Chairman and CEO - One Job or Two?

The McKinsey Quarterly, No. 2, 2004

6 Pages Posted: 24 Apr 2006

See all articles by paul coombes

paul coombes

McKinsey & Co. Inc.

Simon C. Y. Wong

Northwestern University School of Law; London School of Economics; Tapestry Networks

Abstract

Companies in the United Kingdom and the United States are often credited with having the world's best corporate-governance systems, but the two countries have starkly different views on separating the roles of chairman and chief executive. About 95 percent of the UK's largest publicly traded companies split the roles, while 80 percent of big public companies in the United States don't. Combining them empowers a chief executive to act decisively, but a nonexecutive chairman is in a better position to monitor the company's - and the CEO's - performance.

While there are strengths to both models, separating the roles creates a stronger governance model and keeps executives more accountable to shareholders. To encourage the separated model, US companies may need to remarket the job of chairman by making it a respected career path, as in the United Kingdom.

At a time when trust in corporate America is low, reinforcing the independence of corporate boards by separating the positions of chairman and CEO could help rebuild it.

Keywords: corporate governance, separation of chairman and CEO roles

JEL Classification: G34

Suggested Citation

coombes, paul and Wong, Simon C. Y., Chairman and CEO - One Job or Two?. The McKinsey Quarterly, No. 2, 2004. Available at SSRN: https://ssrn.com/abstract=897485

Paul Coombes

McKinsey & Co. Inc. ( email )

Kurfurstendamm 185
10707 Berlin
Berlin
Germany

Simon C. Y. Wong (Contact Author)

Northwestern University School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States

London School of Economics

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://www.lse.ac.uk/collections/law/staff/simon-wong.htm

Tapestry Networks ( email )

404 Wyman St.
Suite 225
Waltham, MA 02451
United States

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