Practical Advice for Strengthening the CFO-COO Partnership

Editor's note:Julie Iskow is president and chief operating officer of Workiva Inc., and Jill Klindt is the company's chief financial officer. Workiva simplifies complex work for thousands of organizations worldwide by connecting data, documents, and teams. The views expressed in this article are solely those of the authors.

As companies today pursue numerous cross-functional initiatives, C-suite collaboration is more critical than ever, especially as we chart our post-pandemic course. In the past, the partnership between a chief financial officer (CFO) and chief operating officer (COO) might have resembledthe rivalry between Edison and Teslaover current standards. Even when pursuing the same goals, they each guarded their own turf.

After all, driven by budget management and risk mitigation, the stereotypical CFO would tighten capital expenditures, while the COO might view those expenditures as essential to day-to-day and strategic administrative and operational functions such as sales, marketing, and product development.

But in today's high-growth companies, all key C-suite roles—whether general counsel, chief human resources officer, or CFO—need to be filled by people who think strategically about business outcomes. The "swim lanes" that once limited executives' participation in strategic decisions are dissolving.

Dissolving boundaries

COOs are increasingly recognizing that the CFO's perspective goes far beyond that of a "number cruncher." Empowered CFOs are emerging from the cocoon of cost-center focus, no longer confined to quarterly earnings calls. They are transforming from gatekeepers focused on margins and discounts into respected voices with a say in driving and achieving business outcomes. As CFOs engage more deeply in business planning, they gain a better understanding of the significant return on investment that a COO's multi-million-dollar plans can deliver.

In this new world, finance and operations are allies, understanding each other's agendas and effectively joining forces to execute the company's shared goals. As Accenture's 2021 global CFO studyreportfound, building a successful CFO-COO feedback loop can "break down silos, collaborate across the C-suite, and strategically rethink ways of working." This sparks innovation rather than stifling it.

Based on our own experience building a strong CFO-COO working bond, we'd like to share a few easy-to-implement steps to strengthen this partnership.

Healthy alignment

We happen to get along well on a personal level, but that's not the point. CFOs and COOs don't have to be best friends, but they do need to trust each other. Transparency and accountability are key. Most important is agreement on the company's strategy and goals.

For example, within our own company, we recognize how to collaboratively deploy resources to execute high-level projects that drive better or faster growth. We recently partnered on strategic initiatives such as global expansion, building a high-performance partner ecosystem, and investing in reporting solutions related to environmental, social, and governance (ESG) measurement.

But the point isn't whether we agree on specific initiatives; it's that we continuously integrate and align across all operational aspects of the business. The CFO's team should be involved in operations, and the operations team should always be mindful of the company's financial health, the financial impact of operational actions, and the cost of achieving business outcomes.

Continuous engagement

Here are some examples of how we and our teams work together to calibrate company strategy and operational goals:

1. The CFO attends the operations team's weekly meetings. Her update on financial and accounting matters is the first item on the agenda.
2. The CFO reviews the COO's "business health" metrics weekly with the operations team and provides perspective and input.
3. Both the CFO and COO attend executive management team meetings.
4. The CFO and COO jointly participate in two key management committees (the software procurement committee and the pricing and packaging committee).
5. The CFO arranges for analysts from the financial planning and analysis (FP&A) team to work side-by-side with business units to understand their activities, performance metrics, and budget and staffing needs, enabling more accurate planning.
6. The CFO's team provides input on product development to the COO and engineering teams, reviewing the company's own financial software solutions from a user perspective.
7. The COO stays informed about the CFO's challenges and responsibilities and strives to gain insight into external issues that may affect the CFO's priorities.

While the list above mentions many "physical" collaborations, what matters most is the alignment of minds on shared corporate goals. If only it were as simple asa Vulcan mind meld!

Data-driven decisions

Naturally, philosophical differences occasionally arise, but we are able to minimize conflict. We acknowledge each other's commitment to company values and rely on data for decision-making. It's hard to maintain a disagreement when you're faced with data that underscores values and expected business outcomes.

Of course, data connectivity is a huge challenge for today's C-suite. CFOs and COOs share a common need to understand company data to achieve good business outcomes, and they partner with the chief information officer (CIO) to make that happen. How is data collected, managed, integrated, and leveraged? How is it protected? How is data integrity ensured? In today's hybrid work environment, collecting data and coordinating the processes that connect and report it have become even greater hurdles.

For example, emerging reporting disclosures related to ESG initiatives may include financial and non-financial data from diverse sources such as sustainability reports, surveys, statutory disclosures, annual reports, SEC filings, and earnings call transcripts. This data must be gathered from multiple business functions including human resources, marketing, manufacturing, and facilities.

Another strategic area of COO-CFO collaboration is IT-related procurement decisions, such as software-as-a-service (SaaS) applications that form part of a company's digital transformation. The rationale for procurement falls within the COO's purview, while the CFO analyzes the pros and cons of the investment and often serves as the CIO's "guinea pig" during implementation as a primary user of financial planning and ERP system software.

Cross-functional alliances are therefore essential to delivering trusted data more smoothly to shareholders, employees, customers, partners, and other stakeholders.

The whole is greater than the sum of its parts

No executive operates in isolation, despite what the backstabbers on "Succession" might have you believe. Today's aspiring CFO not only holds the purse strings but is also deeply involved in helping set company goals and direction. The best way to achieve success is to agree on what success means at the company level and collaborate across multiple functions. The CFO and COO, once viewed as anodd coupleindifferent to each other's motives, can now set an example for the rest of the company through sustained engagement. It's a healthier way to run a business.