In the pressure cooker of the C-suite, it may be inevitable that the executives CEOs depend on most can come to be seen as potential rivals. Nowhere is that uneasy balance more apparent than in the relationship between the CEO and CFO.
When asked which member of their C-suite posed the biggest threat to their job security, one in four CEOs named their chief financial officer, according to The BCG CEO Insomnia Index. CFOs also top the list of senior executives that CEOs plan to replace in the next six months.
The tension is understandable. The CFO has a direct line to the board and provides much of the financial evidence that directors rely on to evaluate the CEO’s performance, including whether a forecast is realistic, whether a transformation is delivering value as promised, and where performance is falling short.
Put simply, the CFO can strongly influence how the board perceives the CEO.
That dynamic is not necessarily unproductive. The CFO helps shape a company’s value creation strategy alongside the CEO. When both trust that they are working toward the same goals, they can channel their differences into productive dissent over key decisions, leading to better outcomes.
But when friction erodes trust between the CEO and CFO, it can undermine decision making, damage alignment with the board, and limit the company's ability to grow.
What the Numbers Say
What CEOs Can Do to Foster Mutual Trust with Their CFOs
A CEO cannot afford to keep the company’s CFO at arm’s length or to mistake healthy tension for dysfunction. Mutual trust should make it easier for CEOs and CFOs to challenge each other’s thinking. The goal is not to eliminate friction, but to ensure that it strengthens decisions instead of straining the relationship. Three fundamental moves can help.
Move 1: Set Clear Expectations
Especially when major strategic decisions are under consideration, ambiguity over roles, responsibilities, and decision rights can easily strain the CEO-CFO relationship. The CEO can reduce that risk by creating space to compare perspectives and clarify expectations early on. Simply asking, “How are you seeing this situation?” can uncover hidden assumptions, resolve misunderstandings, and focus disagreements on the issue at hand, rather than on the relationship.
“Disappointing results and slow progress are often a function of not having made expectations clear,” says Julia Dhar, BCG managing director and partner and a co-founder of the firm’s Behavioral Science Lab. “The most useful thing that you can do is to say, ‘This is what success in the CFO would look like from my position, this is what unsuccessful performance would look like, and this is how I envisage a successful partnership between a CEO and a CFO.’”
Move 2: Welcome Dissent
The CEO-CFO relationship is strongest when both officers expect disagreement and don’t avoid it. CEOs need confident executives who are willing to challenge their thinking, particularly on consequential strategic decisions. Rather than viewing dissent as a threat, CEOs should embrace it as a valuable tool for testing assumptions, strengthening the case for a chosen course of action, and preparing for the scrutiny of investors, the board, and other stakeholders.
“Every CEO needs a good CFO,” says Michael Demyttenaere, BCG managing director and partner and the firm’s North America leader for CFO Excellence work. “Welcome the constructive challenge. Lean on your CFO as a genuine thought partner in shaping the direction of the company, so that both of you are aligned on where it's headed.”
Move 3: Invest in the Relationship
When trust is lacking, CEOs may be tempted to work around their CFOs. But that approach usually leads to more problems over time. Instead, CEOs should lean into the relationship. The CEO and CFO may challenge each other every day, but ultimately they are both accountable for achieving the same goal: the company's success.
“Stop thinking about the relationship as something to manage, and start thinking about something to invest in,” says James Tucker, BCG managing director and senior partner and the global leader of its Corporate Finance and Strategy practice. “This is a person who you will be hugely interdependent with—and quite frankly, there’s an expectation that you partner well and team well, and build deep, lasting trust. Any friction and divergence will be transparent, and then the board realizes it has a problem.”
Final Gut Check: Create a Succession Plan
As the CFO role becomes increasingly strategic, boards may see them as a potential successor to the CEO. Although that possibility could create anxiety, an ambitious CFO can also be one of the CEO’s greatest assets by helping drive strong performance.
Rather than avoiding the issue, the CEO and the board should work together on a succession plan. If the board does not see the CFO as a potential successor, that clarity can remove a source of uncertainty. If it does, the CEO is in a key position to help develop the CFO as a future leader while also being part of the conversation about when to pass the baton.
“Modern-day CFOs play an increasingly strategic role and are key to driving enterprise performance,” says Demyttenaere. “That’s an important coaching opportunity for the CEO, too—making sure the CFO is a forward-looking architect of enterprise value and is really seen as a partner to the choices that the CEO and the executive team make.”
