Marketing professionals around the world lament pitiful budgets, poor executive visibility, and lack of a central role in helping drive corporate strategy. And while we've made progress with tracking the right metrics and aligning more closely with the executive suite, would marketing .... as a function ... be better served reporting to the office of the chief financial officer (CFO)?


In "Marketing as Strategy", London Business School professor, Nirmalya Kumar, discusses the challenges of getting "marketing" back on the radar screen of the chief executive officer (CEO). He notes, "Many CEOs, unable to count on their marketing departments for results, have had to turn to operations and finance, cutting costs and re-engineering the supply chain to increase profitability and mergers and acquisitions to grow revenues."

Dr. Kumar makes the case for marketing professionals to start speaking the language of CFOs, and tracking our progress against the goals of increasing customer retention, reducing costs, increasing innovation and improving the value of the corporation.

In a similar approach, Roy Young, David Stewart and Allen Weiss in "Marketing Champions" also pronounce that marketers need to align our activities to cash flow drivers such as customer acquisition, increasing wallet share, and improving customer retention. The authors advocate "forging a friendship with the CFO" and understanding his or her primary needs in creating healthy cash flows, steady earnings, and improved shareholder value.

The situation is dire, and the authors of both publications point out that in many instances, marketing is:

* Not aligned with the concerns of the CEO
* Not speaking the language of CFOs
* Not tracking the right metrics
* Not playing a role in critical strategy discussions

We know that the above critiques are not true in all instances, but for the sake of argument, let us accept them as valid. We could wait for marketing as a function to "evolve" and over time gain acceptance and credibility as we institute better marketing practices that more closely align with the needs of senior management. But this takes time, and I'll argue as a marketing professional, time is not on our side.

Another, more drastic option, would immediately change the paradigm .... what if the marketing function reported to the CFO?

The following discussion falls under the category of intellectual prototyping. I don't have all the answers, nor will I be able to fully encapsulate the ramifications of such a reporting structure. Perhaps the wisdom of crowds ... the intelligence of many versus the few–can help enhance the discussion.

Benjamin Franklin is rumored to have divided a piece of paper into two halves, the "pro's" and "con's" as a decision making technique. In this spirit, I've listed out some of the positive and negative consequences of marketing reporting to the CFO. There are surely others, and I look forward to the Daily Fix community adding more:

Pros

Marketing activities would be more closely aligned with cash flow drivers - with marketing reporting to the CFO .... they'd have to be!

Metrics used by the marketing department would be those the CFO has approved and actually cares about

Marketers would be forced to learn to speak the language of finance

Cons

Could potentially cause marketing as a function to become more "tactical" than "strategic"

Marketing should arguably report to the CEO, not the CFO (this proposed reporting structure is a step backwards!)

Many CFOs have a "glass half empty" approach to the future as opposed to CEOs who often have a more optimistic view

CFOs are overwhelmed with compliance issues .... competing for their attention could be challenging

Could cause budget cuts, although I'll argue it couldn't be worse than the menial budgets most marketers are currently accorded

Interestingly enough, marketing professionals have much in common with Chief Information Officers (CIOs). Just as marketing professionals struggle with building relationships with the finance department, codifying value and gaining visibility with senior management, in some respects CIOs are challenged with similar issues.
CIO Magazine's annual "State of the CIO" survey shows that more CIOs report to the CEO (41 percent) than to any other position. There are however, a sizable percentage of CIOs who report to the CFO (24 percent in 2007 .... up from 12% in 2002).

To more closely align the CIO position with business issues and impose financial discipline on technology expenditures, many CEOs have taken a drastic step of having the CIO report to the CFO. Is "marketing" next?

My questions for the community:
* What are the pros and cons of the marketing function reporting to the CFO?
* Would reporting to the CFO be a catalyst for changing the perception of marketing within the organization?
* Would reporting to the CFO cause marketers to be more disciplined in approaches to marketing measurement?
* Must "marketing" report to the CEO in order to provide strategic direction to a company?
* Are you a marketing VP or CMO reporting to the CFO? If so, I'd love your opinions on this topic!