is cfo or ceo higher?
The CEO drives the overall strategy, but makes financial decisions based on the CFO’s input, for example where to invest company resources to get the best for customers, shareholders, and other stakeholders. Being in charge of all things finance, CFOs have access to exceptional amounts of data and financial information that can support the development and delivery of the company’s strategy.
These senior leadership roles work hand-in-hand, and often overlap, but how exactly do they differ? And when it comes to career evolution, do CFOs make good CEOs?
A CEO is the overall leader of a company. Not just in title, but also in responsibility. The CEO is in charge of managing the company; they set the company’s culture, and develop and drive the organization's strategy, guided by the advice and expertise from the rest of the executive leadership team.
The CFO is also a leader in the company, albeit with a more precise focus. Usually the highest-ranking member and leader of the finance team, the CFO is the expert in all things money, financial planning, and financial strategy.
Let’s see what similarities these roles share:
While they share similarities, there are also significant differences between the role of a CEO and CFO.
While there are similarities between the CFO and CEO roles, they each attract different profiles.
CFOs and CEOs work best together when they have a complementary set of skills. CFOs normally excel at being able to understand items in granular detail, and are metrics-driven.
On the other hand, CEOs have a strong ultimate vision of where the company needs to go in the medium- to long-term. CEO types don’t need the detail; they want to understand what the topic is, how this will impact the organization's strategy, and what actions are available for them to make a decision on the overall direction.
This is not to say that CFOs’ skills inhibit them from becoming CEOs, just that they will need to expand their focus and abilities if they eventually want to become a CEO (more on that below).
As stated, the CEO and CFO share similar traits. But you don’t necessarily take the same path to reach these positions. Education, certifications, and work experience will set CEO and CFO candidates on different trajectories.
There’s no single path to becoming a CEO. In fact, besides having a Bachelor’s degree and extensive experience in common, very few CEOs have the same exact career track.
A Bachelor’s degree is required for CEO positions; this may change in the future, but today a university degree is still a basic requirement. The exception is usually for company founders who become CEOs. Think Bill Gates or Mark Zuckerberg, neither of whom graduated from university. However, those are extremely rare cases!
Candidates are better off going to university if they hope to climb the corporate ladder to Chief Executive Officer. But what to study?
Many current CEOs studied business (including accounting or economics) or even engineering. But there’s no one preferred course of study; business degrees are probably the most helpful because they’re so broad, although there are many CEOs out there who studied other disciplines.
Finance, communications, and computer science are other helpful areas of study, depending on the industry candidates are interested in. Healthcare management is a good major to choose if you want to work in healthcare, for example. Choose the degree that suits you best, and then perhaps choose an advanced degree that’s more strategic.
As with any C-suite role, a Master’s degree or advanced degree is not strictly necessary, but it will help set you up for success. MBAs are the most popular option, because the curriculum covers the ins and outs of business: finance, marketing, strategy, entrepreneurship, leadership, and more.
After education, there is no defined path to becoming a CEO. The most important determining factor? Experience, and lots of it!
The overall consensus is that experience in a wide range of departments is the most useful for would-be CEOs. Operational experience is key; the CEO should know how a company operates from the ground up. Technical experience is valuable as well, especially for candidates in the tech field.
And because the CEO is a leader, they must also fine-tune their networking skills. Getting to know a broad range of employees from all different backgrounds and departments is crucial. If they only create relationships in one single department, their job will be that much harder once they reach the top. This is why it’s important to get experience in several different departments.
Some CEOs choose to spend a few years in consulting, which is valuable for gaining client-facing experience. Management experience is also necessary, as is getting comfortable with public speaking.
There are surely examples of current CEOs who did not get the work experience described above, because there’s no single path to becoming a CEO. However, to be on the safe side, aspiring CEOs should get operational and management experience across departments within the company, hone their public speaking abilities, and get experience interacting with clients and other stakeholders.
The path to CFO is more straightforward. If you want to learn more about the CFO role in depth, you can read about CFO skills and qualifications here.
CFOs do not have much leeway when it comes to field of study choice. The vast majority of current CFOs studied finance-related subjects.
Aspiring CFOs typically need the following education:
Because the CFO role has expanded to now include business strategy and other responsibilities that are not strictly related to accounting, many CFOs opt to get an MBA. This helps broaden their areas of expertise and prepare them for the CFO role.
The CFO’s scope is broad and ranges from the internal (balancing budgets) to the external (raising capital, managing M&A) and everything in between. They must have lengthy experience in and a deep understanding of all areas of finance.
When hiring a new CEO, the board of directors has crucial decisions to make. An internal or external candidate? Someone from a client-focused role, or with Ops, Finance, or Marketing expertise? Or something else entirely? Is it worthwhile to take a risk, or better to go the tried-and-true route? These decisions will be driven by multiple factors, such as business performance, delivery of its strategy, the external environment, and the skills of the current CEO.
Recently, companies have been increasingly tapping CFOs to fill vacant CEO positions. In fact, the CFO-to-CEO evolution hit an all-time high in 2022!
This could be due to economic factors, which influence the CFO-to-CEO pipeline. When hard times hit, the board will want to be sure that the new CEO has great finance skills and can steer the company through a challenging business environment to safety.
Because the CFO and CEO share many similarities, the CFO could be a natural successor to the CEO. However, there are some pitfalls to watch out for.
There is no reason why a CFO would not make an excellent CEO. In fact, the CFO-to-CEO transition could be a huge success, if certain factors are taken into consideration.
First, CFOs need to ensure that they get organizational experience outside of finance. Their scope will simply be too narrow if they don’t broaden their horizons, especially into operations.
Second, CFOs must adapt their focus and priorities, from day-to-day finance management to a long-term, forward-thinking vision. CFOs are notoriously risk-averse, but they must be able to adapt their risk mindset to grasp potential opportunities as a CEO.
Third, CFOs-turned-CEOs will need to relinquish control in some areas. No longer the head of the finance function, they will have to instead focus on multiple internal and external matters. This is too much for one person to effectively manage, and the rest of the C-suite are critical to supporting the CEO through leading their respective departments.
A good solution could be taking on a dual CFO/COO role to compensate for this lack of experience, and learn the operational ropes before transitioning to CEO. This ensures that the CFO gets valuable experience outside of the finance department, and the switch from CFO to CEO isn’t too abrupt.
The CFO can be a good fit for the CEO role if they have transversal experience within the organization, and they don’t jump straight from CFO to CEO without first closing the skill gap. Luckily, modern CFOs already have ample leadership experience due to the evolving nature of the CFO role.
The CFO and CEO roles share enough similarities that the transition won’t be too challenging if the CFO takes time to gain experience beforehand.
People outside the business world often get confused with the roles played by the CEO vs. CFO. The Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) take on different but equally important responsibilities in an organization.
The CEO assumes the main role of overseeing the operations of the entire company, from sales to administration. He holds the highest rank in the company and only reports to the board of directors. On the other hand, the CFO assumes the highest-ranked financial position in the company. The main focus of a CFO is the financial management of the business.
The CEO is the most senior manager of an organization, who oversees the activities of the whole organization. Chief executive officers manage different organizations, such as government entities, non-profit organizations, and private and public corporations.
The CEO usually reports to the board of directors of the company and is responsible for maximizing the entity’s value, including revenues, market share, share price, etc. In the government and non-profit sector, chief executive officers typically seek to achieve results that relate to the mission of the organization.
The CFO is a senior manager with the primary role of overseeing the management of the company’s finances and financial activities, including financial risk management, financial planning, financial reporting, record-keeping, signing checks, and analysis of data. The CFO is comparable to a controller or treasurer.
The chief financial officer usually reports to the CEO, as well as the board of directors. They may also assume a seat on the board. They are the head of the company’s finance personnel and are also the key financial spokesperson. They normally support the Chief Operating Officer (COO) on both tactical and strategic matters concerning cost-benefit analysis, securing of new funding, forecasting needs, and budget management.
The significant differences in the roles played by the CEO vs. CFO are listed below:
The chief executive officer’s main duty is to keep an eye on the big picture, overseeing the operations in all departments and making sure that the long-term goals of the company are realized. The CEO doesn’t involve himself/herself in the detailed tasks of every department but maintains a general oversight with the aid of department managers.
They usually focus on things like articulating the vision of the company to personnel and potential clients, executing decisions made by the board of directors of the company, developing leadership in the company, encouraging productivity, and ensuring a strong position is maintained in the market.
The CEO is chiefly accountable for the overall company performance. The role is usually determined by the board of directors. On the other hand, the CFO is responsible for the financial part of the company only. The CFO is the top financial manager of the organization. The CFO is, in most cases, responsible for a number of departments that are financial-related, such as budgeting, accounting, compliance, and auditing.
The CEO assumes the responsibility for the general strategy of the organization and the procedures used to accomplish that strategy. The CFO is in charge of the financial support of the corporate strategy, meaning they ensure that sufficient cash is available to cover strategic needs and alleviate risk.
The CFO also plays an important liaison role, since they build relationships with lenders, banks, investors, regulators, and other financial institutions. For instance, the CFO attends meetings with private investors to discuss the latter’s interest in the company or with bankers to create lines of credit.
The CEO is the public face of the company, making speeches and meeting with community leaders and the press.
The CEO generally reports to the company’s board of directors, while the CFO reports to the CEO. As the chief financial officer, the CFO puts together the annual budgets of the company, analyzes financial data, and tracks expenses and revenues. The CFO may also sit on the board of directors, just like the CEO.
The CFO handles tasks that need quantitative and qualitative financial analysis. He/she is responsible for reviewing various aspects of the company to ensure that the costs of operations are controlled in a proper manner and that resources are correctly allocated.
The CFO also conducts an analysis of future capital investment of the company and reviews current market trends. He then reports such results to the CEO, who decides how to adjust the operations of the firm to make it more effective and efficient.
It is the responsibility of the CEO to search, find, and prepare employees within the firm for positions of management. The CFO finds and grooms personnel within areas of accounting and finance only.
C-suite is the term used to describe the company’s top tier leadership positions. These positions are known as C-suite executives or C-suite leaders, and the most common ones are the chief executive officer (CEO), chief operating officer (COO), chief financial officer (CFO), and chief information officer (CIO).
Let’s look at the differences between these jobs, their responsibilities, and what kind of educational path someone has to take to get there.
A chief executive officer or CEO is the highest position and C-suite executive in a company. As such, it’s the highest paying position someone can have within an organization.
A CEO is responsible for maximizing the company’s value by setting long-term goals, a clear vision, and a direction in which the company will go. These professionals have to make crucial business decisions and bear the responsibility for the company’s success or failure.
The responsibilities of a CEO depend on factors such as the size of the company and the industry in which the company is operating. Essentially, the larger the company is, the heavier the workload and the bigger the amount of responsibilities is.
CEOs’ educational background may differ in different industries; however, the majority of them have a business degree or an MBA.
Is a COO higher than the CEO?
In short, no. A chief operating officer or COO is second-in-charge to a CEO. The primary task of these professionals is overseeing business operations, which can include a variety of functions.
Much like a CEO, a COOs duties vary depending on the industry and size of the company they work for. Generally, they work closely with other C-suite executives with a focus on strategy. Their duties oftentimes include overseeing day-to-day operations, critical projects, and other functions of the business.
A COO is in charge of translating a CEO’s vision into an action plan and presenting it to the board. Additionally, they then have to oversee the execution of this strategic plan and manage the directors in charge of making the CEO’s vision come to life.
Although it depends on the person, and experience matters more than the degree, COOs usually have a business-related background, such as an MBA.
A chief financial officer or CFO is an executive that deals with all financial matters of a company. These professionals are the ones that help define a company’s financial vision and future, and they report to the CEO and the board of directors.
Apart from their set role, CFOs can also serve as strategic advisors to other C-suite executives within the organization. They bear the responsibility of strengthening the financial position of a company through recommendations and strategic investments.
CFOs are also in charge of assessing how market changes can affect the company’s profitability and revenue. These professionals’ three main goals are strengthening financial performance, reducing costs, and expanding revenue opportunities.
In general, CFOs should hold at least a bachelor’s degree in accounting or a degree in finance. However, many of them strive for MBAs since the job is more than just working numbers.
A chief information officer or CIO is a company executive in charge of the implementation, management, and usability of both information and computer technologies. They answer to the CEO of the company.
Given that the role of technology has shifted in the past few years, the CIO’s role is increasingly important in companies. Since the introduction of cloud computing, big data analytics, wireless communications, and mobile devices, CIOs are responsible for creating new strategies and computer systems so the company can stay up-to-date with the fast-changing global marketplace.
Now, another part of a CIO’s job is to make predictions on how the technology their organization uses will change in the next few years so that they can stay ahead of competitors. CIOs usually move up from positions in the company such as IT managers, information security managers, technology directors, etc.
CIOs are usually information technology or computer science graduates who have moved up from other positions year over year.
Becoming a C-suite executive isn’t one day’s worth of work. It requires time, dedication, and effort. However, there is no single path you have to follow to reach a certain position within a company.
Some choose to take a lower position in an organization and slowly move up; while others choose to open their own business and become entrepreneurs on their own. Although every C-suite position has its own duties and responsibilities, they all have to understand the company areas and how they affect each other.
Some skills that every aspiring C-suite professional should possess include:
Although often referred to as a collective, C-suite professionals have their differences and their own roles in a company. Whether they’re information technology students, MBA graduates, or hold a degree in accounting, their responsibilities are vital to a company’s success.
The CEO is the highest-ranking position in a company. He or she has the role of implementing decisions made by a company board. In the role of CEO, this executive oversees all the company departments, ensuring they formulate and implement policies and strategies appropriately. A CEO may be appointed by the board of a company or be an owner of a company.
The CEO, as the highest-ranking executive manager of a company or an organization, has the role as the top decision-maker with responsibility for the company's success. A CEO's daily tasks vary, aligned with the organization's goals, mission, and operations. The CEO functions may also depend on the company size and number of employees.
Some duties associated with the CEO role are keeping the company solvent, guiding the company into a strong market position, and executing decisions made by the board of directors. Generally, the CEO serves as a liaison between the company and the external world, articulating the company's vision to both employees and potential clients. A CEO may oversee the company's operations and promote its products or services to connect the company or organization with the community.
According to Forbes, close to 40 percent of Fortune 100 CEOs have MBAs, primarily from top schools. Many hold engineering degrees. Alternatively, a CEO career path could start in finance, with 32 percent of Fortune 100 CEOs starting as chief financial officers (CFOs). Most CEOs work their way up through the ranks of a single company. This gives the CEO opportunities to thoroughly understand a company's culture and business.
A CEO must have many skills to keep a company on an even keel and to grow the business or organization. Some successful CEO traits are:
The CFO has the highest-ranking financial position in a company and reports directly to the CEO. The CFO is responsible for the company's financial business practices and keeping these within industry standards. Essentially, the CFO ensures that the company is meeting business goals. Strategically, the CFO tracks market trends, financial projections, and forecasts. Investments may be a CFO responsibility, and CFOs are often on the boards of directors.
As the top financial officer in the company, the CFO's responsibilities include putting together budgets, tracking revenue expenses, analyzing financial data, and reporting budget findings to the CEO and board of directors. It is a CFO's responsibility to maintain and improve the company's financial health. The CFO oversees the accounting department, financial reporting, budgeting, and any audits. A CFO is responsible for building relationships with banks and other financial institutions.
A CFO usually has an accounting degree with a master's in accounting, business, or finance. A CFO should have a certified public accountant (CPA) certificate with more than 10 years' hands-on industry experience. Some organizations will make exceptions about the certified public accounting degree if the CFO has an MBA and years of experience. A track record and long-term presence at the company is useful.
The chief characteristic a CFO should possess is the ability to effectively manage and responsibly grow the company's money. CFOs are usually averse to risk and methodical when making decisions. A CFO's skills will involve mathematical and analysis skills. People and communication skills are also critical.
The CEO is the highest-ranking role in the organization. CEOs and CFOs are not equal in the organizational hierarchy, despite both having 'Chief' in their titles. Generally, the CEO reports to the board of directors, whereas the CFO reports to the CEO.
- Which god of war armor is best?
- How to say homeland in different languages?
- How to use gmt in a sentence?
- Who's in san joaquin county jail?
- What is cdd rule?
- Which cards are yes and no in tarot?
- Belize where to go?
- How to convert bac to mg dl?
- How to pay att without logging in?
- Why do guys flake on first dates?