CFO and CEO: key allies in value creation
A partnership for performance
An effective CFO-CEO partnership is one of the defining characteristics of a well-run, market-leading organization. Over the last decade, we have seen this relationship evolve and shift.
CFOs have broadened their focus beyond their traditional scorekeeper role, and CEOs have relied more and more on their CFO’s insights to drive business decisions, to represent the organization’s goals to external stakeholders and to help develop overall strategy. During the global financial crisis, the CFO was thrust into the limelight, as their skills and experience in financing and cost management provided a lifeline for many organizations.
In the many conversations we have had with CFOs and CEOs over recent years from all corners of the globe, they unanimously believe that CFOs now need to fulfill the role of strategic advisor to the CEO, with a focus on value creation as well as more traditional finance responsibilities.
However, when asked specifically about some of the major value creation activities on business’ agendas today – M&A decisions, performance measurement, operating model redesign and the shift to digital – our survey of 652 CFOs reveals a persistent focus on cost management as CFOs’ main contribution. This is despite the fact that CFOs consider that their relationship with the CEO has strengthened over the last three years, driven by new growth opportunities, changes in strategy and new products and services.
The question arises: As the global economy makes its faltering return to a more stable footing, will CFOs' continued focus on cost management enable them to act as a strategic business partner, focused on value creation? What do they need to do differently to be able to focus more time on strategic activities?
Our study unveils a second major issue. Of the four activities requiring CFO-CEO collaboration we focus on for this study, CFOs see themselves making the least contribution to the “shift to digital.” Only 50% consider it a high or very high priority in the next three years, and only 49% responded that they will make a high or very high contribution.
This is surprising, as digital is arguably the most disruptive force organizations are facing today. It has the power to both revolutionize entire business models and sectors, and transform some organizations from market leaders to irrelevance in a frighteningly short time frame. And yet our survey suggests that CFOs have not figured out what role they should play in driving and enabling the shift to digital, and managing the legal, tax and regulatory risks that it creates.
We invite you to read our study to discover how the CFO-CEO partnership is evolving, how the two are collaborating on major business challenges and the obstacles they are facing. We also share suggestions and insights on how they can work together to improve their partnership. We are confident you will find our report useful as you adapt to the continually changing business landscape, and develop in your role.