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While the 2010 Winter Olympics in Vancouver dominate the news right now, there is news elsewhere. In particular one news story caught my eye. German software company SAP, AG make some substantial management changes starting with accepting the abrupt resignation of CEO, Leo Apotheker after less than a year in his role. While a CEO departing is always newsworthy for a large, global company, what stuck out at me the most was the announcement of Co-CEO replacements, Bill McDermott and Jim Hagemann Snabe. This isn’t the first time that SAP chose to utilize a Co-CEO setup, although last time was part of a planned hand-off between outgoing and incoming leaders.
I’ve noticed that more and more companies have chosen to implement Co-CEOs over the last several years. AON Consulting does it, Research-In-Motion does it, Martha Stewart Living Omnimedia did it, Aspect Communications tried it and did a host of others. The lingering question for me is whether this arrangement is something sustainable from a managerial practice or simply a visible effect of indecisive boards?
I’ve often found the concept of Co-CEO odd and out of place in a corporate setting. Having personally worked for two companies in my past which had co-CEOs for a period of time I have some perspective on the topic and some pretty blunt feelings about such an arrangement. In short, I think the arrangement stinks. Here’s why:
1. The role of a CEO is to serve as the organization’s leader, provide guidance to all aspects of the business, serve as the public face of the company, liaise with the Board of Directors and set the direction and strategy for the company. Like a two-headed snake, organizations with Co-CEOs tend to operate against themselves with political turf-wars popping up all over the place. In one of my previous companies it became Sales vs. Products based on the respective career paths of each Sr. Leader. Allegiances were very clear and obvious and didn’t necessarily always represent the best interests of the customers and shareholders.
2. With the relationship between a CEO and the Board of Directors, having Co-CEOs confuses the relationship between the layers of management, often results in CEO’s trying to out-politic one another and when sales or earnings take a dip – things can get outright vicious.
3. Often, where Co-CEOs have been put in place the setup has ended with one of the two executives suddenly departing the organization in less than 18 months. This results in more leadership turmoil as well as significant severance compensation.
Regardless of whether this is a good setup or bad, I can assure you of one thing – it’s expensive. Particularly in tough economic times where employees have had to skip merit increases, lost 401(k) matching, and had to endure the challenges of layoffs, does this particular leadership arrangement send the right message internally to the organization? Externally to the shareholders and customers?
Is this a good management trend or a disaster waiting to happen? I’m curious to hear your thoughts on this topic as well. Please join the discussion by leaving a comment.
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Comments
02.15.10
While I don't know if Co-CEOs is the answer, you need someone who can get the job done. I'm assuming that by having Co-CEOs, they're trying to have the figure-head and actual doer on the same level. I imagine the one who REALLY does the job but doesn't get the credit kind of hates his/her life. It's like why some companies have a Chief Strategy Officer: Execute strategy. Well, isn't that the CEO's job? Apparently not all CEOs have time for that. And there's more and more instances where the doer is not the one with the title. But your points around how the system doesn't seem to work are pretty valid. What I think makes all this so much harder is when you have a leader, you expect something (like results), and have a hard time with accountability...because he's the CEO. Even some boards can't do that. Maybe they hope that a Co-CEO will help that. Who knows. Thanks for the post!
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