"Almost in every mid to large cap organization, a CEO is supposed to be the key figure; a pivot around whom is created where organization departments are plotted across the X-axis and the Y-axis is left on the CEO itself for his choice of metric which could be profitability, productiveness, effectiveness etc. as long as the metrics have cross comparability across the corporate functions."
CEO’s Role In Developing CFO - Chief Financial Officer Services, MyCFO
1. Chief Financial Officer Services
CEO’s Role In Developing CFO - Chief
Financial Officer Services, MyCFO
"Almost in every mid to large cap organization, a CEO is supposed to be
the key figure; a pivot around whom is created where organization
departments are plotted across the X-axis and the Y-axis is left on the
CEO itself for his choice of metric which could be profitability,
productiveness, effectiveness etc. as long as the metrics have cross
comparability across the corporate functions."
2. Chief Financial Officer Services
When metrics for any organization purpose get adjudicated, a CEO's
dependency relies solely on the Finance function and this dependency is
seen as widely across all strata's of organization sizes in terms of
revenue or even across borders in all markets of the world. To help this
dependency on the Finance function it is imperative for the CEO to have
someone trust-worthy to helm this important role.
In comes the CFO who is always observed to share a love-hate
relationship with all his peers while trying to maintain a pragmatic
approach on the business for the CEO to make the best informed and
advocated decision possible.
In my opinion where an organization wants to undertake progressive
planning for high ticket position like the CEO, two options exist: to
procure externally or prepare and train someone internally and most
organizations globally choose the latter, for the simple reason; 'A known
devil is better than an unknown friend'. In such a scenario it is but
natural that an organizational CXO would be handed over the coveted
position and it has been observed that six out of ten times, the CFO
would be chosen to step into the shoes. There are three obvious reasons
for such a high probabilities wiz:
1.Being a numbers man him/her self, a CFO could easily make more
sense out of business metrics and the language they speak.
2.Being used to taking decisions catered to increased value of the
organization both intrinsic and extrinsic in nature.
3. Chief Financial Officer Services
3.Overall bird's eye awareness, if not in detail; of other department
functioning's in the organization.
However this transitioning is not an easy one and requires lengthy and
regular sessions of interactions between the CEO and CFO. Hence it is
widely said that 'A CEO makes a CEO'. This aspect of the CEO's role to
successfully carve out his shadow from his/her CFO makes the CEO
more of an execution mentor than just a reporting boss.
In my professional opinion, a few specific areas which a CEO
should not miss while mentoring a CFO are:
1.Numbers are 'Not' the only thing that matter: A CFO is
generally coming with an educational background of a CA/MBA
(Finance)/CFA, where the life's learning and practice has traditionally
always been to look into details and that numbers never lie. This
however is one factor which can hold back a CFO too, if not molded to
see beyond the numbers into the reason behind them rather than just
base facts. In short have the CFO needs to have empathy towards the
causes behind the numbers as in long term the empathy could take the
business many more places than it is currently.
2.Strategically to think out of the box and yet practically staying
in the box: A CEO is ideally supposed to be blessed with the skill of
foresight, as being a visionary goes hand in hand with being a CEO of an
4. Chief Financial Officer Services
organization. This is trait which does not develop without practice and
needs to be put into at good levels by a CFO; however one should never
take a flight without realizing on how hard a ground they are standing.
3.Develop a deeper understanding of functioning of all
organization departments: A CFO could really benefit by deeper
knowledge of functioning of all departments within an organization, as
this would then supplement his/her experience to find out real reasons
for their over/under performance and take measured calls rather than just
facts put forward by an excel report.
4.It is not possible to make all happy at all times: Though this
seems a very obvious life philosophy, a CEO should definitely depict
this in practice to the CFO. Being a CEO is not easy and it is this
foremost reason. All stakeholders within the organization feel that the
CEO holds the key to their happiness and success and this painfully is
not practically possible. A simple "NO" is sometime a very hard option
which needs to be taken for business interests.
5.All that matters in the end are decisions that make the business
succeed: If a CEO's professional existence were spread on a canvas, one
would see a sincere practice of this point. Business is always of primal
importance and nothing comes before it. Decision making keeping all
macro, micro and ethical factors in mind; have to be in overall
organization interests in the long run even though they may not seem
financially feasible and/or profitable in the short term.