From the safe haven of retirement, Bob Bennett, former finance director of Northern Rock, recently admitted that there were tensions between him and then CEO Adam Applegarth during the six years they worked together at the UK bank.
Bennett, who retired in January 2007, told UK media this February that Applegarth was “an energetic, youthful, growth-oriented individual” who “was difficult to deal with and…difficult to handle.” He added that Applegarth’s overzealous pursuit of Northern Rock’s growth strategy was partly to blame for the downfall of the bank, which was nationalised in February after succumbing to the credit crisis.
With both CEO and CFO no longer at the company, Bennett can speak frankly about the problems he faced there. The challenge for most CFOs is how to deal with a maverick CEO while still working with them. Standing up to a chief executive is one of the thorniest parts of any CFO’s job but experts say three things will make it easier: don’t get emotional; back up opposing views with factual evidence; and communicate with the CEO every step of the way.
Beyond this, CFOs have a range of options when raising concerns about their CEOs. At one end of the spectrum is an open discussion. Margaret Ewing, vice chairman of Deloitte, took this approach with CEO Mike Clasper when she was CFO of UK airports operator BAA. “I was able to say, ‘This doesn’t feel right to me. Let’s spend some time looking at this.’…I would go away and do a bit more research and he would go away and do a bit more thinking.”
At the other end of the spectrum, CFOs can include a third party — say, the chairman or another non-executive director — who can broker a solution. Ewing advises discussing this step first with the CEO. “If you just go to the chairman without telling the CEO that you’re going to do that, you have got a terminal relationship,” she says.
Somewhere between these two extremes, Paul Turner, an executive coach with Blessing White, says CFOs can modify a CEO’s misguided strategy by asking if it can be reviewed regularly. Meanwhile, Binna Kandola, a senior partner at Pearn Kandola, an occupational psychology firm, suggests “de-personalising” a disagreement by asking questions that will help the CEO look at it from a different perspective. For example, ask, “What impact do you think this might have on our share price?” If that fails, he says, objectify the issue. “You might say to your CEO, ‘I think the impact of this strategy is likely to be X, Y or Z. I think it’s going to have unintended consequences for us and we need to think about these things if we are going to get a good result.’ That way, you put the problem on the table and offer to resolve it together.”
Should CFOs worry about disagreeing with their chief executives? Absolutely not, says Ewing. “Disagreement should be happening every week, but in a healthy way. As a non-executive, I would be very concerned if my CEO and CFO never disagreed.”
Eila Rana is senior editor at CFO Europe.