Typically, when the President & CEO of a small company names a new President and announces his intention to continue as CEO, there is an immediate outpouring of support for the new President and congratulatory comments to the CEO about his ability to now relax, take more time off, or even retire. Such was the case when Ratliff & Taylor named Beth Sweeney its new President earlier this year.
What causes us to assume the head of a small company is planning retirement once he or she announces a new President? The answer most likely lies in the fact that, once power has been consolidated with one individual, it is rarely shared until retirement is imminent or the person experiences a significant life event. With small organizations, there seems to be a one-company, one-leader mentality. We are changing that paradigm at Ratliff & Taylor.
Two individuals serving separately as President and CEO is commonplace in large organizations but rare in smaller businesses. Done well, however, installing a separate President and CEO in a small enterprise creates a powerful business model. Separation of the roles allows two executives of equal stature to generate a collective impact, both inside the company and across the market, that is far greater than one individual could affect.
This model also allows a business to benefit from two executives who complement each other in terms of strengths, skills and experience. Finally, the model helps ensure business continuity on critical issues like strategy, culture, leadership and succession planning.
If the separate President and CEO organizational model is so good, then why don’t more small companies embrace it? One simple reason is that many leaders struggle with giving up authority to others. There are myriad reasons for this, but regardless, it is difficult. Also, the model requires tremendous attention to the respective roles and alignment. Information flow and decision-making in small businesses tend to be fluid and fast. If the two executives are not aligned, the model creates more confusion and disruption than benefit.
There are several key issues to address when designing a separate President and CEO organization model for your company.
First and foremost, one must be able to promote or hire a candidate who is qualified to assume the role of President. Beyond their technical and leadership skills, the candidate should embody the spirit and culture of the organization and complement the CEO and his vision. The President should not be a clone of the CEO, rather someone who can push and stretch the company without unraveling its fabric. Finally, the President must be someone who engenders a high degree of confidence and trust on the part of the CEO.
To maximize the impact of a separate President and CEO, roles must be clearly defined and understood both inside and outside the company.
Roles and responsibilities most often are established in the traditional sense, with the CEO focused on strategic issues like vision, strategy, and culture while the President is responsible for executing the strategies and objectives set forth by the CEO.
While designing traditional roles is the norm, they certainly do not have to be set up that way. The President, for example, may take on a role typically reserved for the CEO because her skill set is stronger. This allows a company to leverage the strengths of its two most senior leaders, an approach that can add significant value in a smaller company.
Regardless of approach, the roles established for the President and CEO must be effectively communicated internally and externally. Employees must know where they can go to share information and get direction. It is also important that any confusion is eliminated with customers, vendors and throughout the market.
Most importantly, the President and CEO must stay in their lanes and be careful not to encroach on each other. This is particularly true in smaller companies where a handful of employees often operate in tight quarters. It is easy for employees to address an issue with whichever senior leader they see first. The same can be said for clients and customers. The two leaders must educate people on their respective roles while simultaneously addressing their needs.
When two swimmers swim close together, or “close to the ropes”, they create a drafting effect. Together, they are often able to swim faster and with less effort than by themselves. Similarly, the President and CEO who are closely aligned can accelerate the growth and transformation of a small company more readily than either of them could do alone.
To ensure alignment, the two leaders must work at it and be intentional about it. A meeting cadence must be established, and protected, to talk about strategy, execution, messaging and customers. Consistency of message and action relative to direction, strategy, metrics and accountability are critical for employees and customers alike. In time, people see two executives operating as one, but with twice the focus, precision and impact.
Now more than ever, companies are looking for a strategic competitive advantage that advances their position in the marketplace. The answer for smaller companies could be as simple, and complicated, as implementing a separate President and CEO organizational model. Properly executed, we believe this model will drive significant business results in the short term while creating a sustainable culture and ensure the organization remains resilient in the future.
We hope this article offers insights that cause you to explore the benefits of separate President and CEO roles in your company. As always, your feedback and questions are welcomed and appreciated.