Why Every CEO needs a CFO
Management partnerships are the backbone of every successful business. Few are as important as those at the top of the C-suite . The relationship between CEO and CFO is crucial in a company’s growth strategy, from building investor confidence to filling a skills gap. Every CEO/Managing Director needs a CFO/Finance Director that can be their second in command, providing the financial analysis to ground their decision-making process.
A CEO recruiting the right CFO is like a Captain finding their ideal Vice-Captain. They need a co-pilot to work alongside them when negotiating with third parties and building relationships with financial institutions and potential investors.
The role of CFO is continuing to evolve, bringing them into contention as a potential successor. The partnership between CEO and CFO will impact every aspect of the business, from investor relations to cash flow planning. Every CEO needs a CFO to support them in achieving the company’s potential.
CEOs can test the waters with their potential candidates throughout the recruitment process, working with a recruitment agency to identify the right CFO. Every CEO needs a CFO to future-proof their business and help determine its long-term direction.
The CEO-CFO Relationship
While a CFO is technically a ‘Chief Future Officer’, much of their responsibilities now exist outside the usual financial parameters as they take on a greater operational and strategic role. It’s best to view a CEO-CFO relationship in the context of a CFO being a ‘Chief Future Officer’.
CFOs are well-positioned to be a driving force within their organisation, lessening the CEO’s workload and leading on projects like developing ESG strategies, value creation, and investing in technological transformation. The CEO-CFO relationship can boost investor confidence and fill a skills gap. It’s not uncommon for CEOs to lack financial experience, particularly with managing exit strategies, leading on IPOs, or overseeing financial restructuring.
They’ll work together to communicate this vision to every relevant aspect of the business with the CFO translating their data insight for non-financial executives and stakeholders
One of the biggest mistakes founders make is not understanding the importance of having a CFO. They have the power to define the role to fit their specific needs, determining exactly what they want from a candidate before starting the recruitment or headhunting process.
Accountancy, communication, and strategic thinking are skills every senior financial professional will have. A CEO can determine what they want from their relationship with their CFO and recruit accordingly to fill their skills gap.
Tech literacy is a skill that CEOs who aren’t digital natives will want to seek out in a CFO. It’s a way of future-proofing their organisations by enabling them to evolve through tech investment, including establishing systems supported by AI and automation to make operations more cost and time effective.
Determining the Company’s Long-Term Direction
Although CEOs and CFOs operate independently, they have the same responsibility in determining the company’s long-term direction. The CEO and CFO will interlink throughout the strategy and implementation process with the CFO providing the financial forecasting and analysis that enables the CEO to make better decisions.
The CEO will base their strategy and decision making on the CFO’s financial forecasting. They’ll work together to communicate this vision to every relevant aspect of the business with the CFO translating their data insight for non-financial executives and stakeholders.
Financial planning is the backbone of any company’s success, from ensuring cash flow to investing in human capital. While the CEO is the company’s overarching leader, a CFO will take the lead on its finances with both working in unison with colleagues to implement the company’s long-term direction.
Without a skilled CFO by their side, a CEO will struggle to balance their day-to-day responsibilities effectively with developing a growth strategy. Every CEO needs a CFO to provide long-term direction.
Relationship with the Board
A CEO doesn’t want to stand alone in front of a board. CFOs are becoming increasingly more visible, developing their own profile, and working closely with board members and stakeholders as a result. CEOs want to put forward a trustworthy CFO who can build a relationship with stakeholders.
They also provide a bridge to traditional financial institutions and investors, along with increased credibility. A CFO is viewed as a trustworthy financial professional
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Stakeholders and potential investors feel more confident about CEOs with working relationships with their CFO. Both the board and CEO will turn to the CFO to offer them an unbiased perspective on the company’s finances to feed into their overarching strategy. A CEO and CFO who present a united front will win the confidence of its board and stakeholders.
CFOs as a Bridge
CFOs function as a bridge, filling the gap between the company and its external partners while also offering a bridge to the future. A capable CFO provides the company with an internal option when it comes to choosing its next CEO. CFOs seeking to take the step up to the top job will develop their skills and experience throughout the company to position themselves to take on the role. It’s why many CEOs will recruit with succession planning in mind.
CEOs need a real-time 360-degree view of their company’s financial and operational strategies – which is where a CFO comes in. Having a CFO is a win-win scenario for CEOs.
They also provide a bridge to traditional financial institutions and investors, along with increased credibility. A CFO is viewed as a trustworthy financial professional.
who will provide a detailed birds’ eye view of the company’s finances and translate its forecasting and strategy.
Recruiting the Right CFO
While every CEO needs a CFO, there isn’t a one-size-fits-all option. CEOs need to find a candidate who complements their working style, isn’t afraid to think outside the box, and who they can be comfortable delegating responsibility to.
Working chemistry is vital to the success of a CEO-CFO relationship. It’s one reason why CEOs should step back and clearly define the role of CFO in their company to identify the sort of candidate they’re looking for.
Then, it’s worth working closely with a specialist finance recruiter to support the search for the right person – a CEO will not have the same reach and network as a good senior finance recruiter who lives and breathes FD/CFO networking and is around them and speaking with them every day. Also, just putting an advert out will not draw all the candidates to your door either as the good ones may not be looking and so not even see your adverts. FD/CFO recruitment is a crucial hire and worth investing in to get it right. Afterall, I wouldn’t attempt to fix my car or sort out a broken gas boiler if it’s not something I do every day and not a specialist at it!
Search Director
FD Recruit
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