Whether public or private, it is the CFO’s duty to meet the demands and needs of the board. This said, the reporting, relationship, and focus of a board at a public company is much different than that of a private one, and CFOs need to adjust accordingly.
To highlight some of the challenges and opportunities for CFOs in relation to their boards of directors, our friends at Host Analytics recently summarized a panel discussion held by the CFO Leadership Council’s New York chapter, Inside and Outside the Boardroom: Managing and Working with Boards.
Featuring CEOs, Board Directors, Audit Committee Chairs, and CFOs, panel members raised key points that CFOs in both public and private companies can heed in 2016 and beyond:
- Changing Role of the Board: While boards in small and mid-sized companies are more actively involved in the strategy development, those in larger companies are more involved in the approval of research and strategy developed by senior management. Either way, the flow of information is important, whether it’s to assist in the decision making or to help ease the approval process.
- Cohesion, Tension, and Risk Management: “Boards shouldn’t be friends, or too diverse.” The board needs to balance a wide variety of skill sets while working together to achieve the overall goals and strategies of the company. The boards for each of the panelists met 8 times per year to discuss the important issues pertaining to the company.
- CFO Communication with the Board: The flow of information from company to board has to be accurately summarized, delivering both positives and negatives to establish trust and credibility.
- Building a Relationship between CFO and Board: On top of the open, honest, and transparent communication with the boards, the CFO should not be blocked from establishing a relationship with board members. However in reporting bad news to the board, the CFO and CEO should coordinate on the steps to be taken, reporting to the board as quickly as possible.
- CFOs and Audit Committees: Panelists from the session recommend the CFO remain focused on the audit committee, working to achieve transparency through deep dives on key issues such as compliance, IT governance, information security.
- Public Company CFO vs. Private Company CFO:
- Public Company: Public company boards need more diversity and independence in board members. Disclosure requirements are much more extensive in a public company.
- Private Company: Boards of private companies have fewer pressures and disclosure requirements. This is one of the advantages of staying private for a long period of time.
For more insights into how CFOs can better relate, report, and work with their boards—whether private or public—please head to the Host Analytics blog.
Reporting to boards is an often stressful task for CFOs, but with the right insights into the financial numbers, yesterday, today, and well into the future, your tenure as a CFO can be smoother, with better results and more success throughout the organization.
Build trust, improve board relationships, and thrive well into the future with the reporting and forecasting efficiency provided by the leading cloud enterprise performance management software: Host Analytics. Learn more about Host Analytics and contact Brittenford to learn how we can help you implement in the new year.