The Danger of CEO/Chairs: Why Companies Should Separate These Key Roles

Proponents of separating the CEO and Board Chair roles argue that enterprise companies need strong governance to effectively manage risk and make informed decisions. 

An independent Board Chair can provide critical oversight and guidance to the CEO, helping to ensure that the company remains on track. The Board of Directors operates on a longer-term horizon, often focused on the long-term strategy to achieve the company’s vision. 

The Board’s focus is on ensuring the health and sustainability of the company. This includes keeping the CEO in check and taking measures in case they go rogue. 

On the other hand, especially tech companies argue that having a single person in both roles can facilitate quicker decision-making. In fast-moving tech companies, a streamlined decision-making process can be crucial to success.

At the same time, fast decision-making can be an issue, when these decisions lead down the wrong path. If both roles are in the same pair of hands, there is little power balance in an organization, which can have severe consequences. 

Elon Musk’s my-way-or-the-highway-approach to leading Twitter serves as a cautionary tale, where unchecked power can result in chaotic leadership, wreaking havoc to a business – fast.

The often stated argument that a CEO/Chair provides a more crystallized vision, seems to me as a mere excuse, for not wanting to share power or the inability to unify the Board of Directors and CEO around a shared vision. 

When the ego gets in the way of proper governance the potential damage is too big to be left unaddressed: once customers, investors, and regulatory bodies loose trust it can be too late to turn the ship around without significant fallout.

A desire for fast decision making should not outweigh the need for checks and balances. 

While smaller businesses might benefit in their growth journey from a CEO/chair and the resulting speed in decision-making, there is too much at stake once a business reaches the size of an enterprise. 

Businesses and brands need to build trust, which can take a very long time. Preserving that trust is a key role of corporate leadership. Too much power within the hands of one person can destroy trust and shareholder value in no time – a key reason to separate the roles of Board Chair and CEO.

Main Image by Yevhen Buzuk via unsplash