Friday, March 13, 2009


The wife, that is! My cousin, married for two years, seemed totally flustered when he stormed into my office. “She drives me nuts,” he screamed, “and tries to dictate everything. I hate it! What the hell do I do man?” All this while, I had my malevolent love-guru yogi smile resplendently plastered on my face (see above). Twirling a pen, I calmly asked him, “Tell me, who pays for everything in the house?” “Of course me,” came the provoked answer. At that very moment, with a satisfied chuckle, I revealed the Bible of manhood to my man, “Then it’s very simple my friend. Go and tell her the golden rule of management. The one who pays is the one who rules. No questions about it, not in family, not in business! One company, one hero! Period!”

I hope wives the world over realise that this actually holds true globally. All current talk about having a CEO who is different from the owner/Chairman is actually balderdash of the highest order. The research is unquestionable. The classic paper titled Chairman and CEO – One Job or Two? by McKinsey’s Paul Coombes and Northwestern’s Simon C.Y. Wong proves how combining the two positions “empowers a chief executive to act decisively...” Nearly 80% of S&P 500 companies combine the two roles in one person (as per a McKinsey study) – a proportion that has barely changed in the past 15 years. The brilliantly well referred study (...The Separation of CEO and Chairman [positions]...) by Brickley (Rochester), Coles (Arizona) and Jarrell (Rochester) affirms how “Empirical evidence provides preliminary support for the hypothesis that the costs of separation [of the roles] are larger than the benefits for most firms.” Of course, Spencer-Stuart masterfully circumstantiates in its 2006 paper titled Board Governance that “splitting the roles of Chairman and CEO does not improve... the performance of the company. There is no evidence of economic gain...”

The splendid Christian & Timbers study, Rethinking the CEO-Chairman Split, shows how “stockholder returns were nearly 5% lower in European companies that implemented the split,” when compared with companies that hadn’t, and how in US, “returns were 4% lower in companies with a separate Chairman and CEO.” Booz Allen’s 2004 report titled The World’s Most Prominent Temp Workers nails it down that “separation of the roles of Chairman and CEO generally reduces returns to investors.” The final nail is driven in by Dr. M. Useem, Director of Wharton’s Center for Leadership & Change Management, who authoritatively states how “research has shown that the performance of US companies in which the Chairman and CEO positions are held by different people is no better than that of firms in which those posts are held by the same person.” From Michael Dell (Chairman, CEO, Dell) to Steve Jobs (Chairman, CEO, Apple), from Warren Buffet (Chairman, CEO, Berkshire) to Osamu Suzuki (Chairman, CEO, Suzuki), from L. N. Mittal (Chairman, CEO, Arcelor Mittal) to Mukesh Ambani (Chairman, MD, RIL), owners of outstanding corporations the world over have only one man running the show, themselves!! Two hours after I had gloatingly packed off my ‘Chairman/CEO’ cousin – who left with newfound confidence to settle scores with his upstart wife – I received a mysterious text message from him. It cryptically read, “Thanks for your advice. I gave it off to her nicely; took your name too. She’s cool. I get to decide from now on what to eat, what to purchase, which channels to see... and where to stay. P.S: My wife conveyed your ‘conclusive’ research to her best friend – your wife – who suggested to me that you avoid returning home (I’m put up tonight at a hotel near the crossing; food’s cheap too).”


1 comment:

  1. Sir, I like all are your (controversial) articles.your articles and ideas always differ from the fundamental concepts taught in b-schools and that's what makes your articles very interesting to read.A humble Suggestion - I think you should write a book. One copy - booked already, for me!