I first encountered this dilemma over 20 years ago when I was wearing two hats in my own company. In this article, I will explain why separating the roles and compensation of a CEO and a business owner turned out to be not just useful, but vital, and what mistakes entrepreneurs make most often when trying to combine these two functions.
In reality, it is very simple: a CEO should be paid the same salary you would pay a hired CEO in that position. At the same time, financial management within the company must be organized in such a way that dividends, which reward the owner for their work, are regularly distributed.
It is important to understand: these are two completely different types of activity.
Two Different Jobs — Two Different Rewards
The first job is the CEO’s job. This involves managing department heads, planning, strategy execution, and operations. Figuratively speaking, the CEO is the person who squeezes the absolute maximum out of the existing technologies, resources, marketing, and everything the company already possesses.
Read also
The second job is the owner’s job. This is activity focused on long-term strategy, the future, attracting investments, and ensuring the company develops new products, new technologies, and new growth directions. This is an entirely different job that requires a different approach and a different form of compensation.
How I First Built Such a System
Around 2002, I faced this issue for the first time while building the management system for my manufacturing company, Heroldmaster. Once we established financial management, we ended up with a system where specific amounts were set aside every week. One portion went into stable reserves, and another went into a profit-based compensation fund.
This was the only way to build reserves and earn rewards for economic growth—by making it a mandatory expense, just like taxes, rent, and other corporate obligations.
We started operating under this system, and soon the key question arose: what salary should I pay myself as the owner who is also acting as the CEO? My business partner and I decided back then that we should pay ourselves salaries as specialists.
For instance, if a competent CEO for a company of our size cost 1,500–2,000 per month on the market at that time, that exact amount was what I set as my salary as CEO. The rest of my compensation I received as a co-owner, for everything I did to develop the business.
What the Separation of Roles Achieved
This approach worked exceptionally well. I realized fairly quickly that it was far more promising and interesting for me—even in terms of personal growth and financial interests—to focus on helping the company grow faster so that dividends would increase.
After a while, I hired a CEO. Hiring one turned out to be much easier because a clear system was already in place: a predictable salary, role, and set of responsibilities.
Why Combining the Roles of Owner and CEO Is a Mistake
When someone combines the functions of an owner and a CEO, they end up doing the CEO’s job poorly. It is physically impossible to perform both roles at a high level.
There are only so many hours in a day. To perform the owner’s job—focused on strategy and development—one must spend a significant portion of their time on it. But doing so inevitably compromises the quality of their work as a CEO.
If a hired CEO were in place, devoting themselves entirely to management, they would perform the job much better. Therefore, a situation where a company owner serves as its CEO can only be justified for a temporary period. As soon as the opportunity arises, you must phase it out.
Research by Chinese scholars published in the scientific journal Frontiers in Psychology confirms that combining the roles of owner and CEO reduces business efficiency. The study of over 300 entrepreneurs in China showed that business owners who combine strategic management, operations, and team development experience role overload. This state leads to decreased concentration, heightened stress, and lower-quality decision-making. Researchers point to delegation as a key tool that allows the owner to step out of day-to-day operations and regain focus on the company’s strategic growth.
There is another reason. By nature, an owner is motivated to constantly raise the bar, create something new, scale the company, and push it forward. A CEO, on the other hand, is interested in keeping processes stable and avoiding excessive disruption. For a CEO, every innovation represents a challenge and an additional workload.
Consequently, when the same person combines both roles, they inevitably become inefficient as both CEO and owner.
An Internal Conflict of Interest
When I am in the CEO role, I frankly do not want to hear about the owner’s ambitious plans because I know that, as the CEO, my workload will skyrocket.
And when I act as the owner, I realize that I will be the one having to execute all these plans later as the CEO. As a result, I start holding myself back, stifling my own creativity and initiative.
This leads to a situation where I simultaneously harm the company’s future and its current operational efficiency. That is why this habit must be abandoned as early as possible.
How to Break Free
The simplest way is to implement a management framework and hire a CEO. This allows the owner to manage through a system rather than through constant personal involvement.
When a proper system is built, real magic happens. The owner looks at the CEO managing the company and suddenly realizes how many untapped opportunities exist within the business.
They realize there are dozens of growth directions they simply had not noticed before. Time, energy, and creative drive reappear. It feels as if a whole new world, a new life, and a new future for the company are opening up right in front of them.
And this happens not because the person changed overnight, but because they finally stepped out of day-to-day operational quicksand. Having gained the time and energy to look at the business from the outside, they can now fully unlock and realize their potential.
I believe this is the ultimate goal of an entrepreneur’s development—not just to make money, but to reach a level where you can manage the business as an owner and create real value rather than constantly putting out fires.
Alexander Visotsky
