It’s interesting to me this doesn’t self correct. I’d love to know if someone can explain why.
E.g. presumably companies can pay people more if they capture less value themselves. Why can’t a company do that and just hire the best talent?
E.g. presumably companies can pay people more if they capture less value themselves. Why can’t a company do that and just hire the best talent?
Ironically, one of the few places I've seen that actually rewards employees for going above and beyond regularly is Walmart. Entry-level staff who can rise through the ranks with exceptional work can turn from low-wage line workers to store managers who are often paid close to $250k.
But many businesses are just optimizing for lowest labor cost when it comes to their main workforce. That's where you see the arguably exploitive situation above.
Same company, same employees.
The only difference was leadership.
Consider also what happened to MSFT when Nadella took over. Same company, same employees, dramatically different results.
As a shareholder of Microsoft and Apple, I am happy with their CEO compensation. They earned it. And after all, CEO compensation comes out of the pockets of the shareholders, not the pockets of the employees.
That's quite the leap though, and is just confusing correlation and causation. Maybe the previous leadership was simply getting in the way of the engineers and managers that had the good ideas. And the new leadership was more hands-off, or focused in other areas like marketing. Or those cases are just flukes. For every case like the ones you cite, I could find two where the exact opposite happened.
If you're downing a shot of vodka every morning, and suddenly stop, then yeah, your health is going to improve.
In my opinion, many (if not most) of these CEOs are business-focused people with no technical (or even non-technical) knowledge of anything they purport to manage. And on the whole, they really don't affect the value of the company one way or the other.
There's this certain anti-historical proclivity to create heroes for worship. Because it's a simple story to tell and it gives you the opportunity to put yourself in the hero's shoes. But the simple story is almost always wrong.
Not really. There are a lot of external factors that could explain the difference in the company's performance. Different time, different customers, different overall market strength, different availability in capital, different interest rates. You can't pin the company's success or failure entirely on the CEO, and there is not that much correlation between CEO compensation and company success.
I think a lot of people could do Nadella’s job and you’d see similar company performance. In fact I’d be so bold to say that the higher up on the totem pole you go, the more people could do an equal or better job. The world has few CEOs simply because the world has few companies, not because the job is particularly difficult or requires niche, rare skill.
We love to hero worship, though, and the fiction we consume loves to uplift That One Person who won the day, downplaying everyone else who contributed to that win, and the environment in which the win happened.
But without that guide, I would have destroyed Apple. I'm just not that good.
Being dumb luck seems highly unlikely.
If you can show me an incompetent CEO who presided over such success, I'd enjoy hearing about it.