Should President and CEO be separate positions?

May 15, 2018 | Leadership, Talent Management

Success can come with a lot of headaches! As smaller businesses begin to grow into the mid-size space, questions of leadership will inevitably emerge. It might make sense for leadership of a scrappy start-up to be consolidated in the hands of one President-slash-CEO, but the skill-set for founding a smaller company looks a lot different than what’s needed to manage a larger ongoing concern.

Many founders resist considering this question until it becomes a crisis. If you’ve been calling the shots since day 1, it’s easy to become entrenched in the “one-company, one-leader” mentality.

The idea of separating out the roles of the President and the CEO is not a perfect fit for every company, but it’s a decision that should be made consciously and with due consideration. Two individuals serving separately as President and CEO is de rigueur in large corporations but much more rare in smaller firms.

Sometimes, however, it makes sense to separating out these positions in a small enterprise can make for a powerful business model.  Working together, two executives of equal stature can generate a collective impact – internally and across the market – that is far greater than one individual could pull off on their own.

This separated-out model can also allow for two leaders who complement each other in terms of strengths, skills and experience. Last, but not least, this model helps ensure business continuity on critical issues including strategy, culture, leadership and succession planning.

So why don’t more smaller companies separate out their president and CEO positions? One simple reason is that many leaders just don’t want to yield authority to anyone else. It can also make things more complicated, admittedly, since sharing power requires excellent internal communication and tremendous attention to the respective roles and alignment. Information flow and decision-making in small businesses tend to be fluid and fast, and if the two executives are not aligned, the model can lead to more confusion and disruption than it’s worth.

If you’re considering sharing power between separate President and CEO roles in your organization, there are several important dynamics you need to consider:.

The Right Person For the Job

It is crucial that the right individual is promoted or hired to assume the role of President. This role requires top-notch technical and leadership skills, but even more importantly, the candidate should embody the spirit and culture of the organization and complement the CEO’s vision. A carbon copy of the CEO is not ideal. Instead, look for someone who can stretch the company without losing track of the company’s core values.

Distribution of Responsibilities

One of the most important matters for success for separate President and CEO roles to succeed is a well thought out and organized division of responsibilities. Roles and responsiblities must be clearly outlined and understood both internally and externally.

Traditionally, the CEO will focus on strategic issues like vision, strategy, and culture while the President is responsible for executing on these strategies and objectives.

Of course, non-traditional models also exist, depending on the skill sets of the individuals filling the roles and the needs of the company. Again, communication is key, and all stakeholders should have input on how these responsibilities are assigned and carried out.

Avoiding Conflict

One very important potential pain point to consider is conflict. A clear and organized division of responsibilities between the President and CEO should ensure a harmonious relationship between these highest-level leaders, but lower level employees should also be given a clear understanding of how things work.

Employees must know where they can go to share information and get direction. Furthermore, customers, vendors, and all other business partners should have a crystal clear understanding of the roles of these top leaders.

Power plays and internal struggles should be relentlessly avoided. The President and CEO must not try to do the jobs of one another and should stay focused on their own responsibilities.  The smaller the company the more likely for these kinds of conflicts to occur. When staff is limited and working quarters are cramped, employees are likely to bring problems and ideas to the attention of whichever leader they first lay eyes upon. This can also happen with clients and vendors. This is why the role of each leader must be clearly communicated to everyone who has anything to do with the operation of the business.

In Conclusion

In today’s competitive market, strategically minded companies are looking for any edge they can get over the competition. Separating out your President and CEO positions could give your company the edge it needs, but it is not a decision to be taken lightly. If you’re considering making any change to your leadership or management structure, we recommend you bring in a competent HR consultant to make sure that all human resource considerations are taken into account and every impacted employee is taken properly into account.

If you’re in Charlotte, we hope you’ll consider getting in touch with TalentBridge HR Advisory. No matter where you are, we wish you all the best success as your company grows. If you’d like more helpful tips and advice about leading your team, be sure to subscribe to our company on Facebook and LinkedIn and check out our blog for more great articles from our team of career experts.