The CFO’s guide to navigating difficult CEO relationships.
By Derrick Lilly |
You’re supposed to be the sidekick, the number two, the right hand man (or woman), in a super duo that’s leading the company charge to incredible innovation and sensational success. There’s just one problem: Instead of being Robin to your Batman, Batman is treating you like the Joker (or maybe vice versa). Sure, tiffs and riffs and competitions happen in the C-suite, but when the CFO and CEO are at odds … well, let’s just say a super team can quickly turn super sucky.
In the rare case when “conflict between the CEO and CFO shows up in a public way, it can cause significant damage to the organization,” warns executive coach Jay Scherer of Scherer Executive Advisors. “The solution to touchy relationships, and a Golden Rule for anybody who works for anybody, is to have regular discussions and ask for feedback. Unfortunately,” Scherer says, “Some CEOs don’t give very good feedback until the feedback is that today’s your last day.”
So before your super duo falls into super shambles, let’s take a look at some of the most common C-suite conflicts and what savvy CFOs can do to save the day ... and their jobs.
The tone is set at the top, right? So when the CFO and CEO aren’t aligned with each other or the corporate strategy, all hell could break loose. “The CFO is a critical enabler of the organizational strategy and most CEOs need the CFO to be 100-percent bought in for a strategy to succeed,” says Scherer. “If the CEO and CFO aren’t united and aligned in their thinking, they can’t expect the rest of the senior team and organizational staff to fully have their backs.” That could translate into low employee morale, wavering investor confidence, and the overall faltering of the business.
“There’s a cultural due diligence that an incoming CFO needs to do when joining a new company, and that also applies when it comes to the CEO,” explains Ajit Kambil, Ph.D., global research director for Deloitte’s CFO Program. “A new CFO needs to learn the CEO’s style, what the CEO might be looking for, and what he or she believes in and expects. Most CEOs want the CFO to be an effective business partner with them on the change journey that they are trying to execute in their organizations.”
“Awareness by the CFO of what the CEO wants is key,” Scherer adds. “Try to be forward-looking and action-oriented. This way, you can try to stay a step or two ahead of the CEO and anticipate what’s needed to be done.”
“A lack of clarity around the specific definition and focus of the role of both the CFO and the CEO can be a recipe for disaster,” says Scherer. In other words, there should be absolute clarity around what the CFO should be working on, as directed by the CEO, board or private equity owners—or all of the above. The last thing you want is to be stepping on each other’s toes, butting heads over tasks, or wondering what the other is doing.
“Be very sure to work on specific definitions of the roles and understand specific expectations of the CEO,” Scherer emphasizes.
Comrades vs Competitors:
CFOs are wearing more and more hats within organizations and taking on more public roles, dealing directly with board members, shareholders, private equity owners and activist investors. As a result, CFOs often emerge as the second highest ranking executives in a company and the logical successors to departing, underperforming or troubled CEOs.
But actively trying to push out the CEO rather than simply prepping for the role is a different matter altogether. “How detailed, how often, and how these communications look can create conflict between the CEO and CFO,” warns Scherer.
Here again, styles and philosophies can be a source of conflict and rivalry. CEOs are typically extroverted visionaries with lofty goals and an appetite for business risk, while CFOs are commonly the analytical ones, poised to offer a reality check. “In some ways the role of CFO is to keep the CEO out of trouble,” Scherer says. “Where conflict can arise is when the definition of ‘trouble’ is not shared between the two.”
Thankfully, most of these conflicts can be stemmed off with early relationship building at the first sign of disharmony. In most cases, Scherer explains that the CFO will need to be the one to take the initiative. The same applies when a tiff, riff, misunderstanding or rivalry occurs.
“This means letting your guard down, opening up a discussion and having some humility. Use statements like, ‘I feel like I’m not meeting your needs’; ‘I don’t feel like we are on the same page here’; ‘What am I missing?’ ‘Am I focusing on the right things?’” Scherer suggests.
“We’re often afraid to have these conversations, we delay them, we don’t do it, we don’t open up, and before we know it, we’re too far apart,” he adds
Realistically speaking, once the partnership is beaten and battered, there are few choices left to make—either you suck it up and get your CEO’s back or you plan your escape. “Usually when a CEO takes a ‘my way or the highway attitude’ it’s because they don’t feel that the CFO is on the same page with them,” says Scherer. If the misalignment is too great, the CFO should probably begin their search to find a place where they fit and can truly be a partner with the CEO.”