CEO and CFO: What Makes it Work?

What's the best personality match-up for CFOs and CEOs?

The CEO-CFO partnership is one of the most important in an organization, and as Deloitte recently noted, is one that has undergone major transformations in recent years.

However, not every pairing works, the firm notes, so boards that are making these selections need to pay attention to personality types just as they do prior experience and qualifications. In a survey of CFOs, more half of respondents identified their working style as that of a driver - someone who is logical, experimental, determined, analytical, direct, competitive, decisive, tough-minded and pragmatic.

Another 10 percent said they were pioneers while 10 percent labeled themselves integrators. The other 30 percent dubbed themselves guardians, being they were meticulous, traditional, calm, loyal, concrete, process/detail oriented, socially conscious and conscientious. 

When asked to categorize the working styles of their CEOs, one-third called the chief executive a driver and one-third were pioneers - adventurous, spontaneous, creative, adaptable, spontaneous, full of energy and interested in new experiences.

Based on its analysis, Deloitte determined that it's key to have one driver in the relationship, and that it's more often the CFO who fills that role.

"Their above-average flexibility in pairing with CEO types may give them more career opportunities, better CEO working relationships, and better ability to absorb CEO changes," the researchers commented. "It may help them reach and succeed in future CEO roles as well."

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A company may need several different types of CFOs in the course of a decade or two, depending on the means it intends to deploy to grow and what cycle of life it is in. Referencing Michael Watkins STaRS model in his excellent book "The First 90 Days" (Harvard Press, 2003), there are 4 major cycles: start-up, turnaround, realignment, and sustaining growth. Start-ups and turnarounds require distinctly different CFOs, and often the sustaining growth CFO (i.e., the caretaker type) also needs to be shown the door if he or she can't successfully realign a company prior to a turnaround becoming necessary. Necessary skills are also dictated by strategy. If the company plans to grow by acquisitions, it will need more of an M&A tactician that a "driver" who can drive an organic, high-growth strategy. They're completely different things. Also different is the type of CFO who is in a company for which financing is a top priority. This can involve raising VC money, orchestrating an IPO, or repeatedly going to the street (as in a utility) to issue debt or preferred stock. Indeed, each of these financing scenarios typically requires a different kind of financing CFO.

Long story short, we should avoid simplified generalizations. A CFO needs to be able to fit into the situation that the business is in. To the extent he or she can't adapt to a new situation or strategy, then a new CFO needs to take his or her place. No CFO can be an expert in everything. Hence, CFOs need to be prepared to move around on occasion. Doing so is not a sign of defeat. It's merely a realistic recognition that different types of expertise are needed from time to time.

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Very interesting topic that I would like to learn more about. Would you please publish a link to the research?

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To go along with this topic - What's should the relationship be between the COO and CFO?

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Tolerance and patience with your CEO!

I jokingly (not really) tell people that most CEOs I know are bi-polar and tend towards manic personalities. That's why they are so magnetic and frenetic on the upside, and volatile on the downside. The manic part is what is attractive to boards and investors, and the volatile side is what they save for the working folks. Like their CFOs. And actually the CFOs get the best of it - other employees further down the chain don't fare as well.

I find that makes the "guardian" gene strong in CFOs. We're the glue for the rest of the company and help keep the CEO stabilized. I agree that many CFOs are also "drivers" and "pioneers", although those percentages may be a bit high :).

Interesting findings.

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