Separation of chair and CEO is one way to skin a cat

But there are others. Twenty years ago, a weak government in the UK, faced with a string of corporate collapses, gratefully welcomed an industry-based panel to devise a new model for corporate governance. The Cadbury Committee was formed and after 18 months of consultation came up with the code of conduct that set a standard for corporate governance around the world. Its central recommendation was surprisingly simple: separate the roles of chairman and CEO so that no one person would have "unfettered powers" of decision-making. Over protests in the UK, it quickly became the norm, and many other countries soon adopted similar recommendations.

Twenty years and two major crises in corporate governance later, and it's still a live topic, in part because the empirical evidence of success – measured by financial performance or avoidance of collapse – is ambiguous, and in part because theoretical perspectives to explain what should happen diverge. Take one contemporary example: What's the most valuable company in the United States, and what's the fastest growing large company there? There's one answer: Apple. Who the chairman of Apple? Who's the CEO? Until recently there was one answer: Steve Jobs. What led to a separation of the roles in August was probably cancer – but certainly not some code of conduct.

A pragmatic, contingency approach would suggest that you work out what's best for your company, now. But that's hardly a solution unless you can work out a basis for deciding which aspect of the contingency counts, now, and when that changes. In Apple's case it was easy. The illness told Steve Jobs he couldn't work all the time, but could still work enough to organise the board meeting and add a little bit of his special juice to product design and selection. But not every joint chairman-and-CEO gets that sort of message saying when it's time to go. So, how do you decide?

A couple of academics-cum-consultants, from Canada and California, have been musing on this 20-year-old chestnut for The Conference Board, a New York-based think tank. With US legislation now requiring disclosure about board leadership structure, they reckon the decision of whether or not to separate the chairman and chief executive roles is a hot governance topic again – still – for public companies, boards and shareholders. Their report proposes that board effectiveness is affected by the chairman's industry knowledge, leadership skills, and influence on board process rather than by the particular leadership structure chosen.

Source document: The analysis "Separation of Chair and CEO Roles: Importance of Industry Knowledge, Leadership Skills, and Attention to Board Process", by Richard Leblanc and Katharina Pick, is a 12-page pdf file.