It often seems that the main feature of today’s business environment is an ultra-competitive landscape where organizations are scrambling to get ahead.
In all of the changes your board may have thought about making to claim and solidify a top spot in the market, has a shift in leadership models ever been one of them?
From 1996 to 2020, just under 5% of S&P 1200 and Russell 1000 companies were identified as having co-CEOs. This low level of adaptation is for good reason.
While some organizations have found success with the model, there are experts in the field who sincerely believe it’s an awful idea.
Could the truth lie somewhere in the middle?
Explore the concept of power sharing, why some companies took the leap, and what you should know before your board considers deviating from the norm.
The Benefits of Having Co-CEOs
The traditional model of business leadership prioritizes having one strong individual at the top setting the direction for the company. However, an analysis conducted by the Harvard Business Review found that the co-CEO model can produce better shareholder returns, with organizations adopting this model delivering an average of 9.5% annual returns compared to the 6.5% offered by companies with just one CEO.
Having two CEOs can also mean having more diverse competencies and perspectives at the decision-making table. As the scope of responsibilities associated with the CEO role continues to expand, the co-CEO model ensures that the heavy burden is shared, lightening the load for both parties.
Do the Advantages Outweigh the Risks?
Though having two CEOs can bring benefits, some experts would argue that this model has more drawbacks. Undoubtedly, it has the potential to create vast amounts of confusion in the organization.
With more than one leader, employees and management may have no idea who to look to as the top decision-maker. There’s also a higher potential for confusing communication, which can create uncertainty at all levels of the organization.
If there’s a conflict and the two CEOs don’t agree, how can the company decide who gets the final say?
Even if the leaders do eventually come to a mutually acceptable decision, how much time was wasted in negotiations?
It’s possible that a single leader could have made the decision much more quickly, saving precious time that may be better spent on executing a great idea.
Additionally, there’s the issue of responsibility. When things aren’t going as planned, who can the board hold accountable? How does the co-CEO team avoid the blame game?
These concerns cannot be taken lightly. The uncertainty and indecision often inherent in the two-leader model can lead to employee disengagement; a lack of trust with employees, customers, and investors; and missed opportunities for the organization as a whole.
Solving Common Single-Leader Issues Without Power Sharing
There are crucial reasons why the co-CEO model hasn’t been widely adopted among the world’s top companies. Businesses need a leader, not a delegation. Having one person at the helm ultimately offers the most significant benefits for companies.
Still, it’s important to address the concerns that have often led companies to consider the co-CEO model in the first place. Here are a few ways that your company can ensure success for the person in your CEO seat without adding another.
Seeking Diverse Competencies and Perspectives
It is possible for your company to take advantage of varied skill sets and viewpoints without having two CEOs. Often, this can be achieved by examining your board composition. You can build a more diverse board by taking inventory of the skills and backgrounds represented in your current board makeup and defining which are most needed to help you achieve your goals.
Then, consider expanding your recruitment efforts with the assistance of a board director recruitment firm, which will often have access to a larger, more diverse network. Because the CEO partners with the board for guidance and support, this diversity is crucial for well-rounded discussions and informed decision-making.
Finding a Capable Leader
There is little doubt that CEOs are now expected to do more than they ever have. In such a competitive business landscape, there is immense pressure to have the company perform to investors’ expectations. However, you don’t have to resort to hiring a second CEO to help your top leader avoid burnout. Often, the answer simply lies in selecting the right person for the job.
Certainly, a CEO search firm can be valuable in this regard. A top firm that has built a solid reputation will have a proven process for finding capable leaders who have what it takes to get the job done.
Enhancing Business Performance and Success
It can be enticing to learn that companies with co-CEOs seem to produce better annual returns for investors. However, there are other options for enhancing CEO and company performance.
One solution is to make succession planning a top priority for your board. This proactive approach gives directors time to identify potential leaders and develop them to be able to handle the pressures of the CEO role.
Succession planning can increase longevity and performance once that leader’s time has come, as they’ll have built the stamina and skills needed to keep the company on an upward trajectory. You also have the option of recruiting a new CEO, which may be just what your company needs to enhance innovation and get on the path to success.
Selecting the Right CEO Is Key to Business Success
Although having two CEOs isn’t unheard of, it is apparently unpopular, with only 5% of the world’s most successful companies willing to try it. While it has brought some success in the form of increased returns and workload sharing, it can also create confusion for employees and lead to conflicts, delays, and a lack of trust.
Your organization’s best bet for creating and maintaining success is to have one strong leader at the helm. By selecting the right person for the job and ensuring they’re supported by a diverse and highly skilled board of directors, you’ll be one step closer to securing your company’s long-term future.
