2 Nov 2022


The Position and Role of the Chief Financial Officer

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The CFO position focuses mostly on financial aspects, yet the finance department determines the overall performance of an organization. It can influence the culture of an organization, its leadership, and overall performance. This implies that the department offers an excellent training ground for the CEO. To succeed in this, the function must be a high performer or the key determinant of good performance of the firm. However, poorly performing finance departments should not be regarded as good training grounds for future CEOs. A high performing unit is characterized by decision-making, financial leadership, and research analysis. Hiring a CFO to be a CEO has several advantages and disadvantages ( Ida, 1989; Janine , 1999; Murphy, 2012; Warmoll, 2014 ) . 

The CEO will have extensive accurate and realistic knowledge in financial management and leadership. A CFO from your company understands the business and knows the other staff and board. He also knows the financial position of the enterprise. He or she can be a good bet for cost reduction strategies because they understand the company better than anyone else. However, hiring a CFO as the CEO has its disadvantage because they will focus on the financial aspects of a firm and neglect other issues and problems. Such a CEO may take a narrow view of the organization and make decisions that are detrimental to the company. They may not have a general business background because they specialized in finance and accounting and this may not give them the skills needed to be effective CEOs ( Murphy, 2012; Warmoll, 2014 ). 

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Examples of CFO to CEO are Leo P. Denault who is currently the head of Entergy. His academic background includes an MBA and bachelors of Science degree majoring in economics and accounting. The other CFO turned CEO is Christopher E. Kubasik who worked for Lockheed Martin Corporation. He has a bachelor's degree in accounting and a Certified Public Accountant ( Entergy, 2017; Murphy, 2012; Warmoll, 2014 ). 

Hiring a CFO to be the new CEO ensures that an organization has realistic, top leadership and concrete decision making relevant to the entire firm. A CFO with an open mind to the external environment and not centered on the financial aspects is likely to be a high-performing CEO. Hiring the CFO depends on whether they have the skills and experience desired for the top job and will rely on the particular CFO ( Janine , 1999; Murphy, 2012; Warmoll, 2014 ). 

Work cited 

Entergy (2017). Leadership. Retrieved February 12, 2017, from http://www.entergy.com/about_entergy/leadership/denault.aspx 

Ida Picker, (1989).  Do CFOs Really Make Good CEOs . PDF. 

Janine Brewis (1999, June). How a CFO can graduate to CEO.  Corporate Finance, (175), 13.  

Murphy, M. (2012, September 18). Road to CEO Post Goes Through CFO at Some Big Firms. Retrieved February 12, 2017. 

Warmoll, A. C. (2014, December 04). CFOs increasingly taking CEO role. Retrieved February 12, 2017 

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StudyBounty. (2023, September 16). The Position and Role of the Chief Financial Officer.


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