Should my CEO also be chairman?

Dear Aunty B,

I am in the middle of a merger and the founder that owns the other company is insisting on being chairman and CEO. He is formerly from one of the big four banks and has much greater experience in running businesses. I always thought these roles should be split but he says it is a waste of money and we are not yet big enough to warrant that. Is he right?

AB,
Melbourne

Dear AB,

Are you nuts? Quite frankly I think you have gone into business with a shonk. If he is from one of the big four, then he ought to know what he is doing. So if he is setting himself up in both roles, then he is deliberately taking you for a ride.

For a start, the role of chairman is to hire the CEO and fire the under-performing CEO. So he has that base covered doesn’t he? He is hardly likely to sack himself. The splitting of the role of CEO and chairman is also to protect against concentration of power in the hands of one individual. So he has also got that one covered. You also need a separation of roles to get the best strategic outcomes as the chairperson often acts as an advisor to the CEO. And of course, there are governance issues in one person having both roles.

Absolutely stand your ground on this and insist he either takes the role of chairman or CEO. But not both. If he insists on both, have a big think about whether the merger should do ahead. You will have no power and will be sidelined. And that’s just the start of it!

Good luck!
Your Aunty B

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