splitting the roles of ceo

Traditionally, in American businesses, a similar person occupies the role of chairman of the board
and chief executive officer, though this really is gradually shifting to the European model.
Generally in most European, British, and Canadian businesses, the roles are generally split, in an
attempt to ensure better governance of your company, and as a consequence bring higher
returns to investors.
Combining the roles has its advantages, such giving the CEO multiple perspectives on the
company on account of their multiple roles, and empowering these people to act with
determination. However, this permits for little transparency to the CEO's acts, and therefore their
actions could go unmonitored, it makes way for scandal and corruption.
As outlined by Ira Millstein, a specialist in corporate governance, an effectively independent board
is really a shareholder's best protection. Separating the roles allows the chair to examine high on
the CEO, and as a consequence the company's general performance, on the part of the
stockholders.
Separating the roles also allows the CEO and chairman to concentrate on different, equally vital
aspects of the company's performance.
"We believe that it is the right segregation of duties. As a business grows, the CEO can focus on
the business and the chairman can deal with the ever-growing regulatory requirements," noted
Lino P. Matteo, CEO to the Montreal-based management accounting firm Mount Real.
Ultimately, once the chair will not also occupy the role of CEO, they are able to govern the board
within a more impartial manner, meaning that investor returns may potentially be higher.
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However, a whole new survey by three consultants for your international management consulting
firm Booz Allen Hamilton found out that companies that divided the roles actually had smaller
shareholder returns, leading some to rethink the CEO-chairman split.
Market research by Christian & Timbers demonstrated that 97% of European executives feel that
the roles must be split. However, stockholder returns were nearly 5% lower in European
businesses that implemented the split, when compared to companies that had a similar CEO and
chairman.
In The United States, where just about 20% in the major public companies split the roles despite
that 86% of executives polled by Christian & Timbers considered that the roles ought to be split,
returns were 4% lower in companies with a separate chairman and CEO.
One reason they gave for the higher returns within the companies with similar CEO and chairman

was the once the board commits to arranging itself like that, they focus less on constant watchdog
evaluation of the individual than making them successful.
They also remarked that CEO-chairman could possibly withstand pressure better, particularly if
short-term changes don't pay back, than non-CEO chairman.
Thirdly, they attribute the surprising results to absence of authority on the CEO's behalf. "Clearly,
a CEO who is not just a chairman will be the board's hired hand; a chief who may be also
chairman has much more influence over other directors," they noted.
As outlined by an article in the market journal McKinsey Quarterly, Americans is likely to view the
role of chairman with less respect compared to CEO, particularly in companies where roles are
split.
Therefore, they must consider remarketing the position of chairman as being a more respected
profession, as it is in British companies, where 95% of companies have separate people
occupying the roles of CEO and chairman. The remarketing could then function as an easy way of
restoring trust in the increasingly corrupted corporate American landscape.
Regardless of whether the CEO is the chairman from the board or otherwise, there is no way the
company may be successful unless the directors dedicate themselves to helping the CEO and
also other upper-management sustain an excellent level of performance.