CEO and Chairman Roles: A Case Study

This case study explores the debate of whether a single individual should hold both the CEO and Chairman positions within a company, or if these roles should be separated. The study argues that having two distinct individuals for these roles enhances corporate governance, reduces conflicts of interest, and improves decision-making. It highlights the importance of separate responsibilities for day-to-day operations and regulatory compliance, and emphasizes the benefits of having two leaders for better risk management and shareholder value. The case study also references examples like Microsoft, where the CEO and Chairman roles are held by different individuals, and concludes that while cost may be a factor, separating these roles is crucial for organizational effectiveness and long-term success.

Running Head: Case Study
Case Study

Case Study 1
Introduction
In this present paper, we will discuss the case scenario which states that one person should share
two titles that are chairman and CEO of the company or not. The research has been taken place
in order to come up with the conclusion whether the companies should make two titles shared by
one person or appoint two different people as CEO and Chairman.
Generally, a company should have different persons for two titles such as CEO and Chairman.
There are several reasons which are discussed in this case study to support that there is an urgent
need to appoint two different people for two different positions in a company.
If there is a single person sharing two positions or one person having the two responsibilities that
there might be chances those actions will be unmonitored and it will also create conflicts in the
organization. Having the same person in two different positions may create the chances of
corruption in an organization. The single person holding two positions will create the problem
because an entire decision of the company will totally lie in the hands of one person and that
person have total authority over every single decision that is related to the company. This will
create the critical issue for Board of directors to judge his objective as well as performance.
By having two persons for two separate entities will enhance in maintaining the separate roles
which are necessary for running the enterprise separately. Supposed CEO is busy looking after
day-to-day work and then Chairman could look after the regulatory compliance. If CEO of the
organization is somewhere stuck in the meeting then important decision related to recruitment of
board of members can be looked by the chairman of the company. The Chairman and CEO can
look after critical issue that is related to succession planning.
The CEO and Chairman together help in running the organization smoothly. Both people can
analysis the things better and could take better decision for the company. The separate roles of
two persons are important in order to bring efficiency and effectiveness to an organization. If
there are two separate people in an organization it will help to maintain the adequate balance of
power. The researchers say that if there are two people having two different roles than it has been
marked that there is continuous organizational growth. There would be the proper structure of
corporate governance. In leading companies belief of that company is that two separate role help

Case Study 2
in increasing traction. There is a better relationship between chairman and CEO is very crucial.
The best working environment will be created only when there is the good relationship between
both of them. If two positions are shared by a separate person it will help in eliminating mistakes
and provides the best platform for building the great management execution. Most companies
prefer to appoint one person to two different positions because of the biggest factor is cost. They
can't afford to give salary to two different people when the roles of both people are similar to
some extent.
For example Microsoft has two separate persons for the two different positions, namely, John W.
Thompson as a chairman of Microsoft and Satya Nadella as a Chief executive officer of the
company (Microsoft.com, 2017). So both are performing their roles and responsibilities in a most
efficient and effective manner in order to achieve the vision and mission of the company.
Two smart people together can act as the aid in reducing the risk for investors and also help in
providing lower stock returns. (Berger et al., 2015)Two persons help in providing the best
outcomes for the company.
When the company wants better corporate performance then they will appoint two different
people for two different entities. No single structure fits for every corporation. Every
organization is unique and the decisions of both the person considered significant for running an
organization. The separate role of CEO and the Chairman are growing. (Azeez et al., 2015)
A study of JP Morgan emphasizes corporate governance experts to recommend that appointment
of two different people for two separate positions is required in order to generate the best results.
The basic purpose of splitting roles of two positions is because if one is occupied in some other
matter then another person can take care of shareholders. Shareholders play a crucial role in
running the organization. So the decisions related to shareholders must be analyzed carefully.
They should take care that whether the shareholders are happy or not. So there is need to increase
the awareness of appointing two different people.
This is the ultimate call to split the roles of the CEO and Chairman so they both can look after
the demands of shareholders, improve corporate governance and enhance the shareholder wealth.
The active role of both of them helps in bringing positive signals for the shareholder value as
well as for market.

Case Study 3
So our study helps us to reach at one decision that there should be separate persons for two
different positions because it will help us in reducing conflicts in an organization. It also
enhances in fulfilling the regulatory obligations (Dimopoulos et al., 2013). It also helps in taking
good decisions regarding the management. Each organization needs to appoint separate person
because every organization is special and appointing two people differently help in reducing risk
and confusion too.
It can be concluded that the companies should hire different employees for both the positions in
order to eliminate the biased decision making and employees for the particular position will
focus on their key responsibilities areas in a most appropriate manner towards the achievement
of overall objectives of the company.

Case Study 4
References
Dimopoulos, T., & Wagner, H. F. (2016). Corporate Governance and CEO Turnover Decisions.
Azeez, A. A. (2015). Corporate governance and firm performance: evidence from Sri Lanka. J
Berger, A. N., Imbierowicz, B., & Rauch, C. (2016). The roles of corporate governance in bank
failures during the recent financial crisis. Journal of Money, Credit and Banking, 48(4), 729-
770.ournal of Finance, 3(1), 180-189.
Microsoft.com. (2017). Microsoft – Official Home Page. [online] Available at:
https://www.microsoft.com/en-in/ [Accessed 20 Jul. 2017].