Many CFOs are recognizing the need to understand the operations and inner workings of their company in order to improve efficiency and drive growth. The role of the CFO has become more operational, extending beyond the finance department. CFOs are now spending more time with manufacturing teams, commercial teams, and research and development teams.
Some companies have even merged the roles of CFO and COO, or president and CFO, recognizing that some responsibilities traditionally managed by a COO have shifted to the CFO. Currently, only 1% of S&P 500 and Fortune 1000 companies have CFOs with the dual title of CFO/COO, but the popularity of the COO role is growing. According to data from Russell Reynolds Associates (RRA), 39% of S&P 500 companies now have a COO, compared to 48% in 2000 and 32% in 2018. Similarly, 42% of Fortune 1000 companies have a COO.
Some CFOs have already taken on the COO role, including those at Block, Macy’s, Abercrombie & Fitch Co., and The Children’s Place. This trend reflects the increasing importance of the COO position, which has gone through periods of popularity over the years.
According to recent research by McKinsey, the role of the COO is making a comeback and is playing a bigger, bolder, and more transformative role than ever before. In some cases, being appointed as the COO can also serve as a stepping stone to the CEO role.
Overall, the merging of CFO and COO responsibilities reflects the evolving nature of the CFO role and the need for financial leaders to have a deeper understanding of the operational aspects of their organizations. This trend is likely to continue as companies recognize the benefits of having CFOs who can drive both financial strategy and operational efficiency.