Herbert was already working for the QRU as their chief commercial officer, but has been moved back into the rugby department having served as the team's general manager in 2009 and been involved in the championship-winning 2011 campaign.
The decision to keep Graham on board is likely to upset many of the Reds' fanbase, but chairman Rod McCall said he was confident the new structure would give him support he'd been missing in the last two years and allow him to focus on winning games.
"We feel the appointment of our first executive general manager to oversee our performance rugby department will bring us into line with best practice and allow us every opportunity for success," McCall said.
McCall said the panel responsible for deciding on the new coach considered more than 20 applicants from Australia and overseas, but concluded that Graham was the "right man" for the job.
"We fully understand that the results of the Reds over the last two seasons have been unacceptable, however we feel strongly that Richard is the right man to lead us into the 2016 season under this new structure," McCall said.
Graham will also serve as Queensland's defence coach next year with the QRU yet to appoint an attack coach.
"I am humbled by the opportunity to coach this team again in 2016," Graham said.
"As a squad we will not tolerate any excuses that compromise our preparations or performance in order to achieve success in 2016."
Herbert will be supported in his role by new head of pathways and list management Sam Cordingley.
The announcement follows a series of other recent coaching staff appointments, including Nick Stiles as senior assistant, dual international Brad Thorn as a forwards development coach, Damian Marsh as head of athletic performance and Cameron Lillicrap as head physiotherapist.
-AAP
