How many chiefs do we really need ?

Having “Chief” in your title is pretty awesome . I am friends with several people who have “Chief” in their title and they are rightfully proud of it – and I am very proud of them for getting to those important career milestones. I have my own ambitions on this matter – some day I hope to the the “Chief Trainer” at the dog training business I intend to establish post retirement. While I don’t exactly know at the moment what people with the title “Growth hacker” actually do – that is also a cool title I intend to take on in that post retirement business.

The baseline case is that the person running the company is called CEO and the direct reports to the CEO carry “Chief ” in their titles like COO, CMO, CFO, CRO, CHRO etc. CEOs cannot have an indefinite number of people who directly report to him – so some other C level roles get one notch down in the pecking order. For example – CIO working for CFO, a Chief Risk Officer working for the COO and so on. From that point on – it gets out of hand pretty quickly.

While I chose to rant on “C” titles here – this does happen in many flavors. EVP/SVP/GM roles for example all have a habit of playing out the same way.

There are about a half dozen common reasons I can think of on the top of my head why additional “Chief” roles get created. I am sure there are many more.

1. Some “must have” movement happens in the industry and pundits will advise the board and CEO that this needs a C level role. Hence roles Chief AI officer, Chief Analytics officer, Chief Digital Officer and so on get created with great intentions to drive transformation – but not always with any real budget or authority to make decisions.
2. Some “top talent” types won’t join the company without a C level title. Off late I have seen “Chief Growth Officer” as a title cropping up – and many of the people occupying those roles are people who otherwise would have only joined for a CEO or CRO role.
3. A way to retain senior talent for a period of time till another plan can be created . A famous big data company had a chief or technology, chief of engineering, chief of engineering and a few other similar sounding titles co-existing . This scenario is very common when the company is limited in making compensation increases. Similarly it could also be a way to show that a growth milestone has been met, usually for startups. The VP of Legal will become General Counsel, VP of sales becomes CRO, VP of marketing becomes CMO and so on – even with very little or no change in actual responsibilities.
4. A way for the boss to punish someone without actually firing them immediately . I know of a CTO who created a title of “Chief of intellectual renewal” for a very senior engineering leader who was out of favor. It could as well have been “Chief Librarian” . It could also be the other way around – A way for the boss to save face after hiring someone with a great resume only to find out quickly that the candidate is not going to work out, but cannot let the person go immediately due to contractual or PR issues . Not that long ago, a high profile CTO hire was converted to a Chief Business Officer with an unclear charter – who then left the company several months later.
5. A way to temporarily make sure a big transformation effort does not get off the rails – like a business reorg, a new product line , a big M&A etc . Lots of overlay roles are put in place as guard rails – especially for making sure organizational antibodies don’t kill the change before it takes root.
6. As largely aggregation functions – where the role in reality just adds up the work of everyone below then in the hierarchy, and reports it to the top. And similarly serves as a traffic cop on decisions coming from above.

All the above reasons might have been absolutely valid for the context in which those decisions were made . But the trouble is that once these roles are created – they don’t get eliminated even if there is limited proof of value add. And there is a tipping point where everyone will agree that a C level title is meaningless because it is given away cheaply.

What will absolutely happen every time is that the overall cost will go up – and revenue might not proportionately go up. These additional CXOs will need support functions. They create additional operational overhead. They exponentially increase communication overhead. They will all measure the same things across various dimensions and ask similar but repeated questions to the same people on the frontlines, wasting the time they should spend on value adding activities . And at a certain scale – invariably they will create conflicting messages and confuse the heck out of everyone.

Over time, a top heavy organization is a diminishing returns proposition. In the simplest case, it makes a company less agile. If market needs it to shed overhead quickly – it is a lot harder to let go of people at the top than at the bottom of the pyramid even if that is the right solution. Too many people sitting in meaningless roles creates a problem in promoting organically, and worse still – there will always be people aspiring for those low value jobs because the title is impressive.

So what can we do about this ?

Clearly the corporate world will not eliminate every low value CXO role – so what we need is a framework to minimize the trouble it comes with .

First – The CEO and the Board should come to terms with how much dilution can they live with C level titles being dispensed liberally. Obviously if they are ok with significant dilution, they deserve the pain it will invariably generate.

Second – Don’t create any leadership role, especially a C level role, unless there is a clear charter that makes it a unique necessity. That charter should then come with adequate budget and decision making power to deliver on the charter. Agree on a clear way to measure the success of the role before announcing it.  This cannot be a one time activity just when roles are created – all roles need to be reviewed critically every few years.

Third – if you need to make an exception for any of the half dozen reasons I listed above, then put a firm time frame around the life time of the role and define periodic check points to see if you still need the role. Make it a CEO level decision if the role is still needed after the role gets to its expiry date.

Fourth – Ideally, hire people on a time and outcome bound contract into those additional C level roles – so that it is an easier conversation with the people when the role expires, or performance does not match up to agreed levels.

Fifth – Automation ( as in analytics, AI, BI etc ) and business process changes should be the first way of solving aggregation issues. It may not be enough to eliminate all redundant roles at once – but in general it will help point out the glaring holes in organizational design very quickly.