01 May Does Your COO Have CFO Skills? Key Benefits of COO Financial Literacy
Here’s a question for all the CEOs out there: Does your COO have CFO skills? Do they need to?
The short answer is absolutely YES.
Many small and midsize (SMB) companies choose one or the other and then combine the roles. In some cases, the CEO is doing all three jobs—which clearly isn’t an optimal situation. If you’re fortunate enough to have a COO on your executive team, there are many benefits to the COO possessing a well-rounded set of CFO skills.
Why Operational and Financial Alignment Up-Levels Your Performance
The following represents why a COO with CFO talents is an attractive hire.
1) Data-Driven Decision Making
A CFO’s financial expertise equips them to decipher intricate financial information, which is crucial for data-driven decision making. When your COO acquires this knowledge, they can leverage financial metrics to make informed operational decisions that optimize resources and enhance efficiency within your organization. This data-driven approach leads to more targeted and effective decision-making, promoting the overall growth and success of your business.
2) Strategic Financial Planning
Possessing a deep understanding of the financial aspects of a business empowers your COO to formulate more effective long-term strategies. By mastering CFO knowledge, the COO can synchronize operations with financial objectives, ensuring long-term success, stability, and growth for your organization. This holistic view of the company’s financial health enables your COO to make strategic decisions that align with your organization’s overall goals.
3) Improved Risk Management
A robust financial background enables your COO to identify potential risks and uncertainties that may affect your organization’s performance. This understanding allows them to take appropriate measures to mitigate and manage risks more effectively, safeguarding your organization’s reputation and financial well-being. Proactive risk management helps your organization stay resilient in the face of challenges and maintain a competitive edge in the market.
4) Enhanced Collaboration
Bridging the gap between operations and finance promotes a more collaborative working environment. A COO with CFO knowledge can work closely with your finance team, ensuring that your organization’s operational and financial objectives are met in harmony. This enhanced collaboration leads to better communication, streamlined processes, and a more unified approach to achieving your organization’s goals.
5) Agility and Adaptability
In today’s dynamic business landscape, companies must be agile and adaptable to survive and thrive. By comprehending the financial implications of various scenarios, your COO can swiftly adjust operational strategies to address emerging challenges and opportunities. This agility and adaptability enable your organization to remain competitive, respond to market changes, and capitalize on new opportunities, ultimately driving long-term success.
COO + CFO: Two Powerhouses in One Role
Ultimately, possessing CFO knowledge and skills enables a COO to make informed operational decisions, align operations with financial goals, proactively mitigate risks, foster a collaborative environment between finance and operations, and respond effectively to market changes. A COO with CFO skills contributes to the organization’s long-term success, stability, and growth.
If you don’t currently have a COO but are seeking one, make sure to ask potential candidates how much experience they have with financial aspects of business operations. In my past work, I’ve found CEOs are much more likely to maximize their investment in hiring a COO with CFO skills. That’s not a boast, just reality.
If you’d like to discuss this in further detail, please don’t hesitate to reach out. Contact me via my website or email me directly at firstname.lastname@example.org.