The Rise of the Co-CEO

There has been a recent flurry of announcements from the business press regarding the appointment of Co-CEOs. What was once an oddity is becoming more common place. A recent article by Barron’s Andy Serwer addresses this trend in the broader marketplace. I thought it would be interesting to look at how the hospitality industry is or is not embracing this movement. Of the 8,088 hotel, casino and restaurant companies we track at AETHOS, only 24 had a Co-CEO arrangement, representing less than 1% of the industry.

Not surprisingly, the majority (15) were founders, with shared leadership often established at the company’s inception – think Steve Jobs and Steve Wozniak at Apple or Larry Page and Sergey Brin at Google. Additionally, 5 were family members, which aligns with the entrepreneurial nature of the industry. This leaves only 4 Co-CEOs who were neither founders nor relatives. In my view, the Co-CEO model in hospitality is more a result of specific circumstances rather than a broader business trend.

For the companies contemplating this structure, a clear division of decision-making and areas of expertise is critical. How a “buck stops here” decision is made must be clear throughout the organization. Obfuscating how key decisions are made is a recipe for trouble. Think front-of-house and back-of-house in a hospitality context – distinct, but interdependent. There can be clear advantages to collaborative decision-making. In many circumstances, teams make better decisions than individuals. So why isn’t this setup more prevalent?

First, it is cumbersome and atypical. Having more than one person making mission-critical decisions can take longer especially when there is disagreement. History is another obstacle for the Co-CEO setup, with the allure of the larger-than-life leader. It’s the mythology of the hero figure. For example, in Roman mythology, the Roman Senate ran the empire, but it was emperors like Marcus Aurelius who got all the publicity.

In the end, careful contemplation of this leadership structure is recommended. Consideration of how well the two individuals know each other, how well they have worked together in the past, and how the company’s strategy and organizational needs align with the structure are critical. Leadership is as much an art as it is a science, with no one way being the right way.