Recent corporate scandals have many U.S. boards questioning the wisdom of combining the chairman and CEO positions. But a knee-jerk decision to accept the British model of the separation of the two top jobs without understanding of the model complexity is hardly the answer. The corporate governance across the Atlantic has its own characteristic problems. For example, although a separate chairman makes the board more independent of the CEO, the arrangement of confusion regarding the company may lead leade … Read more »

Recent corporate scandals have many U.S. boards questioning the wisdom of combining the chairman and CEO positions. But a knee-jerk decision to accept the British model of the separation of the two top jobs without understanding of the model complexity is hardly the answer. The corporate governance across the Atlantic has its own characteristic problems. For example, although a separate chairman makes the board more independent of the CEO, the arrangement can lead to confusion in relation to the management of the company. And a poor relationship between the chairman and CEO can easily lead to conflicts and power struggles. U.S. boards need independent leadership, but achieving this leadership by splitting the two positions is not necessarily a significant improvement compared to the U.S. model. Instead, the authors argue, for most large U.S. corporations, the addition of a competent lead director or presiding director is probably the right balance between effective governance and leadership.
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from
Jay W. Lorsch,
Andy Zelleke
Source: MIT Sloan Management Review
6 pages.
Release Date: 1 January 2005. Prod #: SMR164-PDF-ENG
If the CEO of the presidency? HBR case solution

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