Don’t let chairs get too comfortable

Titles in investment banking carry weight, but few have more ambiguous heft than ‘chair’, ‘vice-chair’ or ‘executive vice-chair’ of a division.

These roles look impressive on business cards and pitchbooks, but their value to the firm depends entirely on who fills them and how expectations are managed.

At best, they free experienced bankers from bureaucracy to focus on bringing in business. At worst, they create a costly layer of semi-retired executives who add their names to deals they didn’t originate. They can be an extraordinarily expensive luxury.

The rationale is straightforward. A senior banker who has built a strong franchise may no longer be the optimal person for the grind of daily leadership of a business. The bank may want a fresh chief to take performance to the next level. And to retain the best up-and-coming managing directors in a group, it may be essential to promote them to run it.

But at the same time, the firm does not want to lose the benefit of the outgoing team head’s skills, experience and contacts. A title along the lines of chair of global capital markets or vice-chair of EMEA investment banking can give the person kudos and seniority, allowing them to stay with dignity, while being stripped of management responsibility.

It is not necessarily a bad deal for the outgoing team leader. After a few years at the top of a business, and realising that she or he may not be likely to move much higher up the ladder, the banker may themself have become fed up of management.

Stepping aside has become less unattractive since investment banking grew increasingly bureaucratic since the 2008 global financial crisis, with less discretion afforded to senior leaders. Many group heads find themselves with titles but limited decision-making power. Management often devolves into tedious box-checking — it’s no longer a vehicle for exercising real organisational influence.

Rather than push these senior bankers into retirement, banks can give them elevated titles, remove their admin duties and hope they channel their energy into client relationships and business development.

When it works, it’s a smart play. The banker, freed from meetings and memos, becomes an origination machine, leveraging decades of connections to land mandates. Meanwhile, the new division head can run the team without a former boss looming overhead.

But these roles carry a premium cost that demands premium performance. A chair or vice-chair can command nosebleed compensation. Problems emerge when banks don’t set clear performance expectations.

Unlike junior bankers, whose contributions are quantifiable, senior figures often operate with vague remits. Some justify their pay through deal flow. Others coast on their reputations, assuming their presence adds value.

In today’s environment, where clients choose firms for sector expertise, balance sheet strength and relationships with key sources of capital, that assumption often falls flat.

The arrangement has a lot of pitfalls. Unless senior management imposes clarity and discipline, the chair or vice-chair can become a glorified interloper, a rent-seeking apparatchik of the worst sort — swooping in to claim credit for deals they barely touched, frustrating the junior team that did the work.

Some even treat the role as a sinecure, sending the occasional email or joining calls without doing the hard graft that every pitch and deal execution requires. Sometimes they show up for the pitch and then disappear for the rest of the project.

This saps morale and can push talent out of the door. Nothing demotivates a team faster than watching someone swan in on title while others grind. Nobody wants to work with a senior who ‘gloms’ on to wins and dodges losses.

It’s not unlike the ‘designated hitter’ in major league baseball. The DH doesn’t field; they have just one job. Their job is to deliver at the plate. Likewise, senior bankers in these roles must bring offensive firepower to justify their place in the line-up.

No baseball team carries a DH who hits .220 with no power — and no bank should keep a chair who doesn’t drive revenue. You want home run hitters with a high slugging percentage.

Banks that create these roles must be clear and firm about what they want from them. Is the chair meant to drive business or are they being sidelined? Are they accountable for revenue, or is the role symbolic?

Without clarity, the title becomes a figleaf for indecision, a way to avoid hard conversations about succession and performance. A well known name on a pitchbook might impress in the short term — even that is pretty rare, as clients are increasingly blasé about reputation — but the long term cost of internal friction often outweighs any temporary benefit.

The best chairs and vice-chairs adapt. They go beyond the concierge service of door-opening and act as strategic advisers who can navigate internal systems as effectively as external ones.

In fact, one underappreciated skill is their ability to unlock internal resources. Where a younger MD might hit walls securing financing for a client, a well-connected chair can cut through red tape with a few calls. This internal leverage can matter as much as external schmoozing.

The outperformers in this class also understand the deal: they focus on high stakes pitches, key clients and decisive moments where senior presence makes a difference.

Banks strive to strike a balance. They want to retain experience without letting it become dead weight. It’s incumbent on them to ensure that chairs remain engaged, accountable and aligned with business goals.

Because in banking — as in any competitive industry — a title only matters if the person behind it contributes.