The move by the founder and CEO Oracle Corporation (NYSE:ORCL), Larry Ellison, to appoint the two co-chief executives is seen by many analysts as a bold step towards the right direction. The two appointed to the new positions are Safra Catz and Mark Hurd.
The two bring on to the company a high level of job complementary skills necessary to see Oracle Corporation (NYSE:ORCL) rival other big software companies like the German SAP.
Safra Catz majored in finance and law, worked as a Wall Street banker for more than 13 years before joining Oracle in the year 1999. Her partner, sales oriented, Mark Hurd worked for 25 years at NCR Corp, a computer and ATM pioneer company, before joining Hewlett and Packard where he was the CEO for 5 years until 2010.
Bill Kreher, an analyst at Edward Jones however says that co-CEO structures are not ideal because most companies cannot do without the decisiveness of a single strong willed leader. However, he continues to say that Oracle Corporation (NYSE:ORCL) might just stand a chance with this structure because the two co-chief executives have worked together for many years and, practically, there may be no change in the way they work. Another key reason is that Larry Ellison, who now becomes the executive chairman, is still the person to make final decisions thus eliminating any possible confusion or frustration the two might face in future.
In agreement is another analyst, Stephen Ferris, a finance professor at the University of Missouri’s college of business. Together with his colleague Rodgers Chairs, they share the same idea that there will be improved functionality with the two co-CEOs. The two studied 30 companies with similar management structures and found out that the structure had a positive impact on the company’s overall performance. Stephen Ferris argues that the co-CEO model works just as well as the single CEO model though clarifying that the co-CEO model has the potential of better performance due to job complementation and skill diversity.
There hasn’t been any straightforward proof that a co-CEO system is better, but in a number of cases, where there are also checks and balances, such systems perform extremely well. It’s also believed that the unique working relationship between the co-CEOs also has a huge influence on the overall performance of such a system.
The two executives coming into Oracle Corporation (NYSE:ORCL) will therefore determine whether the system works for the company or not.
This article has been written by victor Ochieng.
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