Chief Executive Officer (CEO) is the highest-ranking executive in an organization whose primary job is to take major corporate decisions and managing the overall business. A CEO can either be elected by the board of directors, shareholders or they can the owner of the company as well.
On the other hand, Chief Financial Officer (CFO) is a senior executive whose responsibility is taking care of the financial affairs of a company. The CFO has to report directly to the CEO about the financial status and the CEO has the power to alter the CFO’s decisions if he or she feels it can be more efficient for the company.
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CEO and CFO
CEO: Roles and Characteristics
As mentioned, the CEO is the highest-ranking executive and possesses the role of being the top decision-maker of an organization. The duties of a CEO might vary depending on the company size, operating regions and the number of employees working in the company.
In large corporations, the CEO mostly deals with high-end strategic decisions that can direct the company’s entire management course. In small companies, the CEO is more involved with the day-to-day tasks and often interacts with the employees to personally give them directions.
CEO is the main representative of an organization to the outside world. They are the face of the company. So, a CEO has to be confident in nature while dealing with others. Other than that, there are some other characteristics a CEO should have:
- Have the ability to motivate and inspire others
- Knows what it means to be part of a team
- Proficient in time management
- The ability to brainstorm and solve problems
- Smooth communicating skills
- Accepts failure and knows how to take lessons from them
- Has a clear vision for the organization
- Isn’t afraid of taking risks
A CEO is associated with running the organization and helps it to make a strong position in the market. CEO is the bridge between a company and the external world, presenting the company goals and objectives to the employees as well as the consumers.
CFO: Duties and Qualifications
A CFO is connected to the financial aspects of an organization. As being the top financial executive, a CFO’s duties include taking care of the company budget, analyzing the financial data, keep track of the revenues and expenses and report everything directly to the CEO along with BoD (Board of Directors).
Even though the departments are assigned with the head of departments. It is still a CFO’s responsibility to oversee the activities of the accounting department, finance department and audit everything.
A company cannot run by itself, it needs funding. Aside from investors, companies often turn to banks for help. The CFO must maintain a good relationship with the banks and other financial institutions.
A CFO should have mathematical and analytical skills. Effective managerial skills also require to give instructions to other associates, who also ask for people and communication skills. A CFO must be methodical when it comes to decision making. Other qualities include risk management, strategic planning, forecast the financial state and be opposed to risks.
Differences between CEO & CFO
We already mentioned the roles of a CEO and a CFO. The CEOs are responsible for managing the overall operations and the CFOs are dedicated to financial matters only. There are significant differences between the two. Let’s take a look:
- The CEO has the highest position in an organization and doesn’t need answering to anyone (except for the board of directors in large corporations) whereas the CFO reports to the CEO regarding the financial state of the company
- CEO has to clearly articulate the organization’s vision to all its shareholders, consumers and employees. CFO partakes in only the strategic decisions that can improve the financial health of the company
- The CEO creates the entire plan for the organization, including tactics that can implement to achieve the company goals and objectives. CFO’s strategic analysis is limited to cash management, mitigating the risks and benefits, monitoring the balance books and overlooking the financial reports
- CEOs can appoint anyone from both inside and outside the organization for minor and major managerial positions. CFO can only evaluate employees from his own department
- The CEO is the face of the company, associating with clients, community leaders, the media and the general public. The CFO’s interactions are limited to bankers, financial officers, investors and lenders
- CFO audits the financial status of the company, takes note of the resources, overlooks the costs and revenues and reports all the findings to the CEO who takes the ultimate decision about making any alterations that can make the company financially more efficient
- CEO assembles the team and assigns their tasks and responsibilities accordingly. CFO only contributes to growing the business by managing the economic outcome
- CEO has to find methods to ensure effectiveness and overall corporate success. While the CFO must monitor cost-effectiveness and enable financial success
- CEO can come from any background including operations, marketing, sales, etc. But a CFO usually comes from a finance or accounting background.
To conclude, a CEO is responsible for leading the organization, overlooking all the departments and steer the company on a road to success. At the same time, a CFO is responsible for making sure that the organization can financially operate without running into any sort of problem.