Managing Up The CFO & The Board.

• Author: Millman, Gregory J.
• Position: Your Career - Brief Article

In the early 1990s, Peter Rugg, a partner with Tatum CFO Partners, was CFO of a publicly traded company listed on the New York Stock Exchange. To cope with mounting financial pressure, Rugg had recommended that the company sell some major assets and use the proceeds to retire debt. "The CEO was reluctant to do it," Rugg recalls. The CEO was also averse to telling the board just how had Rugg thought things were.

After a board meeting in which the CEO made light of the firm's deteriorating finances, Rugg got a call from a board member. "He told me what the CEO said, and asked if it was correct. I said no, what's correct is the following..." Rugg laid out the facts. Shortly afterward, the company had a new CEO.

Things could easily have gone the other way, had Rugg not made his relationship with the board a top job priority. The company's corporate governance policy allowed only one employee on the board -- the CEO himself. But Rugg found other ways to make his presence known and his voice heard. "It took several years, but there were numerous social functions where I had the opportunity to meet and talk with members of the board. I'd make the most of those opportunities -- coffee before the annual meeting, luncheons, board outings to play golf. All of those were great opportunities to solidify and build relationships with board members," he says.

Business trends such as the merger boom and the shareholder-value movement have raised the profile of the CFO -- both inside the company and before his or her own board. Meanwhile, new Securities and Exchange Commission dictates for audit committees have set off a miniboom in the market for CFOs as board members. "CFOs have gone to the top of the 'who's hot and who's not' list of talents boards are seeking," says Ralph Ward, editor of Boardroom Insider. "The CFO is in the catbird's seat," agrees Bruce Beebe, editor and publisher of Directorship Monthly, a corporate governance newsletter.

Susan Schultz, CEO of Phoenix-based SSA Executive Search and author of The Board Book, recommends that the board and the CFO do "whatever possible" to see that the CFO has top-level exposure. "It's important for the CFO's relationship with the board to go beyond reporting," she says, "His or her business judgment must be well-established. It's tricky. Too often, the CEO's point of view is the only one available to the board, and it's very awkward for the CFO to intrude into that relationship unless the CEO or the board members understand that they need a second point of view. One of the challenges is the tension between an aggressive CEO and a CFO who has a strong, sensible, balanced opinion -- less...