Fall 2023

Board meetings are a staple of internal communication and strategy-setting at every organization, regardless of size, location, or industry. The frequency of these meetings may vary by entity, from monthly, to quarterly, or even annually. Board meetings may also be called on demand should significant business decisions arise. Some examples of these situations would be an abrupt exit of a key management role, major changes in the law pertaining to the industry, and geopolitical events that could make or break a company.

The topics discussed at board meetings should be of a higher level and not operational in nature. Strategic initiatives and important decisions along the lines of mergers, acquisitions, and divestitures are examples of key areas where boards are major players.

Most companies give serious consideration to who should be on the organization’s board. But big public companies will pull from a different pool than private, closely held businesses. Typical board members in a closely held business may consist of the owner and family members, with the remaining seats rounded out with some external members. These are the voting board members within the company who evaluate the important factors a business may be facing or will face in the future. The voting members have a fiduciary responsibility to plot a strategic course for the business, and that fiduciary role can mean ultimate accountability.  

Once a board is set, does that mean it should remain static and unchangeable? How many board members periodically evaluate who else should be invited to board meetings? Does anyone consider what crucial insights are being missed? 

If the CEO/president is not elected or appointed to the board, certainly the board will want to make sure he or she is an attendee at these meetings. CEOs/presidents are responsible for overseeing an organization’s activities, so it is logical that they would be in the room.

A closely held organization’s main financial person – whether that’s the CFO, vice president of finance, or director – is often extended an invitation to board meetings. This, too, is a natural fit because of the close relationship with the CEO and the fiscal updates and perspectives that the financial chief can bring. Updates on the organization’s financial well-being are a crucial component of any board meeting. But, strangely, this isn’t always the case with closely held businesses. Too often, the lead financial person is not in board meetings, or they are asked to attend to make a presentation and then asked to leave the room once completed. This unfortunate board habit makes it much more difficult to align the finance operations with the directives coming out of the board meeting when not privy to the background discussions or knowing if all the right risk factors were raised. 

There is real value in having the CFO in the room, even if he or she is not an official board member. The CFO plays a significant role in the alignment and measurement of strategic initiatives, and this is reason enough to have them as key attendees at board meetings.

Here are three other reasons an organization’s CFO should be at all board meetings:

• The CFO is often the most knowledgeable financial person within the organization. They possess an inherent understanding of all things finance.
• As a nonvoting board participant, the CFO provides a perspective that is neither biased nor emotional. True objectivity can often be the voice of reason in discussions that become personal for many board members in closely held businesses, particularly in situations where otherwise sound judgment may become clouded.
• The financial security and well-being of an organization are responsibilities that land in the lap of the CFO. Because of this, the CFO is often very attuned to risks and navigating the terrain that could fall outside acceptable risk parameters to the overall survival of a business. Compliance complexities can arise from larger decisions, and having the CFO in the room allows for real-time discussions surrounding these challenges.

In a business environment where the pace of activity is only increasing, it is vital to have the steady hand of the CFO steering the organization through all the challenges. The boardroom is undoubtedly an area that sees these challenges regularly. Ensuring that you have the best team in the room when the discussions are happening rather than causing delays by not having the right voices in the room means saving a seat at the boardroom table for the CFO.

A word of advice to the CFOs who are not currently in the boardroom at his or her closely held business, maybe it’s time to ask for the opportunity to be included. It might just be the missing link that improves your company’s decision-making and better aligns operations with the strategic direction. Often it will cost your company nothing but an additional calendar invite. 

Michael F. De Stefano, CPA, is partner/chief operating officer for RKL in Lancaster and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at mdestefano@rklcpa.com.

Board meetings are a staple of internal communication and strategy-setting at every organization, regardless of size, location, or industry. The frequency of these meetings may vary by entity, from monthly, to quarterly, or even annually. Board meetings may also be called on demand should significant business decisions arise. Some examples of these situations would be an abrupt exit of a key management role, major changes in the law pertaining to the industry, and geopolitical events that could make or break a company.

The topics discussed at board meetings should be of a higher level and not operational in nature. Strategic initiatives and important decisions along the lines of mergers, acquisitions, and divestitures are examples of key areas where boards are major players.

Most companies give serious consideration to who should be on the organization’s board. But big public companies will pull from a different pool than private, closely held businesses. Typical board members in a closely held business may consist of the owner and family members, with the remaining seats rounded out with some external members. These are the voting board members within the company who evaluate the important factors a business may be facing or will face in the future. The voting members have a fiduciary responsibility to plot a strategic course for the business, and that fiduciary role can mean ultimate accountability.  

Once a board is set, does that mean it should remain static and unchangeable? How many board members periodically evaluate who else should be invited to board meetings? Does anyone consider what crucial insights are being missed? 

If the CEO/president is not elected or appointed to the board, certainly the board will want to make sure he or she is an attendee at these meetings. CEOs/presidents are responsible for overseeing an organization’s activities, so it is logical that they would be in the room.

A closely held organization’s main financial person – whether that’s the CFO, vice president of finance, or director – is often extended an invitation to board meetings. This, too, is a natural fit because of the close relationship with the CEO and the fiscal updates and perspectives that the financial chief can bring. Updates on the organization’s financial well-being are a crucial component of any board meeting. But, strangely, this isn’t always the case with closely held businesses. Too often, the lead financial person is not in board meetings, or they are asked to attend to make a presentation and then asked to leave the room once completed. This unfortunate board habit makes it much more difficult to align the finance operations with the directives coming out of the board meeting when not privy to the background discussions or knowing if all the right risk factors were raised. 

There is real value in having the CFO in the room, even if he or she is not an official board member. The CFO plays a significant role in the alignment and measurement of strategic initiatives, and this is reason enough to have them as key attendees at board meetings.

Here are three other reasons an organization’s CFO should be at all board meetings:

• The CFO is often the most knowledgeable financial person within the organization. They possess an inherent understanding of all things finance.
• As a nonvoting board participant, the CFO provides a perspective that is neither biased nor emotional. True objectivity can often be the voice of reason in discussions that become personal for many board members in closely held businesses, particularly in situations where otherwise sound judgment may become clouded.
• The financial security and well-being of an organization are responsibilities that land in the lap of the CFO. Because of this, the CFO is often very attuned to risks and navigating the terrain that could fall outside acceptable risk parameters to the overall survival of a business. Compliance complexities can arise from larger decisions, and having the CFO in the room allows for real-time discussions surrounding these challenges.

In a business environment where the pace of activity is only increasing, it is vital to have the steady hand of the CFO steering the organization through all the challenges. The boardroom is undoubtedly an area that sees these challenges regularly. Ensuring that you have the best team in the room when the discussions are happening rather than causing delays by not having the right voices in the room means saving a seat at the boardroom table for the CFO.

A word of advice to the CFOs who are not currently in the boardroom at his or her closely held business, maybe it’s time to ask for the opportunity to be included. It might just be the missing link that improves your company’s decision-making and better aligns operations with the strategic direction. Often it will cost your company nothing but an additional calendar invite. 

Michael F. De Stefano, CPA, is partner/chief operating officer for RKL in Lancaster and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at mdestefano@rklcpa.com.