When I joined JWT in the early 80s there were only 4 grades – Account Represenatative, Senior Representative, Account Supervisor and Manager of the office. In India, JWT had 5 offices and the supreme commander of these offices was called Chief Executive. Officer is a suffix that was made popular much later, a term borrowed from the armed forces to give the Chief Executive’s position a little more dignity. You might remember Louis Gossett Jr winning an Academy award for his role in the film “An Officer and a Gentleman”.
As time went on however, more and more titles got added in the industry and advertising tried hard to mimic them. At one of our clients which was a multi-national bank, almost everyone you met was a Vice President of some sorts. Naturally the Account Representatives at JWT got a bit of a complex. We did have one senior sounding title in the system called Controller, which sounded quite impressive, but unfortunately that was a non-management post and typically happened to be a part of the union. Yes union. A union was an essential part and parcel of growing up in a quasi-socialist economy. Unions would bring down the biggest corporations to their knees.
Chief Executive Officer of course was soon to become the norm. But the title of Chairman was usually reserved for the Chairman of the Board and was considered to be separate from the CEO who took care of the day to day operations of the company. At JWT our Chairman was the famous Bobby Kooka ( of ex-Air India fame ) and we youngsters normally got to meet him typically at the annual general meeting held every year, or when he came to our offices for a board meeting.
A quick cut to the second decade of the new millennium and corporate titles have inflated themselves substantially since I joined business as a young executive. There are many reasons for this. Firstly, this new business animal called the start-up has forced titles never heard before ; Founder, Founder and Chairman, Founder and CEO and other combinations and mutations that were never heard of before.
To add to that confusion, industries like advertising have been liberal with their titles and designated every head of business as Chairman. The arguments for not having the Chairman and CEO as the same person of course are several. But here are two important reasons:
One of the events that gets the most attention from a company’s shareholders is an increase in executive pay. Increases always come from profits, and most people understand that competitive pay helps to keep talent in the business. However, it is the board of directors that votes to increase executive pay. When the CEO is also the chairman naturally there is the possibility of a conflict of interest, as the CEO is voting on his or her own salary to pay. A board is required by legislation to have some members who are independent of management, but unfortunately the Chairman can influence the activities of the board, which is why there has been criticism of board members being cronies of the chair.
One of the board’s main roles is to monitor the operations of the company and to ensure that it is being run in conjunction with the mandate of the company and the will of the shareholders. As the CEO is the management position responsible for driving operations, having a combined Chairman and CEO role results in monitoring oneself, opening the door for abuse of the position. A board led by an independent Chairman is more likely to take a fair view of the company and ensure it it is not drifting from its mandate to get the company back on track.
Of course you might say this is pure balderdash. Because corporate governance, executive pay and other important subjects are only material to companies quoted on the stock exchange. If you are running a private business not within the purview of the NSE or the BSE, you may want to call yourself Emperor and hardly care if anybody complains.
Another trend that has become popular is to hang on dearly to your functional role in addition to your title of Chairman. For example in creative industries like advertising it seems pretty common now to see the title of Chairman and Chief Creative Officer. Of course this might sound alright in advertising ( I don’t know ) but imagine what this double barrelled title might do to other industries.
Imagine that a guy who was in Logistics becomes Chairman. He would then need to modify his title to Chairman and Chief of Supply Chain. I mean it does sound a bit funny. Or Chairman and Chief Technology Officer.
Somehow one assumed that after reaching the position of Chairman, one wouldn’t be greedy to acquire other titles. Or be generous enough to give up your previous job to someone more deserving. But it seems that it is not so. Reaching the top job in the company makes you even more possessive of your earlier title. Its a bit like the conductor of a philharmonic orchestra clinging on to his instrument of choice for example. Imagine Zubin Mehta calling himself Conductor and Violinist. ( Zubin’s first instrument was the violin which was taught to him by his father Mehli Mehta ). Somehow one assumes that once you become a conductor it is not necessary for you to play any instrument. And if for any reason if you did, you would do a bad job of conducting the orchestra. But it seems this is not so while conducting a corporation. It is possible to be both the conductor and the player simultaneously. Imagine trying to conduct a symphonic orchestra sitting on your piano stool!
Another key trend in the organisational hierarchy is to use titles that were meant to be overall general management titles and attach those to functional jobs. So for example I met someone the other day and his business card read ” President-Marketing”. Now President was a title earlier reserved for the President of the company. It was typically a substitute for COO or even CEO. No doubt soon you might even see a ‘CEO-Marketing” or a “CEO-Technology”. In fact the title of CEO is perhaps no longer so coveted. Another fashionable title vogue is that of Managing Partner. Some companies have a Managing Partner and a Managing Director making you wonder which title is the better one.
Nowhere was the problem stated more acutely, than in the wicked 1969 satire, The Peter Principle written by Dr Laurene J Peter and Raymond Hull. Taking the form of a serious work of business research, complete with entirely fake examples, it purported to have discovered the root cause of manager incompetence: Everyone in an organization keeps on getting promoted until they reach their level of incompetence.
That is I guess is true only if there exists no other title above the Chairman. After all until a few years ago we thought that no one could rise above the position of CEO. And now we have all been proven wrong. So who is to say what comes next.
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