Why a Dual CFO-COO Position Could Be a Gamechanger for Your Business

Your team will make or break your business. Hire the right people and you’ll build a winning team. The most important of any business is the c-suite leadership team. They set the tone and direction of the business, being the guiding force behind its development. While the CEO sits at the top of the c-suite pyramid, they have the freedom to mould the c-suite to meet their company’s needs.

Whether you’re a start-up or a business with over a hundred employees, having a dual CFO-COO position could be a gamechanger. The evolving role of CFO means that they’re increasingly taking on the responsibilities traditionally given to a COO.

If you want to keep your team small or take a strategic approach to your team, hiring a hybrid Chief Financial Officer/Chief Operations Officer (CFO-COO) could revolutionize your business. It can help you unlock the potential of your c-suite team and the rest of your business.

How can you know if a hybrid CFO-COO role is the right one for you? We’re deep diving into this unique c-suite position and why it’s one that you should consider adding to your leadership team. With the role of CFO taking on increased strategic importance, they’re quickly overtaking the role of COO.  You might be interested in: Why your marketing team needs a strategic CFO.

At FD Capital, we’re a boutique financial recruitment agency that specialises in hiring part-time, full-time, and interim CFO. Our portfolio of talent includes an extensive list of candidates with the potential to fulfil a dual CFO-COO position. Read on to find out why hiring a CFO-COO position could be a gamechanger. You might be interested in: How to get your first CFO Position – with the help of FD Capital.

What is a CFO?

A Chief Financial Officer (CFO) is a c-suite position within the leadership team of your company. Their responsibility focuses on overseeing the company’s past and future financial activities. The CFO role has evolved with time to take a key role in the strategy of the company’s future by acting as an advisor to the CEO. This role is typically carried out by the COO.

Today’s CFOs oversee more than expenses or forecasting profit margins. Their responsibilities extend beyond the company’s financial department. Their data analysis and forecasting help to ground the company’s strategy and ensure that the CEO is ahead of industry trends and technological advancements.

Without their insight, the CEO is navigating the company’s future virtually in the dark. Their strategy insight provides the CEO with the knowledge they need to determine the best moves for the company’s future.

A CFO’s day-to-day responsibility will differ depending on the company. Most will utilise the latest technological advancements to enable their analysis, forecasting, and intelligence. Within this data, the company’s KPIs and ROIs don’t have the context they need to provide strategic value.

What is a Chief Operating Officer (COO)?

The Chief Operating Officer (COO) is another part of the c-suite team who is responsible for the day-to-day running and administration of the business, including overseeing its operational functions. Just like the CFO, the COO will report directly to the CEO. They’re typically considered to be second in seniority within the c-suite team behind the CEO.

You may see the COO position being called by one of several other names, including that of ‘Operations Director’ and ‘Chief Operations Officer’. They carry out the same functionality and responsibilities of a COO but under a different job title.

Like the role of CFO, a COO’s position can be adapted to meet the needs and position of the company. A CEO may ask their COO to focus on handling the internal affairs of the business, allowing the CEO to focus on becoming the face of the business by handling external affairs.

The skillset required for a COO is similar to that of a CFO. They’ll need to have strong communication and leadership skills to direct the company’s future while having strong managerial and analytical skills.

The role of COO is one of the most adaptable within the c-suite team and is determined by the preferences of the CEO. In most cases, their responsibility focuses on realizing the organization’s business plan by implementing the company’s long-term strategy. While the CEO approves the business plan and strategy, the COO is the one who brings it to life.

By comparing the role and responsibilities of CFO and COO, we can see their overlap as strategic advisors to the CEO. Both positions require similar skillsets, making it possible to create a dual CFO-COO role.

When combining these roles, you can create a second-in-command who is responsible for overseeing the daily operations to help scale the business. If you find the right candidate with a strong skill set, they’ll have no problem fulfilling both roles.

Why you should consider a hybrid CFO-COO role

Straying away from the norm and transitioning to a hybrid CFO-COO position, you are streamlining your finances and operations to minimize the risk of miscommunication by having one c-suite leader overseeing both departments. You could achieve this by transitioning your existing CFO into the hybrid role or hiring a new candidate to fulfil both sets of responsibilities.

By streamlining your leadership team with a CFO-COO position, you’ll be able to boost your efficiency and keep your business lean, reducing your running costs. It also ensures that the CEO is in the loop by reducing the number of advisors they have to go through by making their decisions.

Creating a hybrid role increases your company’s efficiency by giving you the best of both worlds. A COO’s goal is to keep the company as productive as possible by minimizing waste and inefficiency. Similarly, a CFO wants to increase the company’s cash flow by cutting unnecessary costs. By combining these roles, a CFO-COO can use their knowledge and insight to fulfil both these purposes. With one individual overseeing the operations and the company’s finances, you can take advantage of better results across the board.

A dual CFO-COO can use their responsibilities to create more accurate analysis that will feed into a stronger strategy for the business. If your business is going through a time of major change, such as fundraising or a M&A, hiring a dual CFO-COO role can help you realise your business’ potential.

Combining the CFO-COO role means the CEO can have one advisor who can determine the financial strategy while overseeing the implementation of that strategy and its operational aspects. With their CFO experience, they’ll also be able to identify any drawbacks or faults in the strategy’s integration process that could be altered to prevent unnecessary expense or delay.

Giving your operations an analytical approach

Why should you consider hiring a CFO to fulfil your company’s COO position? A talented CFO is a financial professional who is analytical in everything they do. They’ll look at the company’s past financial performance to help determine its future forecasting and strategy.

By bringing this analytical approach to your operations, you can provide context for what’s happening to the company at present. Your operations should strive to realize the company’s corporate vision and realize its revenue potential. These responsibilities fit the CFO’s analytical mindset and aren’t new skills that a CFO would have to learn on the job.

When you hire an operational CFO, you can capitalize on their analytical approach to develop your KPIs and track their progress by determining the effectiveness of your strategy.

By having a hybrid CFO-COO position, you can utilize the analytical skills of a CFO that can easily pivot to fulfil the operational role of a COO. This hybrid CFO-COO position means one c-suite leader could support and implement the company and CEO’s strategic vision.

The relationship between a CEO and CFO

One of the most important relationships within any business is between the CEO and CFO. This relationship requires a high level of trust to be able to succeed, as does that of the CEO and COO. By combining the role of CFO-COO, a CEO can have one person who fills the second-in-command role.

This individual will work to support the corporate vision of the CEO and provide a form of checks and balances against their decision making. A CFO is someone who the CEO can look to as a problem solver and the person they can turn to in order to implement their strategy.

The CEO will place a high level of trust in their CFO as the person responsible for ensuring the company meets its accounting and compliance requirements.

Not every company will jump at the chance to create a hybrid CFO-COO position. Having two separate positions helps to segregate the duties and responsibilities. It also prevents another c-suite management leader from having almost as much power as that of the CEO.

The wrong CFO-COO could negatively influence the future of the business by hiding poor performance or disappointing revenue. A situation like this could put the company at risk of being exposed during an audit or by internal factors.

While these risks exist, studies carried out on dual CFO-COO positions find that they strengthen the company’s performance. The Journal of Management Accounting Research published a study of companies with a hybrid CFO-COO that shows they provide more accurate forecasting and projection, including that of cash flow.

Recruiting and retaining a CFO-COO

In the age of the ‘great resignation’ retaining your c-suite team has never been more important. Losing a hybrid CFO could feel like a fatal blow for a CEO as they’ll lose their second-in-command and someone responsible for large portions of their business.

Expanding their responsibilities to include that of a COO could help you retain your existing talent. The skill sets required to be a successful CFO mean that they can easily pivot to undertake the operational responsibilities of a COO.

If you’re unsure of having a hybrid CFO-COO, transitioning your current CFO into the position can make the change easier to implement. Your existing CFO will be able to implement the CEO’s strategic vision and already have that important trust-based relationship.

A small business or start-up could benefit from having a fractional CFO-COO who can fulfil both positions and keep costs low.  You might be interested in: How the UK Fractional CFO Market is growing?

Hiring the right CFO-COO for your business

Most of the existing CFO-COOs in the industry have a background of working as a CFO and have gradually transitioned to adopt the responsibilities of a COO. Just like the role of CFO, the responsibilities of a COO will vary depending on the company.

A hybrid CFO-COO will be responsible for a multi-disciplinary team. If you want your CFO-COO to hit the ground running, you want them to be familiar with business operations.

You may decide to look outside your company to hire for the position of CFO-COO. It’s vital that you find the right candidate who can hit the ground running and will flourish within the company culture. They should be ready for the role of being second-in-command, bringing with them the analytical skills required to fulfil the purpose of both CFO and COO.

Working with a boutique financial recruitment firm like FD Capital can put you in control of the recruitment process to find the candidate who will tick all the boxes. We take a tailored approach to every client, drawing up a shortlist of candidates who meet your requirements and business needs.

Adding a CFO-COO to your team

Integrating your CFO-COO to your c-suite team will be the same as introducing any new management position to your team. After finding the right candidate, you want to ensure their transition is smooth by setting expectations and introducing them to your board and other c-suite members.

You want to ensure that your new CFO-COO can take on a leadership and management role ahead of your financial controller and other members of your accounting and finance team. You want to set expectations and ensure that everyone in your company is aware of where the CFO-COO sits in the company’s hierarchy.

Are you ready to add a CFO-COO to your team? Whether you’re a start-up or a business looking to scale to the next level, this role could be a gamechanger for your business. At FD Capital, we’re here to support you through every step of the process. Start the recruitment process today by contacting us at 020 3287 9501.

Adrian Lawrence

Adrian Lawrence FCA with over 25 years of experience as a finance leader and a Chartered Accountant,  BSc graduate from Queen Mary College, University of London.

I help my clients achieve their growth and success goals by delivering value and results in areas such as Financial Modelling, Finance Raising, M&A, Due Diligence, cash flow management, and reporting. I am passionate about supporting SMEs and entrepreneurs with reliable and professional Chief Financial Officer or Finance Director services.