Calming the Waters

What happens when the CEO and CFO just don't get along?

In the autumn of 2004, Theo Epstein was the toast of Boston. The Boston Red Sox had just won the World Series for the first time in 86 years, and it was Epstein, the team’s 30-year-old general manager — handsome, humble, and homegrown — who had assembled the championship roster. In 2005, the Red Sox again made the play-offs, and the team’s future looked promising. So last fall, when Epstein’s contract was up for renewal, it was widely expected that negotiations would be smooth.

Instead, Epstein left the team after days of tortuous negotiations failed to produce an agreement. Speculation about the stunning turn of events centered on possible friction between the young GM and Larry Lucchino, Red Sox president and CEO and Epstein’s boss. Their supposed rivalry dominated Boston’s hot-stove season until this past January, when, in another surprising twist, Epstein returned to the team.

Tension between top executives may be more visible in the world of professional sports, where fans train gimlet eyes on a team’s operations, but it’s hardly limited to that arena. Nor is the CEO-CFO relationship, commonly a close one, immune to frictions. Indeed, given a turnover rate of 16 percent among CFOs at Fortune 500 and S&P 500 companies last year, according to a study by recruiting firm Crist Associates, there is little doubt that disputes over autonomy and management style can cause finance executives to walk away from their jobs.

While both employer and candidate carefully assess personality and fit issues during the interview process, it can be hard to know in advance what the day-to-day dynamics will be. “Sometimes people put on their best tuxedo for the interview,” says Jim Grenfell, a partner with the professional services firm Tatum LLC and a former CFO in the communications industry. “After you’re hired, the real person comes out.”

Can executive personality clashes like those that roiled the Red Sox’s front office be avoided, or if not, then resolved amicably? What should CFOs do when they find themselves locking horns with their boss?

Role Playing

The first thing to do is acknowledge that, to some degree, the clash may be rooted in the different roles of the CEO and CFO. “My advice to both sides would be to recognize that there may be inherent personality differences,” says Gwen Wisler, former CFO and, more recently, chief executive of The Coleman Co. “You’re always going to hear a CEO saying that the CFO is too conservative.”

A recent study by executive recruiting firm Korn/Ferry International confirms Wisler’s experience — and shouldn’t be surprising to finance executives. The study, which was based on data collected on some 500,000 executives, suggests that CFOs may find chief executives to be stubborn, arrogant, and manipulative, while CEOs may find finance chiefs to be rigid and risk-averse. So it’s no wonder that so many finance heads leave their jobs for the ever-vague “personal reasons” or “to pursue other interests.”


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