CEOs are optimistic about the global economy and the outlook for their organizations this year, perhaps reflecting anticipation of a more business-friendly landscape in 2025. To take advantage of those conditions in today’s environment requires a more driven and agile C-suite — one designed for collaborative leadership and with the understanding that roles, responsibilities, and disciplines will increasingly overlap. In designing an effective approach for enterprise leadership, CEOs are expressing the need to break down traditional boundaries within the C-suite and, by necessity, cultivate closer working relationships with their CFOs, according to a survey by Deloitte.
Defining the Modern CFO
In response to rapidly changing trends in technology, government policy, and investor expectations, CEOs are seeking CFOs who will partner with them to align stakeholders, assure investors, fund investments and initiatives, and drive accountability for strategic and tactical performance.
The evolving role of the CFO didn’t happen overnight. When you compare recent job postings to those from 10 years ago, you see a significant move to strategic, transformational leadership qualities, including heightened decision-making, value creation, and business partnership. With more democratization across the C-suite, it isn’t enough to be a traditional financial engineer; today’s CFOs need to clearly articulate both organic and inorganic value propositions in a way that serves the company’s mission and resonates with all major stakeholders. In other words, they need to think like CEOs.
CFOs who can articulate a financially grounded story are infinitely more valuable to their organizations and their CEOs. They can go beyond providing numbers and clearly articulate the need for strategic investments, necessary cost reductions, and a need for leaders to have ownership over both growth and operating excellence. These qualities make for a CFO who not only understands the needs of a modern organization but can also be trusted to carry out the mission of the CEO.
Establishing the CFO as an Executor of the CEO’s Vision
The reality of large, complex organizations is that CEOs can’t manage every part of the business as closely as they may like. A CFO who can help move strategic priorities forward without direct oversight can build trust and goodwill with the CEO and the board, contributing to a strong, long-lasting partnership.
By adopting a future-oriented mindset, CFOs can establish themselves as extensions of their CEOs, working in tandem to make sense of a volatile business landscape, identify threats, and engage others in the C-suite in developing and executing necessary actions. By breaking down these silos, leaders can increase sightlines between the financial tasks CFOs manage and the big-picture strategic moves that fall under the remit of the CEO, encouraging smarter collaboration, faster decision-making, and better results.
Planning for the Future
A successful relationship between the CEO and CFO lays the groundwork for CFOs to be considered as high-quality candidates for CEO succession. CEOs are taking an active role in internal pipeline development and preparedness and are increasingly indicating that they look toward CFOs as potential successors, citing both their role as strategic partners and their growth-oriented mindsets. In fact, Deloitte’s 2Q 2024 CFO Signals survey found that vertical moves are one of the top contributors to CFO vacancies (47 percent).
As chief operating officer (COO) roles continue to become more defined and focused on overall P&L management, the odds increase for a CFO to move into the line of succession for chief executive. That shift means CEOs need CFOs to drive more enterprise-level strategy and operating processes like setting and measuring operating performance, calculating investment ROI, overseeing cost reduction, and assessing vendor performance, among other needs. By fulfilling their roles in this way and taking more responsibility for key transformative enterprise initiatives, CFOs can improve their chances of being considered higher-quality candidates for CEO succession. This is especially important as a greater number of CFOs are absorbing responsibilities traditionally associated with the COO, resulting in a 33 percent decrease in COO positions.
This new year will bring its own challenges, as organizations adjust to the policies of the new administration and continued economic headwinds. A strong working relationship between the CFO and CEO can help fortify an organization against unprecedented challenges and unlock opportunities for growth, all while lining up candidates for CEO succession who understand their organizations — and can set them up for long-term success.
Vincent Firth WEV87 G94 is a managing director with Deloitte Consulting LLP in the US Strategy service line, Monitor Deloitte. As a co-leader of Deloitte’s Chief Executive Program, he supports the success of CEOs and business leaders throughout their careers and works with CEOs and corporate executive teams to build new strategic capabilities; redesign organizations; and develop, align, and implement strategy.
