WWW.ABSTRACT.DISLIB.INFO
FREE ELECTRONIC LIBRARY - Abstracts, online materials
 
<< HOME
CONTACTS



Pages:   || 2 |

«Managing the Evolving Relationship between the CEO and the CFO ECF OO With CEOs increasingly expecting CFOs to act as strategic business partners, ...»

-- [ Page 1 ] --

Managing the Evolving Relationship

between the CEO and the CFO

ECF

OO

With CEOs increasingly expecting CFOs to act as

strategic business partners, top finance executives

need to master some demanding professional and

personal skills to manage this critical new relationship.

Based on interviews with more than 25 leading CFOs

on four continents, Egon Zehnder International’s

Financial Officer Practice explores those new skills,

how finance executives can acquire them, and why

CEOs should seek them in their CFOs.

We would like to thank the following individuals who participated in the survey:

Andrew Bonfield Lincoln Leong CFO, Bristol-Myers Squibb Finance Director, Mass Transit Railway Corporation Limited Enrico Cavatorta Ranieri de Marchis CFO, Luxottica Group CFO, Unicredito Italiano Gary Crittenden Peter Marriott CFO, Citigroup CFO, ANZ National Peter Diesch Richard Meddings CFO, Karstadtquelle AG Group Finance Director Bernhard Duttman Standard Chartered Plc CFO, Beiersdorf AG Mark Rigolle Rahul Gupta CFO, SES Global CFO, Shinsei Bank, Ltd David Sidwell Andy Halford CFO (now retired), Morgan Stanley CFO, Vodafone Group Plc Richard Simonson John C.R. Hele CFO, Nokia CFO, ING Group Pierre-Jean Sivignon Jean-Marc Huet CFO, Royal Philips Electronics CFO, Royal Numico N.V.

John Stanhope Mike Ihlein CFO, Telstra Corporation Limited CFO (now CEO), Brambles Limited Managing the Evolving Relationship between the CEO and the CFO The days of the one-dimensional CFO number cruncher are long gone. CEOs of leading companies almost uniformly agree that they want a CFO who can help them manage the business, complement their skills, think strategically, and offer leadership, while still providing all of the requisite financial skills. It’s a tall order – made even more difficult by the complex relationship with the CEO that this changing role entails. For many CFOs – and the many financial executives who aspire to this more rewarding role – the real challenge will lie not in acquiring the expanded business ability but in successfully managing that relationship.

As part of our global Financial Officers Practice initiative to better understand the opportunities and challenges CFOs face today, we interviewed nearly 20 leading CFOs on four continents. What emerged was a vivid picture of the CFO role in transition around the globe and the professional and personal skills that CFOs need to manage the

critical relationship with the CEO. Chief among those skills are the ability to:

Collaborate with and influence the CEO Maintain independence Deliver business results, as opposed to primarily just managing the financial organization and reporting the results The task seems simple enough on its face, but an even cursory consideration of the first two skills – collaboration and independence – brings us up against the tension at the heart of the CFO’s new role. Many of the CFOs we spoke with cited the dual nature of the role, seeing an inherent conflict between focusing on controls and on business partnering. But as leading CFOs also told us, and as our experience confirms, CFOs who can successfully balance those two conflicting claims are most likely to be able to deliver on the ultimate skill: providing business results.

A Unique Relationship This inherent tension at the heart of the evolving CEO/CFO relationship emerging in leading companies makes the relationship like no other. It is closer than the arm’s length mentoring/monitoring relationship between independent board members and the CEO.

At the same time, it is more distant than a partnership of equals. Even “business partnership” – suggesting explicit contractual boundaries and spheres of operation – fails to encompass the subtle skills involved in managing the relationship.

“To me the CFO role is very much that of the right-hand person to the CEO and therefore the personal chemistry is extremely important,” says Andrew Halford, CFO of Vodafone. “If that works, I think it can be a very powerful combination.”

–  –  –

Collaboration and Influence Today’s CFO collaborates with the CEO on a broad range of issues from business strategy, organizational issues, investor relations, capital and investment management, and competition, to financial reporting, planning and analysis, compliance, and regulatory matters. Some of these issues involve long-familiar concerns of the CFO, but today these discussions are far more likely to take place in the broader context of company strategy. After Sarbanes-Oxley, strategy may have taken a back seat as many CFOs were preoccupied with mastering more rigorous financial reporting and control requirements.

Now, having largely implemented those requirements, CFOs have turned their attention to the more strategic issues with which CEOs increasingly seek help.

In many leading companies, financial executives are developing those strategic skills as they move up through the organization. “Telling someone to be more strategic is generally not very helpful feedback,” says Gary Crittenden, CFO of Citi and formerly American Express. David Sidwell, former CFO of Morgan Stanley, agrees. “Making sure Beyond collaboration lies influence. To enjoy real influence with the CEO, the CFO should also possess credibility and influence inside and outside the company.





that people in the finance function know how to approach strategy, how to think about developing a strategy, how to engage in a strategic dialogue can be difficult if you haven’t had experience doing it,” he says.

These types of leading companies work hard to develop strategic skills in their finance executives. “If we possibly can, we have people actually go outside of finance and have experiences in business units and then come back into finance,” says Crittenden.

“We find that people who understand how difficult it is to run a business unit and the challenges the businesses face have a better appreciation for how important it is that we be accurate, good, and forecast well. All of the skills that we think are important come

–  –  –

as we rotate people around. So we rotate them as much as we possibly can among various functions and try to develop people in this way.” In the event that the CEO is an excellent strategic thinker the CFO should bring complementary operational skills to the relationship. Similarly, if the CEO’s leadership style is to empower people by seeking broad input, sometimes at the expense of reaching a decision, the CFO can provide the requisite degree of decisiveness to help keep the organization moving forward.

Beyond collaboration lies influence. To enjoy real influence with the CEO, the CFO should also possess credibility and influence inside and outside the company. Externally the CFO can complement the CEO, especially for listed companies, by developing relationships with investors, analysts, and other opinion-leaders. Inside the organization, the CFO should develop strong relationship with the CEO’s other direct reports even though on a day-to-day basis there might be little need for interaction. It is equally important to keep some distance. As Peter Marriott, ANZ’s CFO puts it, the CFO is in “a relatively lonely role – if you become too friendly and too close to the rest of the team, you might lose some objectivity.” These strong relationships, tempered by objectivity, can help enormously when the CFO is helping the CEO build a business case from a financial standpoint.

The CFO should also have developed such relationships with all parts of the organization.

“As people are working on the way up the ranks, they should never underestimate the importance of building relationships with all of those who are going to be key opinionleaders later on in their careers, and they are not always necessarily the people who are in the direct line of sight,” says Vodafone’s Halford.

It is also important that the organization understands the broader nature of the CFO’s role. It’s important, say many of the CFOs we spoke with, that the entire organization views the CFO as a business partner, not as an accountant. A CFO who is well connected and influential throughout the organization can not only provide the CEO with broader general business advice but also use that organizational influence to help execute the CEO’s plans.

The CFO should also constantly consider the CEO’s agenda in order to become adept at anticipating what the CEO might need in the way of information, advice, or other assistance. If that help involves highly complex financial data, as it so often does, the CFO should be able to cut through the complexity to present it in terms of the CEO’s objectives. As the working relationship becomes firmly established, the CFO should be able to reliably provide the right information at the right time without being asked.

3 Egon Zehnder International Managing the Evolving Relationship between the CEO and the CFO Maintaining Independence If collaboration is the yin of the evolving CFO role, independence is the yang. Rooted in the CFO’s traditional fiduciary responsibilities and reinforced by recent legislation, independence remains a core value for top financial officers, who are perhaps best positioned to know when the interests of shareholders aren’t being well served. A CFO has to be utterly clear about standards and unwavering in setting the right culture for the organization in terms of control and business practices.

Further, it is often the CFO who must act as the hard-nosed realist in the face of financially unwise or even reckless corporate strategies, policies, or behavior. Says Citi’s Crittenden, “When you are a CFO, you have to be tough; sometimes you have to be really difficult, and you have to insist on performance, and you have to draw the line.

There has to be someone inside the company, like one of the parents in a family, who has the ability to say, ‘No!’” Nevertheless, he says, there is an art to saying no in a way that strengthens rather than destabilizes the relationship with the CEO.

Further, a CFO who isn’t genuinely independent ultimately does a disservice to the boss by acting as an echo chamber instead of a sounding board – telling him what he wants to hear rather than what he should hear. Says John Hele CFO of ING, “The only person the CEO can turn to is the CFO for help making the really tough decisions that need to be made. In terms of adding value, helping make that one right strategic move at the right price may be worth more to the CEO than all of the other things you do.” Like strategic orientation, skill at balancing independence and collaboration doesn’t come naturally to many people. Says Crittenden, “Some people are really good at saying no, and other people have very good relationship skills – it’s hard to find both of those in one person and it’s a very hard thing to train – but I think it is essential for someone who really wants to be a senior-level, successful CFO.” This may help explain why some of the best CFOs have had a combination of experiences in both line and staff roles.

In order to succeed in such different settings, they had to hone both collaborative skills and the ability to remain independent.

Delivering Business Results The simultaneous application of collaboration and independence in the relationship with the CEO should produce real business results. If it produces only a kind of alternation between friendly advice on the one hand and the raising of objections to risky business plans on the other, then the CFO likely isn’t truly fulfilling the role.

4 Egon Zehnder International Managing the Evolving Relationship between the CEO and the CFO In fact, a look at the CFO’s approach to risk offers a strong indication of how well he or she balances collaboration and independence. As Pierre-Jean Sivignon, CFO of Philips, explains, “It is very easy to play the role of a bad guy, to be the control guy, to say you can’t do this, you can’t do that. But the good CFO is not a risk controller but a risk manager. When a question of risk is put on the table, instead of simply saying yes or no, you say no but offer a way to get to yes.” In other words, a good CFO has, in addition to prudence, some appetite for risk in the positive sense of the word, looking at the world outside with an entrepreneurial interest.



Pages:   || 2 |


Similar works:

«1 COMMITTEE OF THE WHOLE PUBLIC WORKS & OPERATIONS COMMITTEE FINANCE & ADMINISTRATION COMMITTEE St. Clair Civic Centre Committee Room 1 February 21, 2012 6:00 p.m. The meeting of the Committee of the Whole was held Tuesday February 21, 2012 with the following people present: P. Carswell-Alexander, Chairperson, Public Works and Operations J. Agar, Chairperson, Finance & Administration S. Arnold, Mayor P. Gilliland Deputy Mayor (joined the meeting in progress) S. Miller, Councillor J. DeGurse,...»

«European Journal of Business and Innovation Research Vol. 1. No. 1. March 2003, pp.26-43 Published by European Centre for Research, Training and Development, UK (www.ea-journals.org) THE EFFECTS OF LEADERSHIP CHARACTERISTICS ON MICROFINANCE INSTITUTIONS’ SOCIAL PERFORMANCE IN KENYA SIMON MAINA WAITHAKA 2ROSELYN GAKURE, and 3KEN WANJAU Mr., PhD student Department of Entrepreneurship, JKUAT, KENYA Prof., Lecturer Department of Entrepreneurship, JKUAT, KENYA Dr.,Lecturer Department of...»

«Financial statements and review of the year 2014 2015 ADVANCE HOUSING AND SUPPORT LIMITED Financial Statements Year Ended 31 March 2015 ADVANCE HOUSING AND SUPPORT LIMITED FINANCIAL STATEMENTS Contents Page: 1 Board and advisors 2 36 Board report 37 Report of the independent auditors to the members 38-39 Income and expenditure accounts 40-41 Balance sheets 42 Cash flow statement 43-66 Notes on the financial statements ADVANCE HOUSING AND SUPPORT LIMITED BOARD AND ADVISORS BOARD MEMBERS...»

«Musical Box Society of Great Britain ARCHIVES CONTENTS November, 2015 Contents Permissions Committee Minute Books Technical Text Books Miscellaneous Other Documents Newspaper cuttings Artefacts Musical Box Tune sheets Business Cards Greeting Cards Orders of Service:Tune Lists. Brochures from other Societies Other Auction Catalogues Original Makers & Dealers Catalogues Modern Day Traders Literature Electronic Media Visual Media Audio Media Digital Media Patents for Mechanical Devices Museums...»

«Sharkawy & Sarhan Law firm Derivatives OUR ESSENCE In 2006, Jim Wright, Ahmed El Sharkawy and Karim Sarhan established Sharkawy & Sarhan. Their extensive experience and different backgrounds combined to create a firm set up to provide high quality business law services. The firm extended rapidly to become one of the leading firms in Egypt. Sharkawy & Sarhan have acted on some of the largest and most complex transactions in the Egyptian market. As an independent law firm, we work together with...»

«FINANCE COMMITTEE 8/28/2008 304 E. Grand River Avenue 7:30 AM AGENDA 1. CALL MEETING TO ORDER 2. ROLL CALL 3. APPROVAL OF MINUTES Minutes of meeting dated August 13, 2008 4. TABLED ITEMS FROM PREVIOUS MEETINGS None 5. APPROVAL OF AGENDA 6. REPORTS 7. CALL TO THE PUBLIC 8. DRAIN COMMISSIONER A. RESOLUTION AMENDING RESOLUTION NO. 2007-04-117 TO AUTHORIZE THE COUNTY OF LIVINGSTON TO PROVIDE FUNDING FOR OPERATION OF A STREAM GAGING STATION ON THE HURON RIVER IN HAMBURG TOWNSHIP Drain Commissioner /...»

«The Impact of Total Quality Management (TQM) on Financial Performance: Evidence from Quality Award Winners Kevin B. Hendricks Richard Ivey School of Business The University of Western Ontario London, Ontario N6A-3K7 CANADA PH: 519-661-3874 FAX: 519-661-3959 Email: khendricks@ivey.uwo.ca Vinod R. Singhal DuPree College of Management Georgia Institute of Technology Atlanta, GA 30332 PH: 404-894-4908 FAX: 404-894-6030 Email: vinod.singhal@mgt.gatech.edu March 2000 Total Quality Management (TQM) is...»

«Tradable Permits in Principle and Practice By Tom Tietenberg∗ Mitchell Family Professor of Economics Department of Economics 5242 Mayflower Hill Drive Colby College Waterville, ME 04901-8852 Tel. (207) 872-3143 FAX (207) 872-3263 Email: thtieten@colby.edu Web: http://www.colby.edu/personal/thtieten/ I. INTRODUCTION BACKGROUND One of most prominent approaches for coping with the problem of rationing access to the commons involves the use of tradable permits. Applications of this approach have...»

«iconvienna 2014 The 10th European Business and Investment Forum East West Summit on Innovation and Smart Cities April 9 to 11, 2014 Vienna presented by MAKE CONTACTS TO CONTRACTS Guest Country Slovakia Welcome to iconvienna 2014 East West Summit on Innovation and Smart Cities „Willkommen im Herzen Europas. Willkommen in Wien. Es freut mich besonders, dass in diesem Jahr die iconvienna bereits zum 10. Mal in Wien zu Gast ist. In einem Jahr, in dem sich auch der Beginn des berühmten Wiener...»

«No. _ IN THE CASHCALL, INC., and J. PAUL REDDAM, IN HIS CAPACITY AS PRESIDENT AND CEO OF CASHCALL, INC., Petitioners, v. PATRICK MORRISEY, ATTORNEY GENERAL, Respondent. On Petition for a Writ of Certiorari to the Supreme Court of Appeals of West Virginia PETITION FOR A WRIT OF CERTIORARI Clifford M. Sloan Thomas C. Goldstein Thomas J. Nolan Counsel of Record SKADDEN, ARPS, SLATE, Tejinder Singh MEAGHER & FLOM LLP GOLDSTEIN & RUSSELL, P.C. 1440 New York Ave., NW 7475 Wisconsin Ave. Washington,...»

«1 GOVERNING EMU AFTER THE CRISIS – SENSE AND NONSENSE OF THE NEW PRACTICES By László CSABA/CEU and CUB/e-mail:csabal@ceu.edu Forthcoming in: LATOSZEK,E. POCZEK,M. – KLOS,A. – OSUCH-RAK, E. – PACHOCKA,M., eds: FACING THE CHALLENGES IN THE EUROPEAN UNION. WARSAW: ELIPSAUniversity of Warsaw Press, 2015. BIO: László Csaba is professor of international political economy at Central European University and Corvinus University of Budapest, Member of the Hungarian Academy of Sciences and of...»

«SCHOOL IN A BOX Guide Series MANUAL 9 HOW TO FINANCE YOUR PLAN SCHOOL IN A BOX ABOUT THIS SERIES The SCHOOL IN A BOX Guide Series is designed as a ‘one-stop shop’ for anyone interested in establishing their own financially self-sufficient school. The series is made up of nine individual manuals which between them cover all of the key areas which will need to be considered in detail in the creation of any Self-Sufficient School. Each manual offers a step-by-step guide to building your...»





 
<<  HOME   |    CONTACTS
2017 www.abstract.dislib.info - Abstracts, online materials

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.