How Multi-million Dollar Companies are Running Without CFOs

Till recently, every big company relied heavily on its Chief Financial Officer to drive the financial aspects of the company. Absence of a CFO was enough to give panic attacks to potential investors and business partners. Anything and everything that had to do with money was under the CFO’s hat, from talking the investors into deal, financial reporting, auditing, forecasting of the profits, calculating the risks, finding strategies to diminish those risks, to making sure the company doesn’t run out of money, at any time.

However, over the past decade or so, the responsibilities of the CFOs have not just been limited to finance, but expanded into various functions of business, as some big companies have come to realize that CFOs could not work independently.

CFOs spreading their wings

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Nowadays, CFOs should be an intrinsic part of all the strategies and the important decisions the company makes. In addition to being the finance expert of the company, which is a given, CFOs these days have to fit in certain other roles in different branches of the business such as operations management, performance, and growth.

  • Finance Chief – The CFO is at the helm of all matters pertaining to finance assisted by a team Accountants who are adept in the field of finance. The CFO along with this team takes care of financial reporting, capital structure, audit and compliance, etc. The team is also responsible for predicting financial risks to the business and devising plans and strategies to combat those risks.
  • Management Expert – CFOs are expected to plan management strategies often in consultation with the Chief Executive Officer. They should have excellent communication skills to manage the different operations of the business and the people involved in those operations. It is extremely important for CFOs today to be knowledgeable about all aspects of running a business. Additionally, a CFO is a key player in establishing and managing client and investor relations and is a prominent member of board.
  • Performance Driver – In recent times, CFOs have made their presence felt in the performance sector as well. They have been involved in outlining various methodologies across the organization to measure and check the company-wide performances.

Why are big companies dropping the title?

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Many CFOs have contributed to the overall progress of the company through their financial expertise, management knowledge, and their zeal to promote performance. Their role has evolved so much that the traditional term CFO doesn’t justify the plethora of responsibilities they handle.

This has led some multi-million companies to do away with the designation entirely. They believe the existing CFOs can do much better once they step out of their positions, letting the Controllers and Principal Financial Officers take their place instead. Most of these companies have requested their CFOs to shift their focus and expertise on other important areas of business. All of them state that this change has not affected the performance of the company in any way.

The long standing CFO of CBS Corp, Joseph Ianniello, is now the Chief Operating Officer of the company who works alongside the CEO. While serving as the CFO, Mr. Ianniello began to work closely in the technology, legal affairs, human resources, and manufacturing departments of CBS Corp. The company doesn’t have a CFO at the moment but alternatively has distributed the responsibilities of the role among the Controller and Chief Accounting Officer, the President for Corporate Finance and Investor Relations, and other executives. At least 7 other billion dollar companies including Jacobs Engineering Group Inc., Oracle Corp., Exxon Mobil, etc. have followed this practice.

What’s the road ahead?

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This change in the dynamics of the top team doesn’t suggest that the designation of the CFO will cease to exist. But, it clearly states that big companies are no longer willing to follow the conventional methods of running a business, and they won’t shy away from experimenting and innovating. Also, the role of top financial officers such as the Controllers, Principal Financial Officers, etc. will become more significant with time.

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