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.
Bryon,
Good post. I find this concept baffling as well. Leadership is so important is making sure a business runs smoothly and having to many chiefs and not enough Indians can be confusing to a Senior Leadership Team as well as the entire organization. Not only is it expensive but it sends a mixed signal that might be interpreted by stock holders, employees, and the competition as, “I don’t trust my CEO and you shouldn’t either.”
More importantly, as a member of the senior leadership team, I would wonder who would I submit my time off vacation request to?
Jessica
@blogging4jobs
@Jessica – Thanks for the comment and perspective. If history is any indicator of what to expect in the future, this practice will continue to be the exception rather than the norm. Moreover, as time goes on I can only imagine what the statistics would show about the long-term viability and benefit of this leadership operating mode;
I found this concept symptomatic of a larger issue we are facing in talent in general. The developed skills of leadership are increasingly hard to find. I understand the tendency of a board to see this as a way to ferret out the winner over the two strongest candidates however; it is costly and damaging to the the organization. Money we can make, integrity and confidence aren’t so easy to regain. I would like see the willingness of a board to choose the candidate they feel is the best, commit to their development and provide the support the individual needs to succeed.
Shared leadership, shared responsibility? I’ve never seen this work well. Organizations need a single leader. The CEO is the face of SAP…the co-CEO idea just subverts that, confuses the public and I can only imagine how shareholders are reacting. Not a good idea.
Byron,
I am glad I came across your post. My organization is mulling over the idea of a Co-CEO and I am against it. There is a famous saying in Arabic that goes “You can not have two swords in one sheath.” I guess someone might end up being cut. Excuse the graphic image but I think that is the risk of having co-CEOs.
@Fhaid – great Arabic quote. I love it. Very fitting. Organizations which maintain Co-CEO roles, unless both are company founders, run the risk of crafting a culture of confusion. I’ve never seen this work out well.