Opinion is divided on whether or not CEOs should take on role of chairman, our poll finds

 

 

Our poll out today in conjunction with the ICSA: The Governance Institute, finds that just one in seven organisations polled (14%) think that their CEO should go on to become their organisation’s chairman. Over half (52%) are against it, with a further third (34%) sitting on the fence.

 

Whilst the majority of responses were opposed to chief executives taking on the role of chairman, except as an interim solution, certain circumstances were highlighted as warranting such a position, such as:

 

  • Death/casual vacancy
  • To ensure continuity
  • The candidate, the needs of the business and the candidate pool at the time of the vacancy
  • When they are a visionary but wish to take a step back from day to day management
  • If the organisation was in a situation of significant change or crisis and the board took the decision that it was in the best interests of the organisation for the CEO to become chairman
  • Exceptional circumstances in which investors wanted the CEO to become chairman or such a move was vital to the ongoing success of the business
  • In small private companies, where knowledge of the business is fundamental or family style businesses.

 

Potential dangers highlighted comprise too much knowledge limiting independence and the extent to which the former CEO’s ongoing presence as chairman might hinder any efforts by the incoming CEO to effect cultural or strategic change.

 

‘It is clear from the responses that most people would prefer to see a period of time elapse before a chief executive take up the chairman’s role,’ says Peter Swabey, Policy and Research Director at ICSA: The Governance Institute. ‘This seems sensible given that a chairman is expected to bring a certain level of independence to the role and switching from an executive mindset to more of a stewardship role is unlikely to happen overnight. Different skill sets are required for each role, but good governance and having proper checks and balances in place to ensure independence should help to avoid problems in those unusual situations where it is the appropriate response.’

19 May 2017

 

 

written by Jon Moores
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