Well, you certainly could, but for that assumption to work, you’ve got to assume that this figurehead you want is one charming motherfucker, more charming than the most charming individual you have on your payroll.
I can see the logic with either form. I don’t endorse grossly overpaying them either.
The only reason execs get so much is not because they are worth it, but because everyone in upper management has a greeedy personal interest in keeping all the salaries high.
This is the same as salaries of movie politicians, movie producers, sports teams, etc. A sport team management wants high player salaries so their own salary will go up.
A rising tide raises all yachts at the expense of the hardworking scows and tugs.
Evil Captor: You have a lot of brilliant business ideas that you like to tout here on the SDMB. Why don’t you put some of them into practice and make yourself rich instead of bitching here about how everyone else is doing it wrong?
Just thinking about my little company, IBM. The CEO is the guy who decides whether or not to sell off the PC business for a billion dollars, or keep trying to make money there. The CEO decides whether or not to pursue X technology vs. Y technology. The CEO determines the strategic vision for the R&D department. The CEO is the guy who decides to invest 6 billion in a new manufacturing plant. The CEO decides how strongly to pursue Services vs. Hardware. The CEO is the guy who decides whether or not to breakup the entire company and sell it off piece by piece.
These sorts of decisions are the cornerstones by which the company runs. They determine the ultimate success or failure of the company. Making the wrong decisions gets your company’s value cut by 3/4 and talk of breaking the whole thing up. Making the right decisons increases value by 5x in 5 years, bringing the company back from the brink of destruction.
These are not decisions made by the data, they’re made by men with vision. These are the decisions that separate Toyota from Ford. Maybe they are overpaid, but don’t kid yourself into thinking they are just rubber-stampers.
But if he did that he’d have to hire people, and then he’d be a manager.
Naw…he’d form a workers counsel with all the workers and peasants and they would make decisions jointly. After all, managers don’t actually DO anything, simply take the information from the good workers and peasants and then take the credit for making ‘decisions’ that any fool, looking at all the great and clear data could make. I’m sure Evil’s company would shoot to the top of the charts, don’t as well or even better than those efficient companies…marvels of the business world…who used this exact same methodology in Russia and China before evil capitalism corrupted their perfection.
I’m sure the only reason Evil and his brilliant ideas doesn’t rule the world is that the bad capitalists are in fear of him, and keeping him down by not giving him the venture capital he needs in order to become the obvious master of the business world that is his destiny. (obscure Rand reference) If only someone would GIVE him a company…
-XT
What would change your mind, or at least convince you that you should reconsider your position?
Hey, I’m all about comforting the afflicted and afflicting the comfortable, baby.
I can testify to this based on immediate ongoing experience.
I work at a technology company you’ve all heard of. We’re currently struggling through a period of weak executive management, though of course nobody is publicly admitting that’s the problem. The original entrepreneurial founders have all cashed out and left the company, and the board has chosen to replace them with a bunch of bean counters, i.e. risk-averse people with strong financial backgrounds but zero leadership skills, zero long-term vision, and zero ability to define a mission toward which we can drive. They’re good at managing the balance sheet quarter to quarter and maximizing immediate returns but there’s no collective sense that we’re working toward anything. The message we’re getting from the top is, “Do exactly what you’re doing, but do it cheaper and faster, and keep us posted. And if you have any proposals for improvement or innovation, feel free to send them up the line, but we don’t promise to act, let alone pay any attention.”
The result has been a long, slow slide into organizational mediocrity. The majority of the idea people have departed; most of who’s left are castoffs from other technology companies. Our biggest initiative right now is a multi-year project to review, update, and polish our core legacy product. I, personally, am no longer a contributor to anything: I’m a button-pushing monkey, waiting for my stock options to finish vesting. The few high-quality people still here are in the same boat.
The worst part is, because there’s no sense of direction, all the mid-level executives have turned into a bunch of isolated warlords, pursuing their own discrete initiatives, more or less by whim, and fighting with, and actively working to sabotage the efforts of, the other executives. The folks at the top aren’t aware, or don’t care, because there’s enough regular cash flow that the company isn’t at serious risk of failure over the next five years. Our stock has slipped to half its value compared to three years ago, but has stabilized at that point; we’ve gone from a sparkling “buy and hold” symbol to a buried-in-the-middle-of-a-long-paragraph “churn and burn.”
Don’t be confused by the large number of middling-to-bad executives and senior managers (remember Sturgeon’s Law); I am seeing firsthand the difference when good leadership is lost and crappy leadership takes its place. While the latter is not worth the obscenely high salary, the former absolutely is.
A complete reversal of my understanding of human nature. Don’t hold yer breath.
So, for a nice hijack, what would be the recipe for success in your company?
Why bother attempting to ‘debate’ a subject that you obviously don’t have any clue about AND you have a closed mind on as well then? I don’t get it. 
-XT
At least I know not to bother debating with you any more.
Huh. And I thought it was a pretty fair question. But really, there’s no debate possible, then.
Size really does matter.
The tops and bottoms of hierarchical systems have more variability based on who the folks are, and what they are doing. But the middle levels get insulated by distance from the workplace/marketplace fairly quickly. I am not talking physical distance, but hierarchical distance. That grows with organizational size, except in cases where the top management really works very very hard at preventing it.
I have a boss. My boss has a boss, and her boss has a boss. He has a boss, in another building on the same site. He has a boss in the same building he works in. (He had an intermediate boss until a few years ago, but he retired, and was never replaced) Ok, that is my Boss’s boss’s boss’s boss’s boss. He is the big boss, locally. He has a boss in another city, who is the assistant of the next boss, who has a boss in that same city, who also has a boss in that city. I think that last guy is the Governor. There might be one more link in the chain, but I don’t follow it all that closely.
Now, not one of these people is ever told that “You are a bullshit traffic cop. You direct the bullshit from the top down to the bottom, and the bullshit from the bottom up to the top. Try not to get any on you.” How many of you believe that the real facts of life would dictate that at least one of them should be so advised?
Oh, on weekends and holidays there are acting bosses in all but one of those spots. (The governor is expected to be Governor on weekends, and holidays.) They are acting bullshit traffic cops, at best. Well, actually they are bullshit storage technicians. No one decides anything on weekends.
Tris
What does human nature have to do with the ability or lack of ability of specific individuals to perform a certain task (being a CEO)?
It seems like you are saying that something in our nature causes all humans to perform about the same in the job of CEO, thus there is no premium to be paid for those that can perform the job better than others because nobody can do the job better. Is this what you are saying?
What about data, would that influence your opinion at all? Someone mentioned IBM earlier, are you familiar with IBM’s situation prior to Gerstners arrival and the situation when he left? It’s a pretty clear example of a job well done.
Ah, a great debate then, eh?
Is there anything at all any of us could say to get you to re-evaluate your belief that executives are over-paid do-nothings?
The difference between a good manager and a bad one is dramatic. Mid-level managers plot strategies for maximizing the utilization of labor. They are presented with decisions all the time, any one of which could earn or cost the company thousands to hundreds of millions of dollars. They interview people and have to choose which ones are worth hiring. They make strategic plans for allocating their resources over the next quarter. They manage teams of people, solve disputes, make purchasing decisions, re-organize departments to cut waste or improve efficiency, etc.
This happens even at the lowest levels. When I worked at Radio Shack years ago, there was a district manager who was almost legendary for his ability to generate revenue for the company. They’d move him into a district, and he’d start evaluating all the stores - figuring out which ones were low performing, and figuring out why. Maybe it was location, maybe it was the employees, maybe it was the store manager. He’d pour over the data, visit each store, spend a day or two in each one as a sales clerk, watching traffic patterns, and then he’d act. Sometimes it would be a matter of re-organizig where stuff was located in a store. Sometimes he’d shut a store down completely or move it to a better location. Other times he sent employees for training or would fire a bad manager.
He was also excellent at finding waste and improving process. He helped drive the elimination of paper invoices in favor of computer terminals. He’d come into a store and pour over its sales records, then examine its inventory, and re-organize the ordering process to get rid of excess product.
This guy got results. After he’d enter a district the sales numbers would see double-digit growth almost immediately. He worked his ass off, too. Instead of being home with his family, he’d be on the road visiting every store in his district. Repeatedly.
While I was there, the guy got promoted to regional manager, responsible for maybe a third of the country. I’m sure he got a lot more pay. Did he deserve it? Do you think he was just rubber stamping the decisions made by lower people?
In my current company, we are in the process of taking a huge technological swing, trying to build a new, radically different product from scratch. The whole project was the vision of one of our upper managers, who looked through the data and saw an opportunity that wasn’t being filled by our competitors. So he put together a software team of over 100 people to build it. It’s costing the company over 5 million a year, but if it’s successful, it could generate 100 million in revenue over a couple of years. That’s a huge risk. This guy put his job on the line - if it fails, he’s done for. If it succeeds, he’ll be a hero and in line to be promoted and be given the power to invest even more of the company’s money on projects that he thinks have value.
Steve Jobs took over a moribund Apple, and turned it around and made it hugely profitable again. How much is that worth?
Jack Welch didn’t just rubber-stamp what his minions gave him. He was a driving force in GE. He initiated the whole Six-Sigma program. He tore down bureaucracies within the company, flattened the organizational hierarchy, and instituted numerous organizational changes.
For example, Welch started a policy in which every GE sub-business had to be first or second in its market in terms of market share. Any one which wasn’t was sold off. This brought a lot of focus back to GE, getting it out of markets in which it couldn’t compete, and diverting resources into markets that GE had a proven track record of excellence in. The result was much higher profits, and a renewed sense of accomplishment throughout the business.
Far from ‘rubber stamping’ some analysist’s advice, you have to recognize that all of these businesses had their own executives, their own champions within hte company. They tried to rationalize their existence within GE. It was up to Welch to sort through it all and make hard choices. Had he been wrong, he would have been fired by the board in short order. But he wasn’t. He had an uncanny ability to see through the bullshit and smokescreens that all the little fiefdoms in a huge company like GE can put up, and figure out exactly what to do to make the company better.
The result was nothing short of a complete re-generation of a company that had become bloated, stagnant, and inefficient. Were it not for Welch, it’s conceivable that GE might not even exist today, or if it did it might exist as a mere shell of its former self like many other old-world companies that didn’t learn to adapt the way that GE under Welch did.
If anything, Welch was under-paid.
And by the time they make to the top, people like Welch have had to prove themselves with a long track record of making consistently good decisions alll the way up the corporate ladder. Lots and lots of people start on the bottom rung. But often they hit the limits of their skill, work ethic, intelligence, or judgement somewhere on the way up the latter and stall out. The best of the best move up to the next level. The cream of the crop rise to the executive level. By the time they get there, they’ve spent years and years proving that, when given the responsibility for managing resources, they can do so in efficient and intelligent ways.
Trust me, this ability is rare. In GE for example, they have an evaluation process that screens out only the top 10% of employees as being eligible for promotion. Of that 10%, open positions up the line will be filled. Then the next year, THOSE people are evaluated against their peers, and the top 10% of those may be eligible to move higher. By the time you’re up to level of business unit managers, you’re looking at people who rose through the ranks of hundreds or thousands of employees and demonstrated their superiority every step of the way.
And then if the business unit under-performs against what upper management thinks it should be able to do, the manager may find himself or herself transferred to another business at a lower level of responsibility, never to rise any further, or simply eased out of the company.
I have a friend who’s on the fast-track in management in a company like GE. He works his ass off. He’s never home. He’s either working late, or on the road visiting other units, or in management training somewhere. He’s one of the smartest guys I know. He’s got a knack for inspiring employees, and he’s got the balls to make big changes where he thinks they need to be made, rather than just keeping his head down and ‘rubber stamping’ what other people tell him to do. He’s already been promoted through management ranks threee times in the last five years, and probably now makes three to five times what I do. And good for him.
I’m sorry, but this is just so wrong-headed. The notion being brought forth here that everyone at a company like IBM is an empty-headed dummy with no ability to contribute while the CEO embodies all that is wise and good is ridiculous on its face. Everybody contributes. And it’s true, the Deciderer is the one who makes the company’s decisions and that can be critical, but there are people who provide him with data and research and so forth, and there are people in charge of critical areas of the company who keep it humming who are also important. As important as the Deciderer? Probably not. Ants to the Decider’s giant? Certainly not.
I think a person of average intelligence with a strong crew of managers with good staffs doing research could probably run a corporation quite well. A really strong CEO with a weak staff might not do so well (though a really good one would know enough to replace the weak staff).
Many of you seem to be confusing the fact that companies make money sometimes and lose them at others with the fact that they have CEOs. You’re like primitives running around saying, “We can’t depose the preist kings! They make the rain! And they make the river flood!”
Jeebus.
Read my post again. You’re dead wrong.