For CFOs, it’s Their Relationship with the Chief that Counts
The Chief Executive article, “For CFOs, it’s Their Relationship with the Chief that Counts,” quoted Russell Reynolds Associates Consultant Amy Hayes about the importance of fostering a good partnership between the CFO and CEO and highlighted the firm’s research, “Leadership Squared: The Power of Industry-Leading CFO-CEO Relationships.” The article is excerpted below.
In the past month, a few big companies have lost their CFOs. And while nobody knows for sure why Simon Henry and Jason Wheeler decided to leave Shell and Tesla, their departures will inevitably put pressure on their leaders.
That’s because a CEO’s relationship with their CFO is perhaps one of the most important in business. And the consequences of not keeping things chummy can range from sub-optimal performance to extreme disruption, particularly if disturbances occur at crucial junctures in a company’s development.
A separate analysis released in December by Russell Reynolds discovered clear strategic benefits of fostering a good partnership. The 49% of CFOs surveyed who said they had a “very strong” relationship with the CEO were more likely to be open—providing boards with access to their direct reports. They also felt more comfortable bringing difficult issues to their chiefs.
“By creating the space for healthy debate, the CEO is signaling directly and indirectly that the CFO is an ingrained, enterprise-level member of the leadership team,” Russell Reynolds’ Amy Hayes said. “In turn, this allows the CFO to operate at that level.”
Without that link, she said CFOs can become constrained to more transactional thinking and responsibilities, under-leveraging their potential to improve the business and possibly tempting them to leave.
A CFO of a multi-billion dollar consumer finance corporation, who wished to remain anonymous, told Russell Reynolds that there’s a natural tension between the two roles. “For that tension to be healthy, you need a base of chemistry, respect and trust,” they said. “Effective relationships are defined by mutual trust and mutual respect for each other’s unique capabilities. That’s not all you need. But without it, the relationship doesn’t stand a chance.”
To read the full article, click here.