Many corporations have the same person serve as both the Chief Executive Officer and the Chairman of the Board. But, when you consider that those two positions are basically diametrically opposed to each other, at least to me, that doesn’t make sense:
The role of the CEO is to be the senior executive of a corporation, to lead the company today and to formulate a strategic long-range plan, as well. She or he should be totally focused on the corporation–both today and in the future.
The Board of Directors is led by a Chairman whose role is to oversea the operations of the corporation, second-guess the CEO when necessary and, most of all, to be the advocate of the company’s shareholders–and lead the Board in doing so.
Combining the two positions sounds, to me, somewhat like the Peter Sellers role in the movie “Dr. Strangelove: (or how I learned to stop worrying and love the bomb)”. Dr. Strangelove was sitting in a wheelchair and his left hand was fighting his right hand. Isn’t this somewhat like what the two-headed monster–caused by a CEO-Chairman–essentially is. Who does this bifurcation really serve?
Think of the two different roles–and the respective motivations:
As a shareholder, you and I should be looking for long-term growth. So, that’s where the Chairman and the Board should be focused. Sure, some income might be good; but, most shareholders are in for the long-term.
But, the CEO and the corporate executives have their Compensation–salary and bonus–mostly based on short-term goals. So, if you are the CEO, and wish to do what’s best for your own livelihood and that of your key staff. what would your focus be?
Back in the 1970s and 80s, when Japan was cleaning our clocks, they focused on long-term market share. They figured that they could always increase their profits, once they began to control the markets. Over time, things have changed, and Japan has faded into the sunset; but, America’s corporate leaders still have not learned their lesson. Perhaps, that’s just more of the “Me, and More” generation!