I am quite sure someone about as competent would do his job for far less. I got this feeling the higher you go the less skill based recruitment is and the more connections and friends matter.
I'm not sure if that small margin matters for running a major HMO, but I could imagine it does. And that small margin might just be having connections and friends. Maybe having those connections and friends is that extra value proposition that a good CEO brings.
As a layperson, it seems like the research is mixed as to whether a specific CEO really matters that much to the bottom line. Despite the inconclusive evidence, though, they sure get paid well like it's a given that they really, really matter.
https://chiefexecutive.net/higher-ceo-pay-produce-better-com...
"compensation arrangements are endogenous and correlated with many unobservables, measuring their causal effects on behavior and firm value is extremely difficult"
Frydman, C. and Jenter, D., 2010. CEO compensation. Annu. Rev. Financ. Econ., 2(1), pp.75-102.
That’s fact not feeling. There are very few positions at the top and an oversupply of skilled people willing to fill them.
It becomes a matter of getting favored by the right people…sure executives put in the work but impressing the right people at the right time is how one progresses in the upper echelons.
On what executive mishire can cause just look at recent events at Flexport. It takes 1+ year to understand that executive is failing and course correction is extremely expensive and disruptive.
Now we hire straight in from B-schools at VP or director level, and one of those ends up CEO eventually (if a CEO's not simply hired from outside, directly).
This practice seems to have dramatically increased the cost of executives. I wonder if it's increased quality.
[EDIT] OK not straight from b-school, they have to do a stint in management consulting or whatever first. Because having that be something that the totally inexperienced do makes complete sense.
Ironically, I read this as an indicator of a bad leader and one who doesn't deserve high pay. A good leader should be regularly training their underlings to make sure there are as few hiccups as possible if they get hit by a bus.
I do agree that assessment is less skill based at those levels, but that is largely because the job is not hard skill based. That doesn't mean the person doesn't matter or that they are interchangeable. No one but Steve Jobs could've turned around Apple for example.
/s