The role of the CFO has expanded in its scope of responsibilities over recent years. An increasingly hybrid role, the CFO is no longer in charge of just the quality of the company’s financial position – nowadays they must also take on duties from other areas of the business, including operations and sales.
The latter, usually positioned on the opposite side of the table from finance, is causing a rise in conflict between the roles and relationship of the CRO and CFO. And while both exist to ensure sustainable business profitability, the question of whether they continue to operate in silos or closer together is a key question as businesses look to grow and progress following the pandemic.
Are both roles closely related?
The CRO and CFO share one thing in common: money. Yet, they both have very different roles and purposes within an organisation. The core purpose of a CFO is to manage the company’s finances; owning the numbers and managing all things budgeting, accounting and risk management. On the other hand, the CRO manages the company’s revenue growth, owning the sales numbers and coordinating closely with the marketing and sales functions.
Despite sharing the same goal to maximise sales and profit for the company, their route and responsibilities are significantly different. A successful CFO needs to be a great business leader, an advocate for long-term growth and be very focused on metrics and returns. In contrast, the CRO should be a pioneer, with one eye on new technologies and the developing future, as well as being sales-focused and able to rally a team to action.
Challenges and benefits of merging both roles
In recent years, there is a trending ‘need’ for companies to bridge the great divide between the CFO and CRO. Although merging both roles has the potential to maximise company efficiency, it is challenging due to differences in specialities, personalities and management styles – so much so that the two roles side by side can often cause conflict within management structures.
If both the CRO and CFO can work together, there are great benefits for the company. It streamlines the entire process and only one person reports back to the CEO. Not only that but by working together both are able to harness the power of two broad and varied skillsets to deliver the best for the business.
A strong CFO-CRO partnership results in a strong business and revenue strategy. Working together, the pair can establish a foundation for risk management initiatives that are designed to propel a company forward despite risk, while optimising data and analytics and drawing on sophisticated tools for coping with unknown risks. A strong partnership can also help define strategy by helping organisations direct business activities to exploit new opportunities for growth, while at the same time building strong foundations to sustain the growth
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Nowadays it is common for companies that already have a VP of Sales and a CMO to hire a CRO since it places greater emphasis on growth and driving numbers due to combined effort. The VP of Sales and CMO report back to the CRO and this allows the CRO to build the bridge from long-term corporate strategy to field execution within the business.
The role of CRO is most valuable to a company when it is expanding and scaling – a time where executing the perfect strategy is absolutely critical to business success. In the case of SMEs, it can be the case that there is a de-facto merging of the CFO and CRO roles. This does make more sense from a wages perspective and also for management clarity, as the objectives of the CRO can be carried out by the CFO and CMO. But by the time it comes to expanding, it might also be the case that more revolutionary or cutting-edge revenue opportunities have taken a backseat in favour of more traditional financial management – so installing a great candidate for CRO should be a priority for expanding businesses.
One of the biggest conflicts between both roles is revenue ownership. The CFO believes they own the numbers whereas the CRO believes that the numbers would not exist without their contribution. This also leads to conflict over who gets to make the final decision over investment. Conflict in management only leads to a turf war to assert professional dominance, defend individual decision-making, and pass the blame for lacklustre performance to each other.
There is no winner to this conflict. Instead, it serves only as a barrier driving business growth by precluding a shared strategy approach. Revenue potential will remain untapped and unfulfilled and the organisational structure of a company can quickly fall into disarray.
This conflict is not only unproductive in terms of achieving business objectives but also brings discord to upper-level management that can seep throughout the hierarchy and ultimately have a negative effect on company culture.
The CFO and CRO are equally important roles that must sit alongside each other and work together for the company to feel the benefit, meaning open and transparent communication between the two roles is key to keep the other informed of targets and results. They are held by two very different candidates, and drawing together those two skill sets can bring a range of benefits to the company. Most of all it allows a more holistic overview of several different verticals – sales, marketing, finance and business development – as opposed to keeping everything separate. Despite the challenges of balancing both roles, the overall opportunity for positive returns and collaborations across verticals makes the structure worthwhile.