CEO vs CFOWhat's the Difference?
Out of all the many things that factor into the success or failure of a company, having a strong team that knows how to perform their roles is incredibly important.
You can have a great market opportunity with a bad team, and they might be able to do alright, but a great team can do amazing even in worse market conditions.
Part of assembling a strong team is to understand each role, which type of people fit into that role the best, and how that relates to the culture and goals of the company.
Someone who thinks in a very abstract and creative way and who hates math and numbers and precision is probably going to be miserable as an accountant or a CFO, but they’ll be happy and thrive in a more creative position.
Recognizing these things and putting people in the correct roles to succeed, from the top down, is really important in building a successful organization.
Let’s compare the CEO vs CFO to understand the similarities between them, the skill sets that each position requires, the roles and responsibilities of each position, and more.
Let’s start with the basics of a CFO versus a CEO in an organization.
CEO vs CFO: The Basics
The CEO is at the top of the corporate food chain, but the CFO isn’t very far behind.
The c-suite, a term used to identify the high-ranking executives in a company, is composed of a handful of individuals.
Each of these individuals have very important jobs and many other employees who rely on them to set the course of the business, strategies, identify opportunities, and ensure that everything is running smoothly.
What Does a CEO Do?
The CEO, as mentioned a moment ago, is the highest ranking individual inside of a company.
The board of directors, as a collective, has the power to oust the CEO but an individual board member isn’t as powerful or influential to the company as the CEO is.
The CEO’s job is to set the tone for the business. They dictate the culture, the objectives and goals, the vision, and the strategy it will take to achieve all of the aforementioned things.
This can be a lot of work, and requires a special set of skills to do it effectively. Even if it doesn’t sound like a lot on paper, there’s a lot that goes into it.
If there’s a public event, the CEO will often act as the representative of the company.
The same is true for when there’s a controversy or a public statement needs to be made.
Simply put, the CEO is the person who faces the public and accepts responsibility when things go wrong and shares praise with their team members when things are going right.
The specific day to day tasks of a CEO will vary from business to business, and will depend on the CEO and their strengths, too.
The CEO works closely with the other members of the c-suite, who help to strategize and also to implement the vision of the CEO in their departments by coordinating with managers and department heads.
What Does a CFO Do?
The highest ranking financial position in a company is the Chief Financial Officer, or the CFO for short. This c-suite member is a high-ranking executive in a corporation, and their responsibilities include:
- Identifying financial strengths in a business,
- Identifying financial weaknesses in a business,
- Keeping track of cash flow and ensuring the company is well-capitalized,
- Helping the CEO with financial proposals,
- Planning the financial future of the company,
- Taking advantage of financial opportunities for growth while avoiding pitfalls as much as possible.
This senior managerial role is the person who oversees the overall finances of the company. Their specific tasks, much like those of the CEO, can and will vary depending on the business, but the role of a CFO is more clearly-defined in most organizations, even if it can vary a bit.
Differences Between CEO vs CFO
The CEO ranks higher, but needs a strong CFO to handle the financials of the company.
A CEO probably doesn’t have every necessary skill for every department in the company, even if they have a general overview of them. That’s where the CFO factors in.
The CFO will coordinate with the CEO when it comes to the finances and the financial situation of the business.
When Does a Company Need A CFO?
Choosing when to hire a CFO isn’t necessarily dictated by the total size of the business, but rather the need for a specialized role of someone who is an expert in finance.
This timeframe does typically line up with a certain amount of growth, but smaller companies could still benefit from having this level of expertise. If a company is too small, though, it’s probably not worth it quite yet to hire a CFO.
When Does a Company Need a CEO?
Business owners will often toil over when it’s time to hire a CEO.
The cost can feel staggering, especially for smaller companies, but the CEO of a small business is going to command a much lower wage than the CEO of a Fortune 500 company, for instance.
It can be very difficult for a small or medium size business owner to hand the reins over to a CEO.
The owner will be an expert in their field, but a CEO will be an expert in the specific skills of running and growing a business.
The owner can carry the torch a certain distance but at that point a CEO can really ramp things up and take it to the next level if the owner is able to go this route.
Some companies will be founded and appoint a CEO right from the get-go, whereas companies that are built by the owner from the ground up may never end up hiring a CEO, or may wait a bit longer until the business is more established.
Final Thoughts on CEO vs CFO
If there’s a sense of competition or rivalry between a CEO and a CFO, it can make things difficult.
They should be working in unison and towards a shared vision.
Ultimately it’s the CEO who is in charge of setting that vision and the CFO should do everything they can to make it into a reality.
The CEO and the CFO are part of a larger team that consists of every single person working for the company, from an entry-level person who was just hired all the way up to the c-suite and board members and the owners.
Everyone plays a role to get the job done, even though the roles are different between a CEO vs CFO.
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