FT.com | Dear Lucy | How can I meet my responsibilities for two companies without having to give up on one of them?

How can I meet my responsibilities for two companies without having to give up on one of them?

October 23, 2008

I run a large company facing recession in all our main markets; I am trying to reorganise our business and keep shareholders at bay. In addition I am a non-executive director of a company that is faring still worse and fighting for survival. To do my own job requires working every evening and every weekend, yet emergency board meetings at the other company are endless. I can’t give that company my full attention, but equally now is not the right time to resign. I have legal and moral responsibilities to both businesses, but short of cloning myself I can’t see how I can meet them. What should I do?

Chief executive, male, 55

Lucy’s answer

From the way you write it sounds as if you think you are carrying the weight of both companies on your shoulders. And if you stumble, so will they.
This is most unlikely to be true but if it is, something has gone badly wrong.
Surely at the company you run you have installed a layer of people below you who are in this with you? And if you haven’t, why not?
It is ominous that you think the answer is to clone yourself: there is a high chance that two of you will be worse than one. Instead, you need to find other capable people who can share the load and perhaps allow you to have the odd night off.
At the same time you need to tell the chairman of the company where you are a non-executive that you are up to your eyeballs and would like to be excused from some of the emergency sub-committees that will be sprouting up everywhere.
You mention your legal and moral responsibilities. The legal responsibilities of an exec and non-exec are identical and I am not sure what you mean about the moral ones – although if you mean the practical responsibilities to your shareholders, staff and customers, they are clearly greater at your own company.
So if you think that by giving time to the non-exec role you are short-changing your own company, you must give it up. You might have thought more about accepting – I have never understood why CEOs want to serve on other boards, as they have plenty of work to do as it is and hardly need the extra cash.
Your problem is timing. Most non-execs are on a short notice period, but you may feel honour bound to stay longer until someone else is found. And then the difficulty may have solved itself: if things are as bad as you say, the company may go under quickly. I only hope you’ve got some good indemnity insurance.

October 23rd, 2008 in Uncategorised | Permalink

34 Responses to “How can I meet my responsibilities for two companies without having to give up on one of them?”

Comments

For me it is clear that your responsibilities at the company where you are CEO trump your non-exec responsibilites at the other company. That is clearly understood in the traditional lines of demarcation between Exec and Non-exec directors in this country - the terms of remuneration of Non-Execs clearly anticipate that this is a “side” role that they undertake in addition to their main job, and the expectation is naturally that the main job will take precedence. I’m sure this is how things worked for you until recently.

But even more importantly, the employees at the company where you are CEO are looking to you to provide leadership at this difficult time. It would be a gross dereliction of duty to short change these people just when they need your full attention. In contrast, employees at the other company are not looking to their Non-Execs in the same way.

You also say that emergency board meetings at the other company are “endless”. This doesn’t sound right. Emergency board meetings, even if frequent, should be brief. The board should be presented with a decision to make (and if appropriate, alternative courses of action) together with arguments for and against and their Executive’s recommendation, and they should decide after a brief discussion. If discussions go on for a long time, something is wrong. Perhaps the Executive are expecting the full board to take over day-to-day running of the company in the crisis, perhaps they are not giving adequate briefings/recommendations to the board, or perhaps the board is split. Either way, it sounds like the management structure needs to be fixed. Perhaps a threat on your part to resign (citing your obvious time pressures) is the way to get this addressed. If board meetings are a shambles, how does anyone expect the company to function?
Posted by: Anthony, Banker, 44 | October 23rd, 2008 at 7:36 am | Report this comment
Hire an experienced, accountable person with common sense who does not have a job, to help you get organized with your life. Should be a piece of cake in this environment…
Posted by: coco, 36, male, COO | October 23rd, 2008 at 8:34 am | Report this comment
Tricky one.

When I’m not sure of something I very often ask myself the question “What would Tomas Bata (Senior) do in this situation?”

If you can answer that question then you know what you should do.

From the information given I would tend to suggest that firstly he wouldn’t have divided himself between two companies, he would have concentrated on being a great leader of just one company. It’s too late for that now though, so finding himself in this situation, what would he do? I would suggest that he would probably resign from the second company. You would be doing them a favour, as you can’t really take proper decisions for them if you are never there. People in your own company need to see you around.

By the way, undoubtably many people’s advice will be “talk about the problem with the second company” but you need to think how you would react if one of your non-execs came and said “I don’t think i have time for this anymore.” You would tell him to either say straight out that he is resigning or to shut up. I assume that you mean there is an endless number of board meetings - whether they last one hour or two hours makes little difference as you are not free for your own company for a whole morning or afternoon unless the companies are in the same building.

By the way, I agree the timing is bad, but there is no other option.
Posted by: Samec, 30 | October 23rd, 2008 at 9:38 am | Report this comment
Few companies are recession proof but if you’ve got irate shareholders there’s obviously something you’re doing wrong. If your NED co is also in trouble - well maybe you’re not actually that good?

In which case I’d do the employees of one company a favour and resign on grounds of ill health.
Posted by: AJ | October 23rd, 2008 at 10:34 am | Report this comment
Interesting in this case that recuse is an anagram for rescue. Formally stand down from board meetings and votes while not foisting the embarrassment of a resignation on your second firm. Otherwise your stress may be compounded by liability from failure to focus.
Posted by: Alan, 59, male, capital markets consultant | October 23rd, 2008 at 12:02 pm | Report this comment
It sounds like you need a holiday, or at least a long weekend away.

Non-executive directors are supposed to keep an eye on the big picture, not spend hours and hours doing crisis management.

CEO are supposed to be operational but should have capable staff to burn the midnight oil. The CEO is supposed to set the questions and arbitrate the decisions, not try and work it all out himself (or herself).

If you carry on this way you will let everybody down and work yourself into rehab.
Posted by: Chris J | October 23rd, 2008 at 1:57 pm | Report this comment
Maintain an air of uncertainty about your business. Admiration for the new is what bestows value upon the accomplished. To play with cards exposed is neither useful, nor in good taste. Create anticipation by not declaring your purpose, and especially where the height of your office command public attention display a bit of mystery about everything, and by it further the respect in which you are held: even when you show your hand escape the obvious; just as in the daily round you do not disclose your inner self to everyone. A prudent silence is the sacred vessel of wisdom. Purpose declared was never highly esteemed and commits itself to criticism in advance; and should it fail, the misfortune is doubled. Imitate, therefore, the ways of god in order keep those about you watchful, and alert. - Baltasar Gracian
Posted by: Brian | October 23rd, 2008 at 2:26 pm | Report this comment
Firstly be careful. If you breach your fiduciary duty to either company as a director you can become personally liable to the shareholders. It sounds as though you are coming close to that with the second company (particularly if it is close to or even already insolvent).

You should take personal legal advice (you don’t want your home on the line if it is not already), and probably you should resign the non exec position – but that is for the lawyer to advise you. At least ensure you have a large amount of insurance in place to protect your personal position.

Kevin, 43, male, director
Posted by: kevin | October 23rd, 2008 at 2:55 pm | Report this comment
I assume that you are not a shareholder of the company in which are the CEO. If you are, do give up the CEO role and make sure a competent chap becomes CEO, else you will lose out as a shareholder. If you are not a large shareholder, do stay put (until you get fired) and do the best you can. In any event, you must quit from your role as a non-exec. www.winnowed.blogspot.com

Male, 34, Lawyer,
Posted by: Vinod Joseph | October 23rd, 2008 at 4:37 pm | Report this comment
If you had 2 children with 2 different women and both of them grew to exhibit a nervous twitch I would say that you carried the gene. Similalry with you predicament. It appears (and you leave much to be assumed) that the methodolgy and practices that you imbue may be affecting both companies. You have 2 crisis of similar proportions and the common factor in both instances is you; the economy is a corollary to the problem no the cause. The choices a. Leave the one that is most apt not to survive the crisis so that you will not be blamed for its eventual failing b.) take a step back in both instances to see if your actions are part of the stimuli for current stae of both firms. Unfortunatley you appear to be the universal link to both situations
Posted by: Allan Howell | October 23rd, 2008 at 6:21 pm | Report this comment
I don’t know to what extent you can be said to have responsibilities to both, so if that truly overrides things, disregard the following: Make sure that you’re not actually enjoying this, because I could be forgiven thinking that you’ve got a little Atlas in you. Then find out what clauses exist in your non-exec contract for getting out due to other responsibilities, and find a way out. If it’d help, find a successor for the non-exec, but if you don’t you’ll lose both soon.
Posted by: Kyle, Consultant, 27 | October 24th, 2008 at 12:37 am | Report this comment
Rather like politicians who seem to believe they are so hard pressed they need more reward, but miraculously seem to be able to have two or even three jobs, you as a CEO and NED have the same problem. I wonder how tolerant you would be of a low ranking employee who came and said they were struggling balancing their full time job for your firm and another job with different firm.

Give us all a break, resign from both posts and go find some grace, humility and a little less avarice and try living in the real world. In the meantime stop whining about a self imposed challenge.
Posted by: Tim | October 24th, 2008 at 9:16 am | Report this comment
Perhaps you should concentrate on doing one job well instead of doing two jobs badly. Quit the one which pays you less or gives you less satisfaction.
Posted by: Anthony Blacker | October 24th, 2008 at 9:21 am | Report this comment
Apologies for the cynicism, but this problem may not exist on Monday as one or both of the companies may have collapsed given the speed at which the financial world is disintegrating.
Posted by: Out of the box | October 24th, 2008 at 1:53 pm | Report this comment
Non execs refuse accounts and fire/hire CEO’s. They are not executive managers (it says it in the name).

If your vanity (I think a lot about vanity) outweighs your wish to be a good professional, fire the other CEO. If you want to be a good professional, quit the non exec job - it should be held by a retired person anyway.
Posted by: Soarintothesky | October 24th, 2008 at 2:27 pm | Report this comment
When your employees have some kind of conflict schedules on different projects and come to you for advices, what usually do you say to them?

I am surprised that a CEO does not know what to do here.
Posted by: Z, male, 30 | October 24th, 2008 at 7:00 pm | Report this comment
You can be an energetic workaholic, doing your work 24/7, but, for sure, work seems to have caught you and it will deflate you.

Do not be Bransonian: airlines, lodges, Virgin Coke etc.

You will later in life that there is nothing wrong with sticking to one task and be a non exec. director at over 10 companies and give attention to only one organisation
Posted by: Mutimba | October 24th, 2008 at 7:09 pm | Report this comment
Sorry, my spellchecker had packed up:

You can be an energetic workaholic, doing your work 24/7, but, for sure, work seems to have caught up with you and it will deflate you.

Do not be Bransonian: airlines, lodges, Virgin Coke etc.

You will discover later in life that there is nothing wrong with sticking to one task and be a non exec. director at over 10 companies and give attention to only one organisation
Posted by: Mutimba | October 24th, 2008 at 7:12 pm | Report this comment
Thank you for posing a question that always bothered me. How can people dedicate all the time and mental resources required by a full time executive position and still have one or more board memberships, play golf and have a life. I am curious about the answers.
Posted by: Haim, Male 49, Entrepreneur | October 25th, 2008 at 1:38 am | Report this comment
Not to mention any names, but people run whole countries without working evenings and weekends (no comment as to their effectiveness). My point is that executive positions require time management skills and the ability to delegate, without which you will always be stressed. My advice is to invest in some skill building. If you remain oversubscribed, make a business decision about what to cut.

On another topic, I enjoyed the Mary Poppins article immensely. By the way, what IS the name of his other leg?
Posted by: David, 55, #1 Facebook Kellaway Fan | October 25th, 2008 at 4:56 am | Report this comment
I’ve been in a similar situation and can understand your difficulty. In my case, many years ago, it was simply a matter of working out with the chairman which meetings were essential. While the UK may be different, most US most public companies carry “D&O” liability insurance to cover directors and officers against lawsuits from shareholders. I, and many other private investors, make sure that companies have this coverage before sitting on their boards. The only hitch is that your fiduciary irresponsibility must be due to negligence—if it’s intentional, you could be on the hook.

Your own business obviously comes first, so perhaps you can come to a private agreement on what’s “negligence.”

Chief executive: good luck to you; these are trying times.

Lucy: try to pull more of these sorts of questions out of your magic bag. Mary Poppins would approve.
Posted by: Investor, male, 51 | October 25th, 2008 at 8:18 am | Report this comment
Stop being so arrogant and assuming you are indispensable.

Cemetries are full of of indispensable people
Posted by: william rodgers | October 27th, 2008 at 1:42 pm | Report this comment
A non-exec should not be sitting in endless meetings - talk to the second company’s CEO and tell them either they get a grip or you’ll have no option but to suggest they stand down. Then close your own office door, switch off the phone and ask yourself how you would answer that question to your own NEDs. If you can’t answer that question, ask the Chairman for an immediate meeting - one 2 one.

btw - you don’t get to hear about Mr Bata (senior) that often … were you in the company?
Posted by: Stuart, 43, Associate Director, London | October 27th, 2008 at 2:34 pm | Report this comment
Resign from both positions.
Nobody needs a leader who does not even know what to do with his working hours in these tough times.
Best
Posted by: Nicola, Male, 26, Lawyer | October 27th, 2008 at 8:50 pm | Report this comment
I wasn’t in Bata - except for ten minutes to buy a pair of shoes. Anyway, Bata senior died almost half a century before I was born. I came across him while looking for a local example for a business course.

Most of the stuff actually worth reading about him is only in Moravian as far as I know, which is a big shame because some of the stuff he wrote himself about the early twenties financial crisis and how he dealt with the overnight trebling in value of the currency and consequent disappearance of his export markets makes inspiring reading during the present crisis - even if there isn’t much currently-implementable policy. The focus on responsibility to others - particularly employees and management’s showing of character being later rewarded is really important. Also his attitude to debt formed by learning from his mistakes in the 1890s is worth looking into.

That’s where our manager who asked the question needs to draw inspiration from. He should lead his own firm with character, only lay people off if absolutely necessary (not just economically desirable right now), and be seen to do be at it day and night. He will then be well-positioned to benefit from the recovery when it comes.
Posted by: Samec, 30 | October 27th, 2008 at 9:11 pm | Report this comment
Sorry forgot to add “And, that is why he should drop the sinecure at the other place that does nothing for his company or his employees.”
Posted by: Samec, 30 | October 28th, 2008 at 8:07 am | Report this comment
Your voluntary retirement from one or both, seems to sum up the responses above! A bit harsh since I assume your pension is not worth what it once was.

Stick to your knitting, give up the part-time role!
Posted by: Ian | October 28th, 2008 at 1:45 pm | Report this comment
An element that no one seems to have touched on yet is, Why did you want to have the non-exec position in the first place, and why do you seem so desparate to hold onto it? My (albeit inexperienced) perception is that you obtained, and want to retain your non-exec role, as a road into becoming a professional director in the future. This thought would naturally extend to suggest that if you forfeit your current non-exec position, in the future you might be passed over as having “dropped the ball” previously, not able to hold up under multiple responsibilities, etc. My guess also is that it’s rather hard to get your first directorship, and once you have it you don’t really want to go back to needing to work your way back into one again.

If these are your thoughts, may I suggest the following:-
1) If you stay on in both your current roles, both will suffer, and poor performance as a CEO is likely to be viewed as less acceptable than poor performance as a non-exec director (what “perfomance” can you do as a non-exec anyway?)
2) If you stay on in both roles and the second company goes bust, you’re not likely to get another directorship anyway
3) Resigning from your non-exec role to focus on your CEO role during a crisis period is likely to be seen as a wise move (or at least it should be justifiable on your part, especially if you pull your company through) when you are plugging for that next directorship in the future; the converse could also be true - who wants to hire a director that has shown a propensity for over-commitment and is therefore unlikely to be mentally present when the company needs you most?

Ultimately this is a balancing act - you need to weigh your ability to see both roles through the crisis against the severity of downside risks in either case. From what you say you can’t do both roles, and the downside risks are pretty big.

Benjamin, 25, male, Investment Banker
Posted by: Benjamin, 25, male, Investment Banker | October 28th, 2008 at 2:21 pm | Report this comment
If you were a woman I would probably advise you to do the sensible thing and take the afternoon off to have a massage, pedicure and buy some new shoes. You might even need a handbag too from the stress you seem to be under. You’d be surprised how pampering and retail therapy can clear the head and make a difficult decision easier.
Posted by: Lydia, 38, Fund Management | October 28th, 2008 at 3:45 pm | Report this comment
It sounds to me like you have been living a classical fat-cat life, whilst times were good and business was easy. Now that you are being challenged, you find yourself wanting, to put it bluntly, inadequate. Rather than catalogue all the things you should have done to prepare for what is going on now, I suggest you resign from both positions and take some time out to devote to personal development, including study, leisure and thought. You should only return to practicising on other peoples’ lives when you can organise your own. It may seem harsh, but you have serious responsibilities as a Director, whether exec or non-exec. Accept it.
Bill, 57, Business Adviser
Posted by: A65Bill | October 29th, 2008 at 2:44 pm | Report this comment
Be very careful that you are not capable of being accused of running a business which is traing illegally. I would be bringing in an interim turnaround manager to sort the mess out as quickly as possible. This person may make the decision for you by firing you and your meeting hungry directors on day one.
Unless you have some equity in the business quit whilst you CV is still capable of securing you a new position.
Posted by: Kevin Parkin, Male, 57, MD, Manufacturing | October 29th, 2008 at 11:01 pm | Report this comment
Dear Chief Executive:

This advice in no way constitutes legal advice. With that being said, you are functioning as a dual agent. An agency relationship exists when one party agrees to allow another party to act on behalf of him or her and the other party agrees so to act. As a CEO you are an agent of the corporation and its shareholders. As a non-exec you are an agent of your employer. In other words, you have agreed to act on behalf of these parties. The agent faces the fiduciary duty to act in the best interests of the principal without regard to the agent’s best interests.

First, you need to seek legal advice to determine whether you have disclosed your dual agency to all parties to whom you owe a fiduciary duty and have received their consent to act in your various roles. Second, you need to seek legal advice to determine your level of liability exposure. If you preside as CEO over a closely-held corporation, then your level of exposure increases exponentially if you violate a fiduciary duty listed above. Additionally, if you have made any guarantees on behalf of the corporation, your liability increases significantly as well.

Aside from the legal ramifications of your behavior, your time and abilities are constraining resources on both businesses, which limit the potential productivity of both businesses. Therefore, you will serve both companies better by getting off the fence and serving one master, not two.
Posted by: Boethius, Male, 34, JD/MBA Student | October 31st, 2008 at 1:17 pm | Report this comment
Take three months off. You’ve earned a good holiday. Give full delegated authority to your number two to run your executive job.

Tell you other board you’ll see them in twelve weeks.

If you think you cannot do that then you are the problem. You should be leading not working. Generals should not be fighting in trenches.
Posted by: Michael Reid | November 4th, 2008 at 5:55 pm | Report this comment
Appalled to see that Lucy is not sure what he means by the moral responsibilities, only the legal responsibilities.

Company directors have huge moral responsibilities to the people whose savings are invested in the company, the people who have turned down other jobs to work for the company, who have got mortgages and are expecting to be able to pay it off by working for the company.

As I said earlier, this is not computer football manager, this is about real people’s lives.
Posted by: Samec, 30 | November 16th, 2008 at 9:52 am | Report this comment