Has the CEO Position Evolved to a Two-Person Job?
When Netflix announced this summer that it was elevating Chief Content Officer Ted Sarandos to co-CEO, sharing the title with founder Reed Hastings, the move cut against conventional wisdom. Salesforce.com, SAP, and Oracle all had abandoned co-CEO structures within the last year, leading The Wall Street Journal to ask: “Co-CEOs Are Out of Style. Why Is Netflix Resurrecting the Management Model?”
In the hierarchies of corporate America, there’s nothing ambiguous about the position of “chief executive officer.” Whoever holds the CEO title sits at the tip-top of the org chart; it’s right there in the capital C. But what happens when that designation—and the power it implies—is shared?
That’s the unusual experiment that several companies have undertaken in the past few months, splitting the role of CEO between two executives. In September, WeWork’s parent named two interim CEOs, Sebastian Gunningham and Artie Minson, to replace founder and spiritual guru Adam Neumann, who stepped down as the embattled shared-office giant postponed its IPO. (The pair will be replaced in February by a single new CEO, Sandeep Mathrani.) Software giant SAP in October named Jennifer Morgan and Christian Klein co-CEOs—the third time the German company has opted for the dual-leader arrangement. And in January, luggage startup Away wound up with two CEOs after former chief Steph Korey returned to cohead the company just weeks after reports of toxic work behaviour prompted her to step down. She’s now splitting the position with Stuart Haselden, the former Lululemon executive whom Away had initially tapped as Korey’s lone replacement.
The truth is the archetype of the omnipotent CEO — the lone commander atop the corporate pyramid — is increasingly a relic of 20th century management thinking. There are some notable exceptions: Founders like Jeff Bezos, Elon Musk, and Mark Zuckerberg still command and control. But in our research with the American Psychological Association, we’ve found that for most mere mortals, it’s simply too hard to go it alone. The modern business landscape is too fast-moving and the demands on a CEO have become too innumerable for a single person to set an organization’s strategic direction and oversee a multitude of internal decisions, all while acting as its public face to stakeholders.
Tellingly, while executive teams have doubled in size over the last three decades as different corporate functions have gained importance (human resources) or have come into existence (digital strategy and data security), the top job has largely remained a solitary grind. As entrepreneur Joe Procopio has observed, “The math on giving 110% usually breaks down to giving 10% across 11 different priorities.”
At the same time, the expectations of modern leadership have evolved. Organisations are more agile, less hierarchical, and must adapt quickly to the sudden dislocations we have today. Generational shifts in the workforce and society bring rising social consciousness of inequalities and a mandate for including others with different experiences into decision-making. These exigencies have made non-traditional soft skills essential additives to leadership.
There are four basic rules on how to 2 CEOs should cooperate when they both are running the company.
1. Pick the right partner. Co-CEOs are in a very real sense professionally married. The foundational qualities of such an enduring personal relationship also apply in a shared C-suite: a common vision, clear communication, and most important, deep trust. This sustains the partnership when, inevitably, there is a disagreement. Each must remember the other’s talents and make decisions knowing it’s still one P&L both must own. You cannot go into this arrangement without believing in the character of the other and vice-versa.
2. Set expectations. Critics of dual CEOs argue that shared accountability amounts to no accountability at all — if two are in charge, no one is. But properly managed, the opposite is true. The idea of joint accountability means setting performance standards that put each partner in the position of having to live up to the other. Ideally, this creates a healthy competition. Would-be CEOs are typically high-performing individuals, so clear lanes help each partner drive improvements in the other. Indeed, a 2011 paper published in Financial Review found that co-CEOs’ mutual monitoring can generate enough accountability to substitute for board supervision.
3. Define roles and responsibilities. The organization must understand who is in charge of which aspects of the company and where decision-making authority lies. We have a highly decentralized workforce — the two of us live in different cities — yet our managers intersect with us with a clear understanding of what types of decisions we are each responsible for. This is liberating in that it takes some daily responsibilities off each CEO’s plate. It also frees up time for skill-building around one’s dedicated areas, yielding more focused mentorship. And one leader can come into another’s problem from a fresh outside perspective. Clearly delineating areas of responsibility also mitigates another common criticism — that co-CEOs are a bottleneck. In fact, the structure often facilitates a quicker response because one individual has authority to make a decision from a greater depth of experience and knowledge.
4. Distribute authority but not responsibility. While each partner has individual duties, both must fundamentally remain a leadership unit, one in which successes and setbacks alike are owned together. These successes and setbacks should be reflected in short- and long-term compensation. They must be prepared to be rewarded or penalized as a unit and accept the consequences. With the right chemistry and trust, it incentivizes both healthy competition and having each other’s back. Another benefit of this conjoined career planning is that it can both temporary or long term. Some companies may see a co-CEO arrangement as a grooming opportunity for a junior leader.
Let’s be honest: The modern CEO is often overwhelmed by unrealistic demands. Netflix’s move to co-CEOs says less about the limitations of individual leaders than about a system that sets them up to fail. We believe business pyramids are stifling innovation, when a division of authority can unleash it. In unprecedented times like these, more companies should rethink their structures and embrace co-CEOs, putting their leaders in positions to succeed.
Given our current situation knowing that your colleagues or employees are best suited for this new scenario we find ourselves in. Finding the right talent, the best fit for the job and your organisation can be a very challenging task. It is now important to find out whether your managers or your team is well-equipped of working together from various locations. It requires deep knowledge of their personalities, strengths, weaknesses, interests, work style and other characteristics. Our technology and solutions will do the work for you, helping you discover if your people are resilient during times of hardship, if they are autonomous, if they are team players, without actual human contact. Given that our platform is cloud-based, everyone can use it from home as well. Humanity finds itself at a crossroad for various reasons now, why not help people discover and develop themselves from the comfort of their own homes?
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Sources:
https://hbr.org/2020/09/is-ceo-a-two-person-job?ab=hero-main-text
https://marker.medium.com/heres-when-it-actually-makes-sense-to-have-2ceos-64827d0ddb5c
https://fortune.com/2020/02/17/co-ceos-model-companies/
