In the world of business, it is the norm for a firm to be led from the front by a single entrepreneur. Often ruling in an autocratic manner, typically (though not always) the founder, this leader is usually the most dedicated player, the heartbeat of the entire enterprise. The prevailing wisdom is that employees, investors and non-executive directors favour this structure. It ensures the firm takes one path, that it remains focused and that the sole chief executive lives and dies by the strategic decisions he or she makes, taking the credit as a visionary when things go right, and the flak when it’s tin hat time.
No one likes them…
Joint chief executives are frowned upon because (so the argument goes) investors, lower-ranking directors, employees and clients don’t really know who is running the show – or with whom the buck stops.
And, if they fall out (human beings being what they are), the consequences for the business are seemingly more serious than the usual run-of-the-mill boardroom bust-up. There can be arguments of strategy, arguments over cash, and competing fiefdoms of responsibility and influence. And the situation can be even worse if
the partners are husband and wife.
David Williams of corporate finance house Marwyn Captial sums up much of the prevailing attitude, saying, ‘I might feel more comfortable if the two chief executive were brothers, but aside from that, I wouldn’t feel particularly comfortable with joint leadership.’
…they don’t care
However, there is much to be said for the joint chief executive concept. The most obvious advantage is that, in a growing company with a joint leadership structure, there are two expert minds thinking about strategy, expansion and products.
And if the people at the top have different skills, then a growing business can usually embark upon a two-pronged dash for growth.
Other favourable aspects flagged up by practioners is the simple fact that the relationship between the two leaders running the show is usually much deeper, facilitating a degree of honesty and frankness that many other businesses do not exhibit at executive level.
Z Group’s joint success
James True and Jack Bekhor are founders and joint chief executives of tech outfit Z Group, which recently joined AIM through a Panmure Gordon-sponsored float at 108p. Well run and making a good return on sales – profits are forecast to hit £1.86 million on £6.8 million sales this year – Z Group’s leadership structure suits its founders
to a tee.
‘It has worked particularly well for our group,’ explains the affable Bekhor, ‘as James and I bring different skill sets to the table. My background is engineering, so I’m more analytical, whereas James has a marketing background. At IPO, we jointly presented to the City, and I can honestly say there was no issue with our leadership structure from institutional investors that we met. With Z Group, we make it clear where the boundaries are.’
Z Group’s share price has performed well, rising to 121p, and the company is starting to attract plaudits. So, are there ego clashes emerging between the two? ‘Not at all’, he laughs. ‘˜I am very happy for James to take the credit and vice versa. We are not precious about it.’
Timestrip balance of power
Paul Freedman and Reuben Isbitsky are joint chief executives of Timestrip. They founded the business together four years ago and hold 15 per cent of the equity each. Timestrip reversed into AIM-quoted shell Internet Music and Media earlier this year, raising £2 million.
The company markets an inexpensive and versatile technology for accurately measuring lapsed time – this ‘smart strip’ displays how long an item of food has been open in the fridge and therefore whether or not it is safe to eat. ‘It is basically an inexpensive clock,’ explains Freedman, who plans to establish Timestrip as a global brand.
‘When we formed the company as a private limited concern, we adopted the titles joint managing director, because we had come at it very much from an equal starting point,’ he recounts. ‘When we were reversing onto AIM, there were rumblings of discontent from certain quarters about the ‘joint’ CEO titles we were adopting, although we weren’t too concerned. Reuben and I did a Google search and found there were about 10,000 joint CEOs out there anyway!
‘And in any case, we feel joint CEO is a very appropriate title, because we are both driving this business together in a unified way.’ When quizzed about the resolution of disagreements? ‘We just wrestle,’ he jokes. ‘No, seriously, we sit down and debate and challenge each others’ points, and we’ve never had a situation come up that we couldn’t resolve together.’
Freedman says that as the company grows, there are more than enough demands on the business to justify two chief executives. ‘As Timestrip grows up, disputes occur less frequently. I am very much the finance man and the City face, and he is very much the sales/marketing and product development man.’
The intense weeks leading up to flotation provided a perfect example of how joint leadership works well. ‘The eyes of a chief executive can definitely move off the ball pre-IPO,’ Freedman laments. ‘Companies spend all of their time meeting and greeting the City. I was off-line for a couple of months with the whole reversal and placing process. Thankfully, Reuben was on hand as my equal to carry on with the day-to-day running of our company.’
The Rick and Nick show
Rick Holroyd and Nick Howe are joint managing directors of catering company Holroyd Howe, which they founded in 1997. The Buckinghamshire-head-quartered company, which expects to turn over £28 million for 2005, provides catering services to blue chips including FTSE 100 companies. Holroyd Howe has won plaudits for its employer skills as well as its catering credentials.
‘Nick and I worked together in Docklands in the late 1980s for 18 months as area managers for Sutcliffe Catering,’ recounts Rick Holroyd. ‘We were in the same office and of a similar age. I once turned to Nick and said that one day, I’d start my own show, and he said well don’t forget me, and I never did.’
‘We set up with backing from a third party, and both Nick and I have a third of the business. However, the third party has 50 per cent of the voting shares, whilst Nick and I each have 25 per cent, for a combined 50 per cent. Interestingly, this means that to have an equal say, we really have to stick together. From the early days, we made a pact. Family comes first, business second, and ego last.’
Holroyd attributes much of the company’s success, both internally and externally, to the differing personal qualities of the managing duo. ‘We are extremely different characters. For me, life is a bit more black and white. For Nick, there are shades of grey. But we can always come to a decision along the various lines of the spectrum from which we approach a problem, although that might mean one of us has to concede.’
Rick freely admits that the major con to joint leadership is a demarcation one. ‘Sometimes it can be a bit confusing,’ he confesses. Yet he attributes much of what has been achieved to the culture jointly fostered by the two. ‘Our growth to date has been purely organic. We haven’t done acquisitions because we have not wanted to dilute the culture that we, as joint leaders of the business, have created.’
- Two heads, two personalities and two sets of skills can prove invaluable in a fast-growing business
- If the duo leading from the front have a close, unified relationship, a business can move forward in leaps and bounds
- If a company is going through an IPO, or completing an acquisition, joint chief executives can share the workload in terms of advisers, investors and the press, ensuring the day-to-day business stays on track
- Joint leadership at the top can encourage other senior managers to take on more responsibility, as the two chief executives are pulled in a variety of directions
- Demarcation issues – staff, clients, advisers, non-executives and investors may begin to question where ultimate responsibility lies
- Relationships are key – if joint chief executives give off mixed messages, staff and clients could run amok, damaging the business