CEO vs CFO – Roles and Responsibilities

The roles of the CEO or chief executive officer and the CFO or chief financial officer are quite different. While they both are C-level executives at the very top of the corporate hierarchy, their functional roles differ.

On a broad level, the CEO oversees the operations of the entire company, whether that may be sales or administration, and the CFO oversees the financial management for the entire company, whether that may be consulting on projects or building strategies.

CEO vs CFO

Who is a CEO?

The CEO holds the highest rank at any company. The primary role of a CEO is to make all major decisions for the company and to function as the face of that company. In some companies, the CEO is also the president, or founder, and might also be part of the board of directors.

Who is a CFO?

The CFO is the highest rank regarding the financial dealings of the company. The CFO’s primary role is to manage the company’s finances and grow revenue. In some cases, the CFO may also be a member of the board of directors.

Is the CEO higher than the CFO?

Yes, although the CEO and CFO, both belong to the C-suite level, the CFO is one of the positions that report to the CEO.

The difference between a CEO and a CFO

As per their respective positions, the differences between the CEO and CFO lie in the scope and level of their responsibilities. Here are 6 principal differences between the CEO and CFO;

Primary Responsibilities of a CEO and a CFO

The primary responsibility of the CEO is to ensure the company is running smoothly. The overall company performance lies under their function. They oversee the operations of the company in every department. They typically do not get involved in the day-to-day tasks, instead, they make sure that all departments and employees are working towards the long-term and short-term company goals. Although depending on the size of the organization, some CEOs do get involved in daily tasks.

The responsibilities of the CEO are more general in nature, while those of a CFO are more specific. The CFO’s responsibilities are only concerned with the financial aspect of the company. They focus only on growth, risk mitigation, expansion, and managing the company’s finances. They oversee all the financial departments of the company, such as budgeting and accounting.

Hierarchy of CEO and CFO

The CEO is the top-most position at a company and reports only to the board of directors. The CEO is also hired or appointed by the board.

On the other hand, the CFO is one-level under the CEO, along with other C-suite positions like the COO, and reports to them. The CFO is hired by the CEO.

Liaising

The CEO is the face of the company and represents the company to the public and others. Some companies have CEOs who are prominent in the media. This is usually when the CEO is very involved in the representation of the product or service offered by the company. Eg. Steve Jobs for Apply Inc., or Jeff Bezos for Amazon.com, Inc.

On the other hand the CFO is more concerned with investors, banks, and other financial institutions. At some companies they are also expected to maintain relationships with the board.

Functional role of CEO and CFO

The CEO charts the strategies and goals of the company along with the board and then delegates it to the next in-charge to follow through. The CEO is in charge of keeping the employees on track to meet the vision of the company in the long term. They set the tone for the company and the other leaders and employees of the company follow suit.

The CFO keeps track of the financial strengths and weaknesses of the company. They propose plans to combat the weaknesses that might be due to a variety of factors including an unstable economy or unexpected turn of events. They also work towards playing up the strengths and ensuring the company is always growing. They also provide financial counsel to the CEO for the benefit of organizational strategy and might also work with the COO of the company on funding and budgeting.

Culture

When it comes to organizational culture, the CEO is the ultimate leader. Everyone else in the company will look toward the CEO to establish the culture. Theirs is the behavior all others will accept and emulate. So, be it a change in culture, response to a certain situation, the upkeep of integrity, and the understanding of what is acceptable and what is not, the employees will look at the CEO for guidance and will follow in their footsteps.

On the other hand, the CFO is not specifically sought after for overall company culture. Rather it is in their job description to be ethical and moral when it comes to finances. That said, as a leader at the company, and one at the very top, the CFO is expected to follow the culture as is everyone else. As a leader and someone in the C-suite, the CFO needs to lead by example, as do all other leaders, whether COOs, managers, department heads or others.

CEO vs CFO salary

The salaries of the CEO and CFO vary depending on a variety of factors, such as the size of the company, the experience of the CEO or CFO, the industry, the kind of company, and more.

According to an Indeed report from February, 2021, the average base CEO salary is $116,890 per year in the US. And, the average base CFO salary is $133,859 per year.

According to PayScale, the average base CEO salary in India is ₹3,007,641 per year. Meanwhile, the average base CFO salary in India is ₹3,484,747 per year.

While the functional roles and the focus of the CEO and CFO may be vastly different, both positions need acute communication and leadership skills. They also will benefit from refined organizational skills. As different as the roles are, both roles are at the very top at any company and are required to hold integrity and ethics. These skills of CEO and CFO will apply differently, but they are essential skills for a leadership job.

While the position of the CEO has many possible career paths, in order to put yourself on the path to becoming a CFO, a course in finance is necessary. On like the Global Master of Science in Finance (Global MS in Finance) program from the Richard DeVos Graduate School of Management is equipped to position you for various opportunities in the world of finance. The program helps you grow as a leader in finance with the ability to shape the future. You will learn from renowned faculty as well as industry experts to stake your claim and contribute positively to the ever-changing and expanding world of global finance.