Formerly of course the chief executive of a corporation was the leading spokesperson, always in the public eye, in charge of company projects and investor relations, and almost an old-fashioned autocrat.
He seemed to be the ultimate authority, the person responsible for all the company’s major actions. That is no longer the case. Now the chief financial officer appears to be the almost anonymous individual who is the supreme authority.
The CEOs have taken on a more public relations role, testifying on investigative committees, mingling with other CEOs and top officials but not abreast of the day-to-day operations of the company. The expertise of lawyers and accountants is used for these company matters, along with managing government directives and programs.
Now the chief financial officials are fed detailed data on the company quarter by quarter with the CEO as a kind of co-pilot. The finance officer is the one involved in major projects and works with the accountants and lawyers. The finance officer’s knowledge of the company determines how the employees will be utilized.
It is not surprising that the financial officer receives less pay than the CEO, but the gap between them is diminishing. Also the CEO often is rewarded with stock options and bonuses reflecting recent profits.
The financial officer clearly is focused on financial matters, less on the image of the company. The former has more tools than ever to see what is going on in the company’s operations. Departments of the company report to the financial chief. The latter has a growing role in shaping plans.
Such matters as direction of the company remain under the bailiwick of the CEO, who is also responsible for all troubleshooting under his umbrella.
This columnist was an officer of Power Corporation of Canada and attempted to guide the CEO on merger or acquisition plans. Then the difficulties of takeovers and amalgamations had to be implemented by the financial officers. If the results were unsatisfactory it was the CEO who had to shoulder the blame.
If a company were adversely affected by general business conditions, the financial officer was responsible. Hence he had to be a keen observer of the economy, while the CEO was aloof. Too, the financial officer mingled with counterparts in other companies with whom he exchanged data. Business schools increasingly are broadening their programs in order to enable students to be overall more effective in either position.
Investors usually are in touch with the financial officer and can help to determine public confidence in the company. Hence the financial officer has become the company’s power centre and probably most important for the organization’s future.