Why Having Two CEOs is Better Than One 

December 3, 20201:00 pm2759 views

The Co-CEO or Joint Chief Executives model of leadership, formally termed the dual-governance or shared governance structures, is among the more uncommon leadership arrangements. It is where the position of CEO is shared and distributed among two or more individuals. But for a company, is it beneficial to have two people sharing leadership versus a single person at the forefront?

Companies with Co-CEOs

Some examples of organisations practicing the Co-CEO arrangement in the past or currently have Co-CEOs include:

  • Citibank, with Co-CEOs John Weill and Sandy Reed
  • Blackberry (formerly Research in Motion) under Mike Lazaridis and Jim Balsillie
  • International business software giant SAP, with Jim Hagemann Snabe and Bill McDermott.
  • Groupon under Eric Lefkofsky and Ted Leonsis

In some cases, Co-CEO arrangements tend to generate mixed outcomes and perceptions about their viability as an organisational leadership structure. Robert Frisch, a Managing Partner in The Strategic Offsites Group and a critic of the Co-CEO model, commented that throughout human history, it was generally a single leader who maintained leadership of a large group.

Jointly sharing leadership in such a dynamic and powerful position might inhibit successful decision making and corporate policy decisions, as well as increasing the time required to make decisions. However, the Co-CEO model has proven functional and workable for other major companies, such as:

  • Deutsche Bank AG, with Co-CEOS Juergen Fitschen and Anshuman Jain
  • Chipotle Mexican Grill, an American Mexican food chain, led by Co-CEO Steven Ells and Montgomery Moran
  • The Standard Bank Group of South Africa, led by Joint Chief Executives, Sim Tshabalala and Ben Kruger

Samsung Electronics, along with those mentioned, have also endorsed the Co-CEO model, having appointed three Co-CEOs in 2013: Yoon Boo-keun, the President of Samsung’s consumer-electronics division, J.K. Shin, the President of Samsung’s telecoms division and Kwon Oh-hyun, who oversees the company’s components business.

So what makes the Co-CEO model a compelling leadership model? Counter-intuitively, joint executive leadership structures can and do work, given the right conditions. So what are some of the benefits and drawbacks? And what’s required to make it work?

See also: 4 Tips for CEO to Boost Performance Management 

More robust business decisions

Having a shared governance structure allows for two CEOs with different personalities, backgrounds and experience to share perspectives, knowledge and experience on significant business decisions, as well as aiding policy-making. Using the other as a sounding board, there’s less chance of major decisions being compromised through personal bias, as well as granting a greater level of objectivity.

It allows in-depth assessment of strategy and acts as a check to hasty decisions, providing a chance for more in-depth and robust discussions about strategy and tactics, generating better outcomes and robust policies for a business. In short, two heads make for better decision-making, since they provide perspective and oversight for each other. There’s also implicit mutual monitoring happening in a Co-CEO arrangement.

Better strategic management

Having Co-CEOs brings together two individuals with job complementarity or educational complementarity (e.g. a CEO with an MBA while the other has a graduate science background). This brings together a broader set of experience and knowledge, as well as produce better long-term strategies.

It also allows for the company to support and grow more complex operations. In a global world with business activities distributed across multiple corporate divisions, functional areas, industry verticals, geographic regions and products across a wide range of markets with differing cultural environments, a shared governance model enables high-level attention and resources to be allocated to significant challenges.

Similarly, operating across such diverse markets as China, India, North Africa and SouthEast Asia necessitate having managers with the cultural literacy, social capital, knowledge capital and agility necessary to operate successfully in these regions.

Shareholder Interest protected

According to Professor Stephen Ferris of the Trulaske College of Business, Co-CEOs earn slightly less than twice what a single CEO would earn. While seemingly excessive, it might actually better serve shareholders, given the differences in compensation types.

Co-CEOs tend to get less incentive-type compensation and more cash compensation.The reason a single CEO’s compensation is geared to maximising shareholder value is to incentivise individual performance.

With co-CEOs, self-regulation comes into play. Each CEO ensures the other works as hard as them to boost results, reducing the need to link pay and performance as much as with single CEOs. The presence of a Co-CEO creates a situation of implicit mutual monitoring, leading to greater accountability in the management and the protection of the interests of investors and other shareholders, institutional or otherwise.

In fact, publicly-listed firms led by co-CEO’s tended to generate more positive outcomes for shareholders and investors, compared to those with a single CEO.

What Makes it Work?

So what makes the Co-CEO arrangement work? In essence, what’s needed are:

  • leaders with complementary areas of expertise and knowledge
  • senior executives with emotional maturity
  • established command & control protocols for delineating management responsibilities
  • mechanism to resolve differences (e.g. split-testing to evaluate potential outcomes)
  • mutual common respect as partners
  • unified support on major decisions

In the end, it needs to be a partnership. The division of labour must arise from the skills portfolio that each CEO brings to the company.There needs to be boundaries and a demarcation of what roles each plays in the operational and decision-making process of the business. And finally, lines of communication must be clear and precise.

Can having too many cooks spoil the broth? Sure. But any large restaurant needs more than one chef to make the restaurant a success. And anyone working on a busy meal in the kitchen, in order to cater to the surging demand of the customers in the serving area, will tell you that more hands on board are always appreciated.

See also: Human Resources and Leadership Beyond Bureaucratic Reputation

Notes & References

Arena, M. P.,Ferris,S. P. & Unlu,E.(2011). It Takes Two: The Incidence and Effectiveness of Co-CEOs. Financial Review,46,385-412.

Athitakis,M.(2013).Can a Co-CEO Structure work? Associations Now.

Banham,R. (2012a).Co-CEOs: Are Two Better than One? Chief Executive.

Banham,R.(2012b).Two for the Road. Chief Executive.

Brady,D.(2013).Standard Bank Takes Risky Step With Co-CEOs. Bloomberg Businessweek.

Frisch,R.(2012).The Co-CEO Model Is Officially Dead. Business Insider

Lundeen,N. & Dauer,U.(2013).Can a Co-CEO Structure Work?. Wall Street Journal Blogs.

Rahael,A. & Casey,A.(2012).Co-CEOs: An Exploratory Case Study of Shared Leadership in a Family Owned and Operated Business.George Washington University Doctoral Dissertation