Summary.“Two heads are better than one.” It’s a familiar expression—and one that businesses might want to heed. The authors’ study of 87 companies led by co-CEOs showed that those firms tended to generate better returns than did peer companies with a sole CEO.
Successful power sharing at the top depends on multiple factors: strong commitment to the partnership by both leaders, complementary skill sets, clear responsibilities and decision rights, mechanisms for conflict resolution, the projection of unity, shared accountability, board support, and an exit strategy. The authors caution that the co-CEO model won’t work everywhere. But for large, multifaceted firms, those with agile-based management, and those engaged in technology transformations, it’s a promising option.
For a long time the prevailing wisdom has been that companies need to be led by a single strong leader. Over the years some companies have put co-CEOs in charge, but not often. Of the 2,200 companies that were listed in the S&P 1200 and the Russell 1000 from 1996 to 2020, fewer than 100 were led by co–chief executives. Moreover, during that period, especially in times of stress, some of those jointly led companies performed notably poorly—among them Chipotle Mexican Grill, the software company SAP, and the mobile phone pioneer Research In Motion (which became BlackBerry in 2013).
A version of this article appeared in the July–August 2022 issue of Harvard Business Review.
FAQs
Many companies have tried it, and according to a Harvard Business Review study, co-CEO average annual shareholder return was 9.5%, “significantly better than the average of 6.9%”, and approximately 60% co-CEO led companies “outperformed”.
Are two CEOs better than one? ›
This impressive result didn't hinge on a few highfliers: Nearly 60% of the companies led by co-CEOs outperformed. And co-CEO tenure was not short-lived but more or less the same as sole-CEO tenure—about five years, on average. We're not suggesting that all organizations should rush to adopt a co-CEO arrangement.
What are the disadvantages of a co-CEO? ›
The drawbacks of co-CEOs are large and clear:
- No one knows who the boss is. It's very confusing who ultimately makes decisions.
- High potential for ego issues. Are the founders just kicking the can on a big issue — who's ultimately the CEO?
- High potential for multiple marching orders.
A balanced workload is another significant benefit of the co-CEO model. Since each CEO focuses on their areas of expertise, they can share their responsibilities and avoid stress and burnout. For example, one individual can concentrate on sales and marketing while another can focus on finance and operations.
Why is CEO duality bad? ›
CEO duality can create potential conflicts of interest, as the CEO may prioritize their interests over those of other shareholders and stakeholders. Such conflicts could result in decisions that benefit the CEO personally but are detrimental to the company's long-term prospects.
What are the benefits of a co CEO structure? ›
One of the main benefits of co-CEO leadership is that it provides a system of checks and balances. With two leaders in charge, there is less chance of a single person making a poor decision that could negatively impact the company.
Is it normal to have two CEOs? ›
Using a co-CEO structure is not for every business, but almost by definition, startups are breaking conventions. Breaking organisational structures, then, if it's right for the founders, can become right for many others. Guenther Eisinger is the Co-CEO and Co-Founder of Omnipresent.
What are two CEOs called? ›
“Co-CEOs are ideal in many situations, especially when the executives provide oversight of each other's actions and have complementary skill sets,” says Stephen Ferris, a finance professor and Rogers Chair of Money, Credit and Banking at the University of Missouri's Trulaske College of Business.
What is the difference between a CEO and a co-CEO? ›
While the CEO sets the company's vision, culture, and brand identity, the COO ensures the practical realization of this vision, fostering a cohesive business culture. Both roles are distinct yet interdependent, contributing significantly to the company's success.
Why would co executives be a bad idea? ›
The main danger is that there is no clarity of leadership. People need to know who makes the final decision, and where the buck ultimately stops. The co-CEOs themselves will get little done if they're constantly at loggerheads, or pulling in different directions.
abbreviation for co-chief executive officer: the title given to each of two people who share the job of chief executive in a company: Mr Michaelsen will be chairman and co-CEO in charge of the offshore oil production business.
What are the disadvantages of co leadership? ›
What are the challenges of co-leadership?
- Varying skill sets. The fact that co-leaders bring different skill sets to the table is a positive thing. ...
- Increased confusion. With two people in charge, team members might become unsure who to approach with confusion or problems. ...
- Slower decisions. ...
- Potential for disagreements.
Here are some of the most common pros of CEO duality:
- Faster decision-making. ...
- Stronger and more unified leadership. ...
- Access to an assisting lead director. ...
- Improved industry adaptability. ...
- Greater company long-term value. ...
- Executive compensation conflicts. ...
- Corporate governance abuse. ...
- Audit committee conflicts of interest.
While being a CEO can be perceived as a glamorous, lucrative position at the pinnacle of one's career, with power, influence, and the ability to make important decisions, many CEOs face the role with the significant challenge of loneliness.
Can you have 3 CEOs in a company? ›
There is no law against it. Co - CEO's has been tried. Three may be difficult but not impossible if the divide up the responsibilities carefully.
How much do CEO co founders make? ›
The estimated total pay for a CEO-Founder is $247,227 per year in the United States area, with an average salary of $133,392 per year.
Who is more powerful CEO or co founder? ›
Who is higher, CEO or founder? The status of “founder” or “co-founder” denotes a historical fact about who was responsible for creating the business. As such, these are permanent titles that can't be revoked later on. The CEO, meanwhile, is the highest-ranking employee in the business.
What is the difference between a CEO and a co CEO? ›
While the CEO sets the company's vision, culture, and brand identity, the COO ensures the practical realization of this vision, fostering a cohesive business culture. Both roles are distinct yet interdependent, contributing significantly to the company's success.
