In the construction industry, it’s not uncommon for Chief Financial Officers (CFOs) to find themselves managing marketing departments. However, this arrangement often leads to significant challenges and missed growth opportunities. Here’s why entrusting CFOs with marketing responsibilities can be a huge mistake and what the ideal reporting structure should look like.
The Misalignment of Responsibilities
CFOs are traditionally responsible for finance, risk management, human resources, and technology. These areas are fundamentally different from marketing. As the famous Sesame Street song goes, “One of these things is not like the others.” Marketing is a revenue-generating function, not merely an expense, requiring a different approach and mindset.
The Power of Marketing
I’ve been fortunate to work with some exceptional CFOs who understood the strategic value of marketing. They either supported marketing initiatives or, at the very least, did not interfere with them. Unfortunately, this is not the norm.
Marketing is often viewed as a necessary evil, leading to budget constraints that stifle creativity and effectiveness. This mentality can hinder a company’s growth, as marketing budgets are often minimized to the point where only the bare minimum is achieved. That creates a ripple effect, where poor-performing results give the CFO more reasons not to invest in marketing.
The Impact on Marketing Effectiveness
When CFOs manage marketing, initiatives are frequently reduced to the cheapest options rather than what is best for the customer or what will provide the highest return on investment (ROI). This approach can lead to subpar customer experiences and diminished brand strength.
The Ideal Reporting Structure
So, if CFOs shouldn’t manage marketing, who should?
The head of marketing should report directly to the CEO. This structure allows the marketing team to align closely with the CEO’s vision and growth goals. It also ensures that quantitative KPIs and qualitative data support marketing strategies, which is crucial for informed decision-making.
Especially in ConTech start-ups, the CEO often deeply understands the company’s audience and the problems the company solves. They typically embody the company’s brand qualities, making them well-suited to oversee marketing. This direct line of communication and alignment can drive more effective marketing strategies and business growth.
Real-World Consequences
I know dozens of marketers who have left their jobs because they felt handcuffed by their CFOs. Many have also turned down attractive job offers due to the prospect of reporting to a CFO. This trend highlights the frustration and limitations experienced by marketing professionals under such an arrangement.
Bucking the Trend
As a fractional Chief Marketing Officer (CMO), I usually work directly with CEOs and in-house marketing teams. However, I have had productive conversations with CFOs who were open to investing time and resources into enhancing the customer experience. These exceptions prove that with the right mindset, CFOs can positively impact marketing, but they are not the norm.
In summary, while there are exceptions, the best structure for most companies is for the head of marketing to report directly to the CEO. This alignment fosters a more strategic and effective approach to marketing, driving growth and enhancing the customer experience. By recognizing the unique value of marketing, companies can avoid the pitfalls of treating it as a mere expense and unlock its full potential as a revenue-generating powerhouse.