Speaking to the Daily Mail in March, sources at the department for Communities and Local Government argued
that “there was really no need for councils who opt for an elected mayor to have a chief exec – because the mayor can take on the executive role and could deal with the directors of various government departments himself.”
Since then, most of England’s cities have rejected the government’s proposal for directly elected mayors, but what of the argument that elected mayors should take on the role of chief executive?
As I have argued before, while some councils will re-badge their senior officer, not many will experiment for long without a senior officer. The reasons for this are well argued in a new report by the Group of 30, an international grouping of central bankers and senior financiers. In their paper on governance of financial institutions they outline 10 tasks that well-functioning boards should discharge. Two in particular concern the role of the chief executive:
“Appoint the CEO and gauge top talent in the firm, assuring that the CEO and top team possess the skills, values, attitudes, and energy essential to success. A very good CEO is preferable to a “star” CEO. The board must confirm the appointment of independent members of the executive team, including the chief risk officers (CROs) and head of internal audit, and should be consulted with respect to other very senior appointments. Boards should maintain a focus on talent development and succession planning, which are critical components of organizational stability.
Respect the distinction between the board’s responsibilities for direction setting, oversight, and control, and management’s responsibilities to run the business. It is misguided and dangerous to conflate the responsibilities of management with those of the board. The board’s primary responsibilities include: (a) reaching agreement on a strategy and risk appetite with management, (b) choosing a CEO capable of executing the strategy, (c) ensuring a high-quality leadership team is in place, (d) obtaining reasonable assurance of compliance with regulatory, legal, and ethical rules and guidelines and that appropriate and necessary risk control processes are in place, (e) ensuring all stakeholder interests are appropriately represented and considered, and (f) providing advice and support to management based on experience, expertise, and relationships.”
The Financial Times today reports on the woes to befall Jamie Dimon the chairman and chief executive of JP Morgan Chase and quotes Robert McCormick, chief policy officer of Glass Lewis & Co on the joint role “It is potentially insurmountable conflict. How can you oversee yourself?”
This idea of checks and balances is as essential in the corporate governance of democratic institutions as it is in financial institutions. Human beings are not omniscient creatures, we all require advice, cooperation and partnership to achieve all but the most simple of tasks. It is no dilution of democracy to recognise that political leaders also require others to achieve their goals. And of what value is it to be surrounded by people whose roles you think you can do better than them? JP Morgan Chase seems to be the latest to discover the myth of the emperor-like, all-powerful leader who acts without any real challenge to his authority. Without the cooperation of others who bring new capacity, knowledge and skill, leaders ultimately deny themselves any hope of success. Eric Pickles should listen to the bankers in the Group of 30 and stop encouraging mayors to go macho.