Co-CEOs? How to navigate ‘two in a box’ leadership structures for success

Co-CEO models are rarely the first choice for effective governance or leadership of an organization – here are some observations and tips to get the most out of the arrangement

Less than 5% of major public companies have official co-CEO structures, but some circumstances do call for them (e.g., a temporary overlap in leadership to expand skills at the top, or navigate a transition like a merger or a new CEO). "Unofficial two in a box” leadership models are more common these days – think CEO + active founder, or new CEO + old CEO as active executive chair, or CEO + president with broad remit.

While two heads may be better than one proverbially, these are tricky arrangements to navigate, and whenever you have two leaders at the helm, it is crucial they and the Board work through two essential questions at the outset.

1)?Why do we think we need "two in a box" and are the benefits worth the potential downsides?

The first fundamental consideration is why you think a co-CEO arrangement is needed, and whether the added complexity is justified. The most common context for co-leadership is CEO succession and transition. Boards and retiring CEOs may think of the overlap as a safety net that projects stability to external markets, and provides “training wheels” for the new CEO while ensuring knowledge transfer from one leader to the next.

However, there are real risks involved, and Boards need to consider potential unintended downside, including whether the arrangement could:

• Signal a lack of confidence in the new leader to external markets, stakeholders, and the company
• Create a dynamic of executives going from one leader to the other in a bid to get a “yes” if the other leader gave a “no”
• Hamstring the new leader’s ability to drive bold decisions and change
• Confuse the starting point for holding the new leader accountable for results

If the benefits of a co-CEO setup outweigh these potential risks, leaders and Boards need to be very clear about the structure well in advance:

• What is the unique role you want each leader to play and why? For example, should the leaders' focus be split internal vs external? Or product/ future vision vs day-to-day operations? What will be the divide and conquer?
• How long do you think the overlap will be constructive? In the context of a new CEO transition, for example, that period is typically less than 18 months. Have explicit conversations up front with both leaders about this timeframe expectation.
• Are both leaders really equals? Or is one really in service to the other? Be explicit about this too.
• How will the leaders’ relationship and interaction with the Board work? How will the Board navigate the two leaders’ individual performance reviews and compensation?

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2)?If "two in a box" is the model chosen, what is required to make it work in practice?

As with any “marriage,” co-CEO arrangements can benefit from some “pre-marital counseling” to help identify potential misalignments early on. If the co-CEOs have competing visions or lack the ability to work through interpersonal conflict, the effects could be profoundly detrimental to an organization. Even if they agree on vision, stakeholders can be confused about the leadership structure and this early counseling can help decision making on track if any such issues do arise.

This tough but critical counseling can be done by addressing questions centered on the three foundational elements of a successful co-CEO structure: a unified vision and voice, clarity of roles, and a healthy interpersonal dynamic:

Unified vision and voice:

• Do we have a shared vision and set of priorities for the company? If not, how will we align, both now and over time?
• What norms will we implement to update each other regularly and stay in sync as context evolves?
• How will we handle disagreements? What norms can we agree to now to ensure we will hear each other’s point of view in a dispute and arrive at a resolution?
• How will we shield the organization from disagreement and prevent sending mixed messages to our teams?
• What will we do if people attempt to “play” one leader off the other, using the other leader as a “court of appeal”?

Clarity of roles:

• What is the explicit role of each leader? Are we aligned on why those roles are additive and make sense? Do we recognize the unique skill set of relationships each brings to their role?
• What do these roles imply about key decision rights? While you may consult each other, ideally one person has final say for areas such as (1) Setting strategy, goals, and outcomes, and the key priorities and initiatives to achieve them; (2) Culture and ways of working, including how the place is run and managed, leadership behavior expectations, and working norms (3) Talent and team, including making “the final call” on people, and deciding who interacts with whom on what topics, and in what ways (4) External stakeholders, including relationships with the board, customers, and other constituents
• How will we help stakeholders understand decision rights and which leader they should go to for what and when so there is no confusion about leadership structure??

Healthy interpersonal dynamic:

• How will we quickly establish trust with each other in these new roles, and how will we build confidence with the other in our competence, intentions and commitment to the same goals and outcomes?
• How will we hold each other accountable for doing what we say we will do?
• How will we invest in our relationship over time so that we can work together even more successfully? What feedback have we both received in the past that would allow the two of us to know our strengths and areas to develop and how we can better support each other?

Every organization is unique, and a co-CEO structure may be appropriate for certain companies and circumstances, often only temporarily. An open and honest discussion based on these questions can help pave the way to reaping the potential benefits of empowering the CEO's office with two leaders.