A recent article on CNBC shined a spotlight on the important relationship between a CEO and a CFO. Even at an incredibly successful company like Pepsi, the CFO and CEO will often have different perspectives on crucial strategic and financial decisions:
“As a result, the CEO and CFO of Pepsico get into arguments on a pretty regular basis, say Indra Nooyi, the CEO and chairman of Pepsico, and Hugh Johnston, CFO and vice chairman of Pepsico. We argue and fight about lots of issues. We shut the door and we debate."
It’s important to note that the CEO and CFO will have disagreements. The CEO needs to have a strong CFO who is able to voice a different opinion in order to challenge conventional wisdom. The process of working through the debate to reach a better financial or strategic decision is essential for a company, whether it be a global company or a small business.
It’s also important to note that the process of working through differing opinions needs to based on mutual respect:
“While Nooyi and her CFO do butt heads, the working relationship is successful because there's a method to the "fighting," one that preserves civility.
"'When we come out to the executive committee, we have to show a level of unity. The reason being that it can't be that the CFOs disagreeing with the CEO, then the question is who's running the company. You can't have that kind of confusion,' says Nooyi. 'It's very important that the CEO and CFO see eye to eye – and we discuss things ahead of time.'"
Another important key in a successful relationship between the CEO and CFO is agreement on the overall strategic direction for a company. In other words, being unified on the overall company vision helps to keep the debate on a particular operational or financial issue in context:
"Part of the reason that good healthy debate works, though, is that we have complete agreement on the strategy of the company," says Johnston. "It is very much about driving performance, but doing that in a sustainable way. And we see that with 100 percent clarity."