In any organization, Roles and responsibilities of each and every stakeholder play a very important role in driving the overall business. This has been possible because everyone knows what role they are going to play. What is being required out from them in order to layout a proper business plan for the organization?
As it is rightly said that hierarchy is laid down in an organization in order to ensure smooth organizing of work. Where the bureaucracy involves information flow from Top-level management to Bottom level management.
BUT do you know that in any organization what role do CEO and CFO play? One cannot sideline the importance of roles what CEO and CFO has to offer, as they are very crucial to any organization
Both the CEO and CFO are part of the top-level management of any firm. It does still exists and companies have aligned different skillsets for CEO and CFO.
CEO vs CFO
The main difference between CEO and CFO and is that CEO of any company holds the top position in terms of strategic overlaying. CEO is in charge of taking overall decisions for the firm, CFO of any company holds the top position in terms of financial planning. CFO are in charge of taking crucial financial decisions for the firm.
The CEO can be the owner of an organization or is being hired by the board members. CFO is hired in the organization by the Board of organization with CEO inclusion as well
Therefore,
we should keep in mind that both the CEO and CFO have an important set of roles
and responsibilities. They are very crucial in terms of the company’s vision-mission
achievement.
There
are different sets of responsibilities that set apart the CEO than CFO. Hence the
company follows a different approach while hiring a CEO and a CFO.
In
this guide, we are covering all the essential details for you to understand the
difference between the CEO and CFO, so as you know about these two roles.
Comparison Table Between CEO and CFO (in Tabular Form)
| Parameter of Comparison | CEO | CFO |
|---|---|---|
| Definition | CEO of any company holds responsibility for all the strategic activities that occur in an organization. This role is administered by the board of directors. | CFO of any company holds the top position in terms of financial planning. CFO role is administered by the CEO of the organization. |
| Role | Leading an organization and overlooking all departments | Leading and overlooking the Financial Department |
| Type of Risk | Looks for overall strategic risk | Looks only at financial risk |
| Liaison | In Liaison with all the stakeholders of the organization | In Liaison with financial stakeholders. |
| Decision | Accountable to take overall organization’s decisions | Accountable to look only at financial decisions |
| Skillsets | Can be from any background (eg Sales, Operations, Technical, etc.) | Necessary to have a financial background |
Who is CEO?
CEO
of any company holds the top position in terms of strategic overlaying. They
are in charge of taking overall decisions for the firm.
CEO of any organization looks for overall strategic risk. As they are answerable for complete organization’s decisions which may lead to the company’s success or failure.
Following
are some roles of a CEO known;
- Leading the organization and administering all departments
- Responsible for mitigating strategic risk
- In Association with all the investors of the organization
- Responsible to take overall organization’s decisions
- Look out for ways to see profitability and the organization’s growth.
The primary objective of the CEO in any business is to look at the strategy, mission, and goals of the entire organization. The CEO might be an internal board member, or can even be chairing the board of the organization.
Therefore,
it is equally important to also know, that CEO is quite important for any
organization that is looking to ensure their vision, the mission is fulfilled.
Thus,
it is required to understand that the CEO plays a very significant role in any
organization and appropriate information should be acknowledged about it.
Who is CFO?
CFO
of any company holds the topmost position in terms of financial forecasting.
They are in charge of making critical financial decisions for the firm like
budgeting forecasting etc.
As CFO of the organization, he is in charge of administering the financial department ensuring the financial health of the organization is not compromised.
CFO
of any organization foresee any financial risk
and take measures to address these risks.
Following
are some roles of a CFO known:
- Administering the entire Financial Department
- Liable for mitigation of financial risk
- In Connection with financial investors.
- Liable to look only at financial decisions for the organization
- Look out for ways to see the organization’s financial growth.
The
primary objective of CFO in any business is to ensure that there is sufficient
cash surplus to support the organization’s strategic needs.
Therefore, it is equally important to also know, that CFO is quite important for any organization that is looking at financial operations, budgeting and financial reporting.
Thus,
it is required to understand that CFO becomes important for any organization
and proper information should be known about it.
Main Differences Between CEO and CFO
Although
both the CEO and CFO are important for an organization. However, the CEO and CFO
have a lot of differences with respect to decision making.
- CEO looks at overall decisions, whereas CFO looks at financial decisions.
- CEO can be from any department. CFO should be only from the financial department.CEO foresee overall risks but CFO only looks at financial risk.
Frequently Asked Questions (FAQ) About CEO and CFO
Which is a higher position out of CEO and CFO?
A chief executive officer of a company is higher in the hierarchy then the chief financial officer.
The chief financial officer takes all the decisions which are related to the finance segment and then he reports to the chief executive officer of the company who deals with all the segments of the company.
What a good CFO do?
A good CFO is the one who has good financial foresight, who is able to deliver the financial target, someone who has a deep understanding of the business, someone who can manipulate the financial decisions at crucial times and also is able to make the impossible possible by molding the budgets.
What does a CFO actually do?
The chief financial officer of a company manages all the decisions which are related to finance.
He keeps in touch with all the financial analysts of the company and maintains the incoming and outgoing statements of all the transactions of the company.
Who reports to the CFO?
Goes by the name, CFO manages all the financial-related decisions of the company.
Thus, all the people of the organisation who are indulged directly or indirectly in making financial decisions for the company directly report to the CFO of the company.
How many hours do CFO work?
The chief financial officer of a company has to deal with pressure and stress situations on a daily basis.
A CFO of a company may have to work for more than 75 hours a week. If they have a light week, he may have to work somewhere between 45 to 50 hours a week.
What degree do you need to be a CFO?
CSS stands for the chief financial officer. For becoming a CFO of a company, a bachelor’s degree is required along with some years of experience in the market.
For getting to this big position, the masters of Business Administration (MBA) degree is common.
How are CEOs chosen?
CEO stands for the chief executive officer. CEO of the company or organization is chosen by the board of directors of the company.
The board of directors of the company is chosen by the shareholders of the company.
Conclusion
While
both the CEO and CFO are quite important for any organization in order to meet
their objectives. These roles strategies have to be devised separately. Since
the requirement for the business varies.
So, in general, the CEO is responsible for guiding the organization overall while the CFO is responsible for ensuring that the organization has the appropriate financial resources to achieve its goals.
Both these officials have a significant impact on the overall management and direction of the organization.
References
- https://www.clutejournals.com/index.php/JABR/article/download/7791/7855
- http://www.aaajournals.org/doi/abs/10.2308/ajpt-50666