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Health, Sports & Psychology

Young v Old, CEO v Chairman: A tale of two citadels

Updated Wednesday 3rd November 2010

 Do the battles of the generations reflect the power struggles between Chairs and CEOs?

"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us."

So wrote Charles Dickens in The Tale of Two Cities, set in London and Paris during the French Revolution.

This classic book comes to mind when looking at the roles of Chairpeople and Chief Executive Officers (CEOs), and the challenge of the relative demands of old and young people In both cases are we looking at a tale of two citadels?

The Rayen Citadel Creative commons image Icon Erwin Bolwidt (El Rabbit) under CC-BY-NC-SA licence under Creative-Commons license
The Rayen Citadel, Iran

One of the earliest citadels was The Acropolis in Ancient Greece which provided a stronghold and refuge for the citizenry of Athens.

The relationship between Chairman and CEO of companies is a symbiotic one, but at times of difficulty they can seem like two citadels at war with each other. A bit like Brian Cox's Agememnon to Brad Pitt's Achilles in the 2004 film Troy, based upon the classic tale of the siege of Troy

In modern business history the relationship between the Chair and CEOs of companies is often a complex and difficult one. In 1992 the Cadbury Review of corporate governance suggested a demarcation between the two roles, along with the importance of Non-Executive Directors in balancing boardroom interests.

Clashes of personality, style and strategy are nothing new in the higher management echelons. In 2003, the CEO of the retailer Matalan was forced out after a 14 month tenure.

The former CEO of Marks and Spencer, Stuart Rose, combined both roles in 2008 but ran into opposition from a group of powerful shareholders who saw this as a breach of the company's code of corporate governance as well as putting too much power in the hands of one individual.

The worst excesses seem to occur in various sports where chairmen (often owners) exercise complete de facto over areas of their team's performance but are no more qualified to exercise than the average fan. 'Trouble at mill' problems often occur in universities where Vice Chancellors re-style their institutions as businesses and give themselves titles such as President or Chief Executive. They often owe their position to a Chair of a governing body who either appointed them or who tolerates their institutional management style.

What are the ingredients of a good working relationship between these two corporate citadels? A Chairman should be 'out there' lobbying on behalf of the company; an ambassador who maintains the business's reputation whilst exercising a restraining hand on any excessive corporate zeal by the CEO and lieutenants.

The CEO develops and drives forward the strategy of the company in personal and professional capacities in order to achieve its goals and satisfy stakeholders. Yet there are more examples which are in breach of this principle. Just look at the behaviour of the Chairman of BP in response to the Gulf of Mexico oil spill crisis.

You could be forgiven for thinking that the birds who were rescued from were less hung out to dry than the outgoing CEO Tony Hayward.

Tony Hayward Creative commons image Icon US Coastguard Eighth District Internal Affairs under CC-BY-SA licence under Creative-Commons license
Tony Hayward

Again, literature informs business and management about what should and should not be done in avoiding inter-citadel conflict. In Mervyn Peake's second of his trilogy of novels, Gormenghast the central character, Titus Groan, is the Earl of the eponymous castle who discovers that his rival Steerpike seeks to wield power against him.

The denouement of the book occurs when Titus Groan, using the forces of the castle against Steerpike, kills his rvial.

Like most literature, Peake's novels use metaphor to explore questions of power and succession. At its most visceral these questions centre on the young replacing the old. The caricature is that when you are young you hate the old and vice versa: in business, it is often a tale of the young usurper plotting to replace the older incumbent.

A version of Randy Newman's song Short People could be composed which focuses on the uselessness of older people.

In the 1970s, the Transport and Road Research Laboratory tried to estimate that value of life. Their work suggested that retired people and children had a negative value, leading to the inevitable conclusion that these sections of the population should be culled. Recently silly commentators and politicians have suggested that the baby boomer generation have stolen the life chances of young people.

The current difficulties of the younger generation in the developed economies notwithstanding, this issue revolves around the concept of Ricardian Equivalence, named after the famous classical economist. This concept is used to point out that current generations should not burden future generations by expenditure or taxation to fund present economic opportunities. But the question of inter-generational equity is nothing new and with population living longer there is a concern about the old holding on to resources at the expense of the young. But this only occurs if the economy operates at a stationary state (another Ricardian concept).

Like the nonsense about needing more young people to pay for pensions (national income is made up profits and rent, as well as wages), the old and young are not two citadels in opposition. The expectation that age shall wither us all is a shared experience. Being young does not guarantee knowledge, enthusiasm and ambition just as being old does not guarantee judgement. The young will always caricature the old and vice versa, but there is one certainty is that the young will eventually take over the citadel; a visceral fact that cannot be denied. And, any professional worth their salt should know it is always about the next generation.

The bottom line is that in the tale of two citadels, revolution and counter-revolution is just part of the journey of business and society. This seems to hold whether we are discussing the relative roles of Chair and CEs; young and old people; as well as the dynamics of demographics.

We return to Dickens for the final appropriate words from the same book we started with, on how the citadels we defend go the same way as all flesh:

"Charles Darnay seemed to stand in a company of the dead. Ghosts all! The ghost of beauty, the ghost of stateliness, the ghost of elegance, the ghost of pride, the ghost of frivolity, the ghost of wit, the ghost of youth, the ghost of age, all waiting their dismissal from the desolate shore, all turning on him eyes that were changed by the death they had died in coming there".

 

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