Single CEO/Chairman at Goldman Sachs
I was intrigued by Goldman Sachs’ decision to give CEO-elect Lloyd Blankfein the title of both chairman and chief executive. When the announcement was made that current chairman and CEO Hank Paulson was nominated to be Secretary of the Treasury, media speculation was that Blankfein was not ready for the position and a chairman might be also named.
The current governance trend is towards separating the two functions despite the fact that more than two-thirds of U.S. Fortune 500 companies still consolidate power in one person. The opposite pattern exists in Europe and Asia/Pacific. The Booz Allen Hamiliton research I noted in a previous post found that the best-performing companies are those where the chairman-CEO titles are held by two people. Worth noting, the best combination is when the chairman is not the previous CEO but a genuine outsider.
Several factors may have gone into the Goldman Sachs decision to give the two titles to Blankfein. First, the board recognized that the CEO-elect was ready for the position despite an elevation sooner than expected. Second, naming a chairman to lead along with Blankfein would have sent a signal that the mighty Goldman Sachs was unprepared and Blankfein was not seasoned enough. I can hardly believe that knowing how Goldman Sachs regards training and leadership. It is a true learning organization. Third, Goldman Sachs’ competitive peers do not share power either.
Tend to agree that consolidating power with Blankfein was the right move. Any uncertainty has to be erased knowing that the Goldman Sachs’ impressive board will be watching and monitoring carefully. That’s like having one dozen chairman with keen peripheral vision. The future will tell.