Recently, it was announced that Galen Weston, Executive Chairman of Loblaw Companies, has also been appointed as President and is taking over the daily operations of the business. I cannot think of a better way to muddy the business waters and create obstacles to the smooth functioning of the company.
I firmly believe that the roles of Chairman and President should be separated. Here’s why:
1. It concentrates too much power in a single role. How can one person be accountable for both the oversight of the company as well as its day-to-day functioning?
2. One person as President and Chairman creates potential for conflict of interest. The chairman protects the interests of the shareholder, while the president manages the business. This often creates a healthy tension between the two roles that helps police them. That can’t happen if one person holds both positions.
3. There is simply not enough time in a day for one person to fulfill both roles. How will he decide which “hat” to wear? Will he end up delegating and/or abdicating the bulk of his accountabilities due to time constraints?
Now, in addition to being chairman, Galen is accountable for managing and maximizing the performance of 135,000+ employees. This in itself has got to be more than a full-time job and does not need any other distractions. Either role in a company this size is hugely complex and time-absorbing. The president's role itself will be busy overseeing the integration of Shoppers Drug Mart into the Loblaw business. How will he apportion his time?
As President, Galen will have a lot of strategic thinking to do. How will he ensure it is integrated across all of his reporting functions? How many store and location visits will he have time for? How will he plan his days? And during Board week, will the business take a back seat to board meetings? It all sounds like too much of a stretch.
In the long term, it could compromise the health of his business.
