship with shareholders, board meetings, and ensuring that the biggest customers are happy. The CEO is ultimately responsible for the company’s growth and the decisions the company makes to push itself forward (or not). Among these decisions is deciding what markets to pursue, what products to sell and defining what exactly is the scope of the business and why. All companies should have goals and a vision, and these require constant efforts to fulfill. The CEO ensures that these efforts are being addressed in the right order to fulfill present and future goals in the most strategic manner possible. He or she should also ensure that the goals set are realistic. The CEO needs to maintain an overview of aspects of the organization, inside and out. In order to do this well, the CEO needs an in-depth analysis of the company from experts in their respective area, which is where the CFO comes in.
Responsibilities of the CFO
A CFO is responsible for analyzing accounting data and developing metrics to help measure the organization’s success and gauge possible risks and opportunities. It is the CFO’s responsibility to make sure the company is doing business in a cost-effective manner by overseeing employee benefit plans, costs of vendors and suppliers, insurance costs, and legal. The CFO is also responsible for helping the company to raise capital. The CFO sees the company’s financial big picture. This is why a strong CEO and CFO relationship is crucial. He or she provides the CEO with the right financial analyses to make the big decisions that move the company forward. A CFO should not only be aware of a company’s current performance, but should also be able to compile data to paint possible financial pictures of the future, should certain decisions be made. The CFO’s overall responsibility is to identify and analyze financial risks and opportunities and present them to the CEO, as well as to listen to the CEO’s input and possible strategies to put those into financial models for analysis.
The Benefits of Working Together
The difference between the CEO and CFO lies in the management of the overall big picture and the financial big picture. As a company grows, financial oversight is a full-time job and a role that is extremely advantageous to pushing the company forward. The CFO must be aware of the CEO’s values and big picture while providing him with a view of the company’s current and possible future financial situations. With the vision and passion of the CEO and the financial insight of the CFO, these two roles working together provide the company with the well-grounded vision it needs to move ahead. If you’re looking for a CFO to support your values then contact VantageCFO today and further discuss the benefits of having a strategic partnership between the CEO and CFO in your business and learn how we can support your chief financial officer needs.