By Nancy Akullo
Head of Communications
In 2001, Enron Corporation filed for bankruptcy. Marred by fraud in what came to be one of the biggest global scandals in corporate history, the company could no longer sustain its operations.
Kodak, a renowned technology company, call it a tech company of many firsts, invented the digital camera, only to get left behind in the whirlwind revolution of digital photography. They focused on short-term profitability goals placing emphasis on their film division, and they missed the bigger picture.
Similarly, Lehman Brothers was brought down in 2008 by the collapse of the United States housing market.
Such has been the fate of many enterprises, setting out with ambitious visions, only to have their lifespans prematurely derailed by financial mismanagement scandals. But what might have been the root cause? Could it be that the board, management and the Chief Financial Officers (CFOs) were not aligned? Perhaps ineffective corporate governance practices?
While speaking at a C-suite Forum, Ms Proscovia Nabbanja, the Chief Executive Officer (CEO) of the Uganda National Oil Company Limited noted that the Corporate Governance and Performance tripod which currently comprises the Board Chairman, the CEO and the Corporation Secretary needs to be modified to accommodate the CFO.
According to Ms Nabbanja, the CFO manages the company’s financial actions, including budgeting, forecasting, and financial planning and analysis, which are crucial to an organisation’s sustainability. The reports and analysis assist management and the board to understand the implications of strategic decisions, therefore, the collaboration between the CFO and CEO is of utmost significance.
“CEOs need to have a strong anchor in the CFO who will help them to understand the financial aspects of the business,” noted Ms. Nabbanja.
She noted that whereas the Board oversees overall strategy and direction, and whereas the CEO implements strategy and the CFO handles strategic financial management, the objectives of the 3 need to be aligned through a shared vision, clearly defined complementary roles to avoid overlapping while leveraging strengths, and aligned performance metrics, not forgetting financial oversight – a role played by the CFO.
The common factors in the collapse of many global enterprises are poor risk management and general financial mismanagement. Perhaps the CEOs of these enterprises did not listen to their CFOs.
“An organisation is only as strong as its CFO,” advised CPA Derick Nkajja, the CEO of the Institute of Certified Public Accountants of Uganda (ICPAU).
“I like this saying – show me a thriving organisation, and I will show you a competent CFO,” he noted.
The CFO’s role is crucial in ensuring transparency and integrity.
Ms Nabbanja highlighted three imperatives for enhanced organisational performance:
- A culture of open communication through regular meetings and feedback sessions. Silos must be broken.
- A collaborative mindset through a shared commitment to the organisation’s goals, and focus on compromise and collective problem-solving.
- Aligned strategies through regular strategic planning sessions and joint decision-making.
According to CPA Joshua Karamagi, the CEO of the Uganda Electricity Transmission Company Limited, in the organisational leadership hierarchy, CFOs should be the third in line after the Board Chair and the CEO. He urged CFOs to be intentional about earning their positions in the C-Suite through collaboration and demonstrating value.
“If the CFO is distant from the CEO, he/she will be distant from the Board,” noted CPA Karamagi.
“CFOs should drive value so as to earn their C-Suite positions,” he added.
CPA Karamagi further encouraged CFOs to create enabling environments for growth by managing resources optimally without stifling innovation and progress.
Organised by the Institute of Certified Public Accountants of Uganda, the C-suite Forum was held on 29 May 2024 at the Sheraton Kampala Hotel. The theme was the Collaborative Role of the Board, CEO and CFO in Fostering Organisational Performance. Over 100 c-suite executives attended, from various public and private sector organisations including MTN Uganda, the National Social Security Fund, Bank of Uganda, Mengo Hospital, Steadfin SACCO, Stanbic Bank, Kampala Capital City Authority, New Vision, Uganda Revenue Authority, Watoto Childcare Ministries, Makerere University Business School and the Ministry of Finance, Planning and Economic Development, among others.
The C-Suite Forum is an avenue for CFOs to engage with CEO and Board executives for deeper dialogue on the synergies that propel organisational sustainability. This was the second edition.
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