Hi Aunty B
I have enjoyed your articles and I desire an answer to the following question. I am a qualified pharmacist trying to grow our organization as a corporate model.
I am trying to identify positions at the top of the organisational chart.
I have a board which myself and 3 partners (like me qualified as pharmacists) sit on with one Non Executive Board Member
I have a Financial Controller (FC) who is a CPA and wishes to be a CFO. But I am not sure what it means to be a CFO.
One of my partners we call Director of Finance (no accounting degree).
Is a Director of Finance a CFO that has been invited onto the board? A bit like a CEO becoming a MD when joining the board or is a CFO and Finance Director distinctly different?
Do titles matter?
Leon T, Rockhampton
Course they do. I bet you’re not called Chief Bottle Washer for nothing.
Firstly, a corporate structure has to reflect the strategic direction and vision of the organization. So the titles of your people must align to that direction.
Secondly, yes, there is a difference between the function of an accountant and that of a CFO.
The financial controller’s role is to produce monthly accounts, to guarantee the integrity of numbers and some level of management performance reporting. The Financial controller reports to the MD who reports to the board.
The CFO is a much more commercial role. A CFO for example might have human resources and IT responsibility as well as strategic responsibility.
He or she is involved in modeling the future of the company and on improving its current performance. The responsibility of the CFO is to ensure that financial policies are supportive of the firm’s strategic direction.
For instance, if the strategic direction is to achieve market penetration in a particular area, the CFO would be required to examine the financial issues involved in order to determine what the project would cost and whether or not it is viable.
If the strategic direction is to constrain costs in a soft market, the role of the CFO would be to work with the people responsible for different divisions (or, in your case, distribution outlets) to see what financial initiative can be taken to constrain or reduce costs without risking the enterprise.
(Too often, CFO’s initiate strategy initiatives which are purely driven by financial dynamics, only to discover later that the cost in lost commitment of staff is enormous).
Leon, I ran this past one of our strategic bloggers Lou Coutts and he had some good advice. He says to be careful about establishing a hierarchy which can on occasions stifle individual initiatives. The modern and successful thrust is to give responsibility as far down the line as possible so that individuals can exercise their initiative.
As his mentor at Colombia used to say “Lou, if you have good people working for you who you trust, then just let them do their job. If, on the other hand you have people you don’t trust, then fire them”.
Hope that helps Leon!
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