Bowlers for Bankers? Don't Import Failed UK Governance Cliches

By: Jeffrey Sonnenfeld,

JP Morgan's Jamie Dimon is just the lastest to be ensnarled by the annual "separate the roles" campaign -- independent of lack of evidence these arrangements improve governance. Media pundits often refer to "the silly season" when critiquing the overblown electioneering rhetoric that accompanies the falling leaves every other autumn. There is also a "silly season" of springtime inflammatory governance polemics. The "governista" mantra that recycles seasonally is the chant for mandatory "separation of roles" for corporate CEO and chairman positions that spouts with the daffodils in time for the spring. Last spring produced a record of 56 proxy votes on leadership role separation -- with only four approved by shareholders and this spring looks comparable.

The drumbeats of commercial interests from profit proxy advisory services and lawyers along with a more innocent chorus of determined ideologically-driven advocates brings about a welcomed seasonal energy attracting the attention of drama seeking media. Sadly, while the burden of proof should be on those who seek to break the prevailing practice -- instead the separation of roles is accepted with a religious fervor absent evidence it helps.

The tragedy is that these board governance titles are not predictive of financial success nor are they preventive of governance misconduct. Perhaps, on occasion, the model may not do any damage, say at firms like Ford, HP; Microsoft; Oracle; Walmart; and Tenet Healthcare -- given family ownership and entrepreneurial transitions.

However, there exists no empirical justification for this role split arrangement to be the norm. Fully 18 of Fortune's top 25 "Most Admired Firms" have a combined chairman/CEO leadership roles as do such high performing iconic enterprises as: Amazon, Starbucks, IBM, Southwest, Berkshire Hathaway, Walt Disney Company, PepsiCo; Coca Cola; UPS; Fed Ex; General Electric, American Express, BMW; Procter & Gamble; Caterpillar, 3M, Target, Time Warner; DirecTV; Exxon Mobil, and Boeing.

Often it does NOT Work

Furthermore, many firms frequently waved around by shareholder activists as poster children for the effectiveness of the separation of roles tired it -- and dropped it. These firms include: IBM; Procter & Gamble; Boeing; Dell; General Motors; and The Walt Disney Company. If this governance structure was so valuable, why did the "try it, you'll like it" experiments failed so quickly -- with the very boards who'd introduced such role separation recombining the leadership roles? In fact, only 23 percent of U.S. firms actually have independent board chairs.