When he became chief executive in 2003, he elevated the responsibilities of Arnd Zinnhardt, the firm’s CFO, from a role that was considered a “numbers expert and assistant to the CEO” to a “fully empowered board member responsible for all financial aspects of the business,” Streibich recalls.
But there are limits to empowerment, Streibich insists. “Sometimes when CFOs are empowered, they become disloyal and behave like the CEO,” he says. “If times are tough and there is loyalty issue as well, it is a crucial issue and the CEO will not accept it.”
After all, chief executives are looking for partners that complement, rather than duplicate, their skills. Though CFOs now often appear as frequently as CEOs in front of analysts, investors and the press, it’s often a different story internally. Take it from Gary Parke, CEO of Evolve Energy, a fast-growing energy management firm in the UK. “As a CEO, you have to be pretty guarded in what and how you say things,” he says. CFOs, by contrast, “can be a little less diplomatic in the language that they use. It’s a classic good cop-bad cop routine.”
Though he is careful not to cast his finance chief, Nusrat Shah, exclusively in the “bad cop” role — both because it can be dispiriting for the CFO and disruptive if the CFO were to embrace confrontation too readily — Parke relies heavily on her ability to play a strong hand. “CFOs are one of the very few on the senior management team who get to look right across a business,” he says. “They can go into any unit and ask the tough questions.”
As more tough questions now need to be asked, Parke, like Streibich at Software AG, is wary of finance allowing any newfound power to go to its head. “Some see finance as a being unto itself. Especially during downturns, this sometimes leads to delusions of grandeur,” he says. “But at the end of the day, it’s a service function.”
Lean on Me
That said, in the midst of the worst economic slump in a generation, many CEOs are giving their CFOs leeway to shape their company’s cost base, capital structure and more. During good times, a common complaint among CFOs is that finance is subjected to relentless pressure to boost efficiency. Now the fruits of their labour are gaining wider appreciation, not least by CEOs.
At Randstad, after closing the deal for Vedior, the company found that it achieved between two and three fewer days sales outstanding than its recent purchase, giving scope for €50m to €70m in working-capital improvements. “Our people are even more talented than I knew they were,” CEO Noteboom says.
Meanwhile, Alstom’s chief executive Kron notes the “broader importance” that risk management, financing and cost control are taking. Despite a healthy order backlog, finance has “proven it can react quickly with the launch of an efficiency programme” to safeguard margins, he says. The firm increased its profit guidance in May 2008, and confirmed it in January, after unveiling double-digit sales growth during a difficult fourth quarter.