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Trouble at the Top: What to Do When the CEO-CFO Relationship Goes Sour

Every relationship has its share of bad moments. At some point, inevitably, there’s a misunderstanding or a feeling that one person doesn’t respect the other or a sense of fatigue at being around each other all the time. It happens with spouses, among colleagues, and between a boss and employee. The stakes could be the highest when that boss is the CEO and the subordinate is the CFO. In that case, any grumblings have to be suppressed, for the greater good of the company and its staff.

For the most part, any big tiffs between the chief executive and the No. 2 executive (who is usually the CFO) do manage to stay out of public view. After all, senior executives who have managed to secure a spot in the C-suite haven’t gotten to where they are today without knowing how to be professional, even in heated situations. However, sometimes a rift between the two positions becomes too wide and the risk of one executive having to leave arises.

CFOs at smaller companies in particular, where CEOs are the founders and may own part or all of the company, could have a dartboard on their back if they disagree with what the chief executive believes, according to those who have worked under such conditions. “Typically an issue arises if the CEO feels they are not getting the support they want, whether it’s their perceived reality or something that’s really happening,” says Thomas Sabath, a consultant who provides operational controller services to private equity and oil companies.

In a previous job, where he held a top finance spot, Sabath found himself suddenly “out of the loop” with decisions getting made without him and no one giving him a head’s up before changes occurred. Knowing he couldn’t keep doing his job effectively that way, Sabath confronted the CEO and asked to be included. “One week later, I was out,” he says.

In a Proformative discussion on this topic, Sabath blamed problematic CEO-CFO partnerships on the one area that neither executive has much control over. “A dysfunctional relationship between the CFO and CEO is almost always a personality issue,” he wrote. “Overcoming personality issues are very difficult and usually are resolved by someone leaving.”

Before it gets to that point, hopefully, the executives can work out their differences. As it is, the roles of CEO and CFO are poised for some conflict. By the nature of their job, CFOs sometimes become known as naysayers, gaining a reputation for always having to say no to other executives who have big dreams that require lots of capital. On top of a disconnect between lofty goals and reality could lie a difference in work styles and philosophies. Moreover, CEOs tend to be more extroverted than CFOs. They may think in broader terms and plans than a CFO who is detailed oriented and who thinks more analytically and may not always excel at getting points across in a way the CEO can process. The CEO may also feel rivalry with this second-in-command executive (40 percent of CFOs believe they’ll be the next in charge, according to a 2013 Deloitte study).

While big, career-ending conflicts tend to be rare, they do happen. And in some cases, one executive may just not be a good fit. This could be more of an issue these days, observers say, when economic uncertainty (which breeds insecurity in leaders and stress among everyone else) at the same time that the CFO role has risen in prominence. While it’s rare that a CFO would ever move straight into the CEO spot, despite what CFOs hope will actually happen, it’s more of a possibility than in the past. “The role of the CFO has risen to one of a strategist and a catalyst for change,” says Ajit Kambil, global research director for Deloitte’s CFO Program. “The financial crisis really changed the role of the CFO and elevated him even further.”

Can the Relationship Be Saved?

In the early 2000s, as a chief operating officer with a deep financial background, Thomas Fumarelli confronted his CEO. The two executives were not seeing eye to eye, and something had to change. Fumarelli asked his superior for counseling in a setup akin to marriage counseling, with the two executives working through their personal feelings and their business challenges with a third party during ongoing sessions. A decade later, Fumarelli carries over the lessons he learned during that time in his consulting practice, called Fumarelli Associates, which provides leadership development and “partnership coaching” which is similar to what he experienced at his former employer.

Ideally, he explains, executives do such coaching sessions before serious problems arise. Venture capitalists, for example, may hire someone like Fumarelli if they are unsure whether a new CEO and new CFO will work well together. A CFO suddenly working for a new CEO may also request such an arrangement; the majority of the time, incoming CEOs fill their C-level ranks with former colleagues, according to Adam Vandoski, a partner at Vantage Cost, a procurement consultancy.

Read on for tips on making the relationship between these top executives work and exploring whether a broken one can be mended.

Cultivate the relationship from day one: “The CFO reports to the CEO except in exceptionally rare cases — it’s the single most important relationship CFOs have to get right at the outset,” Kambil says. Divergences in views may likely occur later on but may not arise to the level of significant problems if the relationship has a strong foundation. While you don’t have to be the best of friends, you may want to get to know each other outside the office, away from the distractions and demands of the workplace. Fumarelli, for instance, met with his former CEO for coffee once a week (eventually, the two executives amicably parted ways after a sale of their company).

Always present a united front: The top executives set the tone for the entire company — employees have a constant need for guidance and reassurance from those who are in charge. If the messages coming from the top level are mixed, morale could be affected and, ultimately, the performance of the overall business could falter. “It’s fine to disagree and to argue and debate behind closed doors, but when they are in the public view, they need to appear to be always aligned,” Fumarelli says.

Accept that rifts are going to happen: The issue is how those rifts get resolved. “There will be always be disagreements and natural tension between these roles, but if there’s mutual respect and if everyone understands their part, I think it makes resolving conflict and navigating uncertainty that much easier,” Fumarelli says.

Look outside the company for input: Everyone involved with the company has an agenda, including the board of directors and the head of HR. Just like a faltering marriage likely wouldn’t be helped by the meddling (albeit well-intentioned) actions of parents and siblings, neither could a problematic partnership between executives get fixed solely by an internal trusted advisor who may be swayed by one person over another, Fumarelli notes.

Communicate in ways the CEO can understand: “Try to mesh with the CEO’s style, how they listen to information and how they like information presented to them,” Kambil suggests.

Realize how you come across: Kambil emphasizes the need to have self-awareness and a willingness to ask the CEO regularly how you are performing and ways you can improve. While acting proactively can be good for your relationship and your professional development, it should also prevent you from getting blindsided.

Be open with each other: Fumarelli highly recommends all executives read Crucial Conversations: Tools for Talking When Stakes Are High by Kerry Patterson. The book provides ideas on ways to address grievances without letting emotions interfere with the messaging. Don’t make the discussion about you and your needs, Fumarelli suggests, but stick to the facts, acknowledge the other person’s point of view, and express your feelings on how to get past any roadblock the two of you are facing.

When all else fails, have an exit strategy: Fumarelli recommends being intentional about how you manage the relationship with the CEO as much as you should manage your career. You don’t want to be pushed out without a backup plan, and you also don’t want to be slowly demoralized under false hopes that matters will improve.

The fact is, says Wayne Spivak, president at SBA Consulting, an interim CFO business,

“if the CFO and the CEO aren’t getting along and it’s to a point where it’s actually difficult for any decision to get made, because they’re not in alignment, then it’s time for somebody to go.”

Most likely, he adds, that person will be the CFO.

 

Sarah Johnson is a freelance business writer and editor living outside Boston.

Comments

Kimberly Knight
Title: CFO
Company: Tigé Boats, Inc.
(CFO, Tigé Boats, Inc.) |

I have found that there can be a language barrier between the CEO and CFO, for that reason, when speaking and reporting I use dialog and visuals such as graphs to show and backup what I am saying. Works extremely well while conveying the information, still in detail, without overloading or having it come across as just our personal opinion.

ArLyne Diamond
Title: Owner - President
Company: Diamond Associates
LinkedIn Profile
(Owner - President, Diamond Associates) |

Strong personalities often disagree. In fact, the CFO( and the CEO might have different primary values and assumptions guiding their decisions. There is clearly a lack of alignment when the disagreement reaches a point of needing an outside consultant to mediate the conflict. If it is due to a personality clash than usually the CEO wins the battle - but more often than not, I find that when I work with people first trying to learn from them what they see as of primary importance, there can be a positive resolution to the dispute - and a renewed positive on-going relationship.

Putting it under the rug is the worst solution - although all too often that's where the problems are placed when they start..... Wish people would get help from professionals able to help them long before the animosity escalates.