In the past month, a few big companies have lost their CFOs. And while nobody knows for sure why Simon Henry and Jason Wheeler decided to leave Shell and Tesla, their departures will inevitably put pressure on their leaders.
That’s because a CEO’s relationship with their CFO is perhaps one of the most important in business. And the consequences of not keeping things chummy can range from sub-optimal performance to extreme disruption, particularly if disturbances occur at crucial junctures in a company’s development.
In Tesla’s case, Wheeler announced last month that he would leave in April, having only arrived at the company from Google in November, 2015. The timing of his departure was hardly ideal for founding CEO Elon Musk, given it added to a string of other high-level staff exits and came on the cusp of the launch of the company’s new Model S electric car.
Henry, meanwhile, had served as Shell’s CFO for a solid seven years when he left this month. He has worked together with CEO Ben van Beurden since January, 2014, helping him successfully steer the takeover of BG Group. No reason was provided for Henry’s departure.
When 321 other CFOs were asked by Korn Ferry why they would voluntarily leave their position, 52% said the top reason would be a poor relationship with the CEO. A similar weighting was given to involuntary departures, with 41% saying not working well with the board and CEO would be the No.1 reason they’d be asked to leave.
A mere 8% of respondents said that not meeting their company’s financial goals would be the top reason for being stood down, indicating just how influential CEOs can be. “This proves that the CFO role is about much more than profit or loss—it’s about helping lead the strategic trajectory of an organization for overall success and developing the relationships that are required,” Korn Ferry’s Bryan Proctor said.
A separate analysis released in December by Russell Reynolds discovered clear strategic benefits of fostering a good partnership. The 49% of CFOs surveyed who said they had a “very strong” relationship with the CEO were more likely to be open—providing boards with access to their direct reports. They also felt more comfortable bringing difficult issues to their chiefs.
“By creating the space for healthy debate, the CEO is signaling directly and indirectly that the CFO is an ingrained, enterprise-level member of the leadership team,” Russell Reynolds’ Amy Hayes said. “In turn, this allows the CFO to operate at that level.”
Without that link, she said CFOs can become constrained to more transactional thinking and responsibilities, under-leveraging their potential to improve the business and possibly tempting them to leave.
A CFO of a multi-billion dollar consumer finance corporation, who wished to remain anonymous, told Russell Reynolds that there’s a natural tension between the two roles. “For that tension to be healthy, you need a base of chemistry, respect and trust,” they said. “Effective relationships are defined by mutual trust and mutual respect for each other’s unique capabilities. That’s not all you need. But without it, the relationship doesn’t stand a chance.”