BREAK THE BOARD!

It’s common in Britain, the organic growth of dual position in public companies of chairman and CEO forming the basis of executive positions of the top management. The flowing trend of this is yet to form majority in United States, even though it’s growing and it is being widely held by the governance experts. The increased ferocity of the collapsing financial system in a number of US firms like Tyco (TYC), Marsh & McLennan (MMC), AIG (AIG), Fannie Mae (FNM), and Walt Disney (DIS) has necessitated changes in governance structure to placate the stakeholders by introducing separate chairman and CEO. Though the number is growing in United States it is still just 37% of S&P 500 companies. The creation of a separate Chairman will provide another answer to the management solutions and do away with unchallenged decision of the CEO.

A changed mind-set to split the management between chairman and the CEO is reflected in an ever ubiquitous pattern that has already formed a majority practice among the Standard & Poor 1500 composite index in United States. In UK, the independent director is a rarity, where they are increasingly adopting a new plan viz. appointing an outside independent director as a non-executive chair. A convention in 2004, organized by the National Association of Corporate Directors (NACD), embraced 50 experienced CEOs, board members, and FIIs, who revealed: one-third favouring a split, one-third in favour of an independent director, and the remaining for non-executive chair. It strongly corroborated a tectonic shift of business governance in America! The instances of high profile firms adopting a split are plenty. The CEO and Chairman of Siebel Systems, Tom Siebel is surrendering his CEO post to ex-IBM fix-it man J. Michael Lawrie. Walt Disney’s top executive, Michael Eisner, who was holding both the top posts is relinquishing his chairman title to the former US senator George Mitchell. George Mitchell on the other hand will place in his CEO post in Dell Computer to his subordinate, Chief Operating Officer, Kevin Rollins. Then, Larry Ellison of Oracle allowed his CFO Jeff Henley to take former’s chairman position while retaining the CEO title. And most publicized case of Bill Gates turning over his CEO post in Microsoft to Steve Ballmer in 2000, have been the cases of American firms adopting the split for greater good of the organizations.

The splits also have been a long-running struggle to insulate firms from the financial scandals. This is also a saviour to comply with the governance guidelines drafted out by New York Stock Exchanges and National Association of Security Dealers and to count the organizations against the troubling finances. The founder making way for an experienced CEO allows the founder to think strategically and allow the executive to run the show albeit both remaining involved. Therefore should we adopt British corporate governance system in the heart of 21st century? The answer should be – Yes!

ARE YOU THERE, MR CEO?

Progressive branding today is virtually incomplete without the exploitation of social networking sites by the head of the management teams or more specifically, the CEO. Social media’s evolution in corporate world is rapid and lasting. It is the common man’s nomenclature that CEOs are imbibing; be it for recruiting, scouting, public engagement, or social CRM. The remarkable posts, intelligence, wisdom, and interaction with the consumers can find a brand streets ahead of the left outs. Not only consumers, even the employees productivity can be enhanced manifold by using collaboration tools like blogs and wikis by welding the team with organisational knowledge sharing. The value of knowing other people’s opinions, thoughts and ideas strengthen the network, which is possible only through interaction through social sites.

The CEOs are fast realising the blip of not adhering to social media and have started using it from the top of the pyramid. The online marketing has become a trend with a Google research indicating that an average consumer source at least 10 different information tags before a purchase decision. In another survey conducted by Doremus and Financial Times, 60 per cent of the executives engage in all sorts of blogs, online advertisements and interactions (like LinkedIn) to make their buying decisions.

The maverick Richard Branson for example, writes in first person in his profiles of Facebook, Twitter or Google+, where he narrates not only his business but also his travel experiences, his lifestyle and whatever he wants to share. The CEO Drew Patterson of Jetsetter, a consumer savvy travel startup experience about 40 sales each week through their website, offering hotels, villas and adventure experiences to its members. They maintain the most cordial relationship with prospective and existing members and interact with them regularly that centers from travel plans to honeymoon destinations. Finally, one of the strongest online marketing companies in the world, called Kate Spade New York, led by its CEO Craig Leavett is achieving triple digit growth this year through social networking sites.

There is no doubt that social networking sites are fast becoming a major differentiator for all sorts of companies. All sorts of business are increasingly compelled to use social media in their fixtures. Customer support will be requiring it to receive the complaints by using tools like CoTweet, sales department will be requiring gauging the business environment, marketing department will find it invaluable for backward integration and distribution department will use it to handle down line channels… et al. lt would be silly for any CEO to ignore 1.43 billion active users accross various social networking platforms. Its time to make sure, Mr. CEO, you are there.