The UK’s Combined Code on corporate governance is firmly of the view that the roles of chair and chief executive should not be combined but business leaders are limited in their choice of confidants, warns Big Mouth MD, Lucy Saunders.
There are many companies where one person holds both positions, not least M&S where Stuart Rose has both titles. The thinking is that the combined role is perilously powerful and that there isn’t a strong enough balance at the top of the organisation to look at different courses of action and determine which route to take.
The loneliness of the CEO
One of the important roles of chair is to be the confidant of the CEO, a counsellor that a CEO can talk to without limits and without judgement, a combination of mentoring and counselling.
Given the difficulty of finding good senior executives, it is likely that companies will continue to be led by people who combine the chair and chief executive role – so where could they get the mentoring and counselling support from? I was talking to Amanda Laurence last week, a financial services specialist consultant who has just set up her own company to develop new business models and create a new market as a business confidant.
From her years working with senior executives at Clifford Chance, Accenture and Oracle, Laurence is sure that there are enough senior executives out there willing to pay for a business confidant to make her business sing.
Unofficial confidants
Her argument is that CEOs do have business confidants – yet rarely call them that. The confidant could be a professional mentor from a previous organisation, someone who taught them at sometime - look at Tony Blair’s tendency to put his academic superiors into official positions.
There are consultants of various kinds, peer groups met through professional organisations or a partner. Is the time right for senior executives to admit they need someone who is going to hold their hand, in a very robust way of course?
The role of CEO is an isolated one, however much it looks like you are always moving in the middle of a crowd. The decisions stop with the CEO. So however close the CEO is to other executive members of the board, the CEO is still the person who has to rate performance, set targets and agree remuneration – which does not make for a relationship of equals.
It is not uncommon for CEOs to make confidants of consultants of various kinds – from management consultants to marketing to PR to anyone outsider hired to look at the organisation with an in-depth understanding of similar organisations.
Circuitous thinking
The BBC is always being lambasted for its tendency to spend money (lots) on management consultants. The old cliché definition of a consultant is someone who asks to look at your watch then tells you the time.
Maybe the role is more often one where the CEO can talk through different scenarios, float possibilities and make emotional statements without having to live with the consequences of that thinking afterwards.
It is difficult to talk to your CFO or FD about how much you want to replace them with someone who works better with you, for instance. If you only have that conversation with yourself, you get all the same answers, all the time.
If you talk, however speculatively, to someone else in the organisation about such a situation, then that person will always know that you can think like that - whether or not you get rid of the FD or CFO or work with them for years after wishing they would just go.
Your confidant within the business is always going to be worried that you are thinking the same thing about them, and will hedge everything they do as a result. Confiding in others, however much it might make for superficial bonding, means that you are not going to get the best work out of them.
We need fools in business
It is the problem that Henry V had – if only he’d made the comment ‘Who will rid me of this turbulent priest?’ to his fool alone he wouldn’t have had to deal with the consequences of the overenthusiastic executive arm, the knights who went and murdered Thomas a Becket.
So, who can you talk to? I have long thought that there is a role for an official corporate fool. Like the fools of old, he can say anything and speak the truth that no one else dares.
The problem comes in with balancing independence, knowledge and experience necessary to do the job properly. Then we are back full circle to having a chair and a CEO where the chair can provide some of that role for the CEO.