Co-head

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Co-head
kəʊ-hɛd (n.)

To appoint a co-head is to convey the impression one has overdone managerial responsibility whilst creating a vacuum of it. To be a co-head is to claim credit for the cake that is kept, and blame someone else for all the cake that is eaten.

A staple motif of corporate mis-management technique of the multinational, the co-head speaks to every conceivable weakness in upper management.

“Co-head is no head”

To appoint co-leaders of a division, or the firm itself is to settle a petulant inter-personal dispute that is, at best, only adjacent to the institution’s interest — but in all likelihood is positively hostile to it — by undermining the one thing such an appointment is meant to achieve: direct personal accountability. A sole head of business who presides over catastrophic loss may blame inclement weather, Brexit, or regulatory head-winds, but cannot evade the retort that managing external factors such as these is just the job she was empowered to do.

That dynamic changes should she share the hot-seat with someone else. If something goes wrong, there’s always a reason it wasn’t her fault. Her hands were tied; it was not her area; others were looking at it.

The greatest, most glaring example of this is at our old friends Credit Suisse, who found to their cost what happens when you have co-heads of prime services. For those without the stomach for a deep foray into hedge fund financing, you need know only this: prime brokerage generally splits into physical and synthetic components which are formally6 quite different but substantively the same; Europe and New York are major centres for prime services businesses. Now at the time a certain hedge fund blew up, trading synthetic products in the Americas causing Credit Suisse roughly $5billion in losses, the firm had co-heads of that business, one in the US and one in Europe. These men were duly summoned before the executive board to explain themselves. The one based in America explained that he was responsible only for physical prime services, so this was not on his patch. The one based in London said he was only responsible for European prime brokerage, so it wasn’t on his patch, either.

The only way a co-head arrangement could work is one that few investment bankers would entertain for a moment: that of partnership: joint and several liability, and therefore individual responsibility for the totality of any loss, and proportional sharing of any profit. This is, of course, to increase one’s vulnerability to one’s comrades in the service of the firm’s interests, and is not how the professional managerial class like to go about things.

Rationale

Purported rationales are to encourage a lean market inside the organisation for ideas, and to sort wheat from chaff. Pitting two young thrusters against each other is some sort of Spartan matriculation: one will emerge, soon enough, the other will expire in the cage in a mess of blooded feathers. This is how Goldman looks at it, anyway. Elsewhere, kinder places, it is a symptom of the failure to weed out senior players who have passed their use-by date, but no-one can

See also

• Co-calculation agent
• Cognitive dissonance
• Joint and several liability