When two heads are better than one
Article Date: Aug 08 2005
Business experts hate the concept of a company with joint chief executives at the helm. The received wisdom is that sooner or later, the business ship will run aground. But a raft of fast-growing ventures reaping the benefits of being led by a driven dynamic duo.
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.'
