Studies show that the CEO-CFO relationship bears strongly on a CFO’s success and longevity in their role.
In a 2017 Pulse Survey of more than 300 Chief Financial Officers and heads of finance, Korn Ferry found that more than 50% indicated a poor CEO relationship was the top reason a CFO would voluntarily leave their position.
And with turnover costing upwards of 200% of the salary for a senior executive, finding and keeping the right people in those roles can have very real and tangible benefits for an organization.
If you’re looking to further your organization’s goals and strategies by fostering a productive CFO-CEO relationship, here are a few key steps to get started.
But what if your CEO-CFO relationship is already in trouble? Conflict in the C-suite is an inevitable outcome of the stresses of leading an organization. With strong opinions and various experiences, your chief executives are likely to arrive at different and unique approaches to challenges, and that passion can lead to energetic disagreements around business decisions.
When one person is tasked with delivering dividends to shareholders, one person’s prime responsibility is to maintain the company’s financial wellness, one person is all about public perception, etc., conflicting priorities within your leadership team can get tricky quickly. Additionally, executives don’t generally rise to their positions by being mealy-mouthed or wishy-washy. Executives are typically opinionated, outspoken, and confident they are right.
Conflict is not an inherently negative thing. It’s critical to the responsibilities and problem-solving in the C-suite. According to industrial psychologist and Russell Reynolds leadership expert Amy Hayes, “Sharing dissenting opinions is often a sign of a strong strategic partnership. 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. In turn, this allows the CFO to operate at that level. By contrast, without strategic partnership, the CFO can be constrained to more transactional thinking and responsibilities, which can undermine the relationship and under-leverage the CFO’s ability to make a positive impact on the business.”
But what happens when that conflict goes wrong? How can you take action to reel in a business conflict which has turned into a distracting and counterproductive disagreement?
Conflict avoided rarely goes away. More likely, it grows and festers and poisons everything around it. It fosters resentment in all it touches, including many innocent bystanders impacted by the disfunction and interruption related to it. Conflict undermines productivity, efficiency, and attitudes, all of which trickle down to the organization’s financial statements.
Chief executives must be able to deal directly with differences of opinion and approach in order to efficiently move past issues and maintain the company’s peak form. Whether they are able to work through to a compromise or ultimately just have to live with one person’s approach winning out, being able to face the conflict head on and discuss it professionally and honestly can keep a disagreement among the leadership team from being a companywide battle.
While your Chief Executive Officer and Chief Financial Officer are debating the merits and expenses of a new strategic direction, the actual costs for the disagreement might be more than the cost of the initiative being discussed. The impacts could include interruption of normal, day to day business; delays in determining and moving on a strategic direction; loss of cohesion among the leadership team, including potential side-taking; silo building; and a general loss of respect from the employees at large. In some cases, news of infighting can make it out to shareholders and analysts, ultimately undermining the company’s value and credibility.
As leaders of the organization, it’s imperative that they understand what will happen if they continue to hold doggedly to their position with no room for compromise. The resulting losses in productivity, morale, staff retention, and even possibly actual cash value of shares may very well be more than the cost of either moving forward or not.
If the CEO and CFO can’t resolve the conflict on their own, it’s time to reach out. And if they won’t ask for help, then the remaining leadership team or Chairperson must step in and identify an executive coach who can help them work through the details and figure out a way forward. As an outside third party arbitrator, the coach can bring logic and perspective that those closest to the situation likely can no longer find, allowing the leadership team to move forward and maintain the business’ cash flow.
An executive coach is likely to be more successful because they can come in without personal connections or agendas and objectively view the conflicts. They can not only provide a safe space for the individuals to work out their difference but can help each individual see how their actions are impacting those around them. They can call out biases, either conscious or unconscious, and help the individuals work past them.
One of the most valuable things an executive coach brings to a C-level conflict is the ability to take a dysfunctional argument and transform it into a results-driven, healthy conflict. When a business disagreement has devolved into personal attacks and other unhealthy behaviors, it’s easy to forget that conflict serves a very real and valuable purpose. By getting away from the personal aspects of the situation and focusing on the crux of the issue, the coach can move the participants back to the best solution for the organization.
In short, the CEO-CFO relationship is critical to an organization’s success, and by setting the position up correctly and dealing with issues as they arise, you can greatly improve your organization’s outlook.