211–220 of 363 posts
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Why would investors vote for board members that waste their money?
Class solidarity.
Imagine a charity or pension fund that invests in a company. What incentive do you think they have to spend money unnecessarily on CEO compensation?
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Uh, I'm pretty sure BCG is in the first tier, and the others you mention are in the third tier, when it comes to the Scapegoat as a Service business.
I don't mean the tax/audit arm of those companies. They all do the generic management consulting. I left several off. Here's a market share chart: https://imgur.com/a/O1Urjkm
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It's also perfectly feasible for them to pay more rent for their stores, or pay their suppliers more for their products, but why would they?
The general idea is that if your workers are well paid and the store is well kept (if you would accept that "pay more rent" is generally the same as "spending more on the building") then customers will be more happy/satisfied and thus return more often, spend more, and recommend your store to friends thus increasing your revenue.
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Touches on an interesting point. I think the data input is highly unstructured and the output not very regular.
Sounds like the first step is figuring out a new standard to structure executive information.
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I'll second this comment. Armchair evaluation of CEOs suffers from survivorship bias. Decent/good CEO keeps the business moving. A bad CEO can sink a company. Boards/owners (dependant on corporate structure) can mitigate results.
> When you swap out somebody who does a decent job for another person who performs at about the same level it's not really that noticeable. Which interestingly is the same effect as swapping out somebody who does nothing for someone else who does nothing.
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I'll second this comment. Armchair evaluation of CEOs suffers from survivorship bias. Decent/good CEO keeps the business moving. A bad CEO can sink a company. Boards/owners (dependant on corporate structure) can mitigate results.
> When you swap out somebody who does a decent job for another person who performs at about the same level it's not really that noticeable. Which interestingly is the same effect as swapping out somebody who does nothing for someone else who does nothing.
Actually though, setting up and maintaining the organization so it can self manage is harder than it looks. Of course, some CEOs have good results with meddling too. It's hard to have two CEOs and A/B test them, although RIM/Blackberry had two CEOs for a while, and there's some other companies that tried it too.
I too used to think that CEOs were a waste of resources, and that they had minimal if any impact on most companies. But I think people grossly underestimate how important CEOs are, because the vast majority of them do a decent job. When you swap out somebody who does a decent job for another person who performs at about the same level it's not really that noticeable. That said, you'll come to appreciate those "decent…
I do agree, in German we have an idiom "Der Fisch stinkt vom Kopf her" ("a fish rots from the head down") to describe precisely how bad management cause ripples all the way down. That being said, CEOs are still prime candidates for automatization. I mean, surely nobody wants to replace good CEOs with bad software but rather with equally or better performing software equivalents. Additionally, one day it might be easi…
I'd be curious if it's merely an expression or a true thing about fish.
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And you have only one CEO - so their comp is expensive, but not hugely expensive relative to total org costs. Apple has Tim Cook. In terms of investors evaluation of his ability to generate profits - let's say apple is going to do $400B in sales, and you think Tim's approach over time will yield a 3% improved margin. Is he then worth $12B/year? CEO's have enormous influence on a companies direction. Investors will au…
Walmart's annual profit is ~$130B so what I'm seeing is that yes in fact it's perfectly feasible for 1.6M Walmart employees to get a $40K/yr raise.
Companies like Wal-Mart generally have low profit margins, because there's not much of a barrier of entry and no valuable brand or intellectual property.
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Careful what you wish for here. I suspect that if an AI can replace the job of a CEO then all other jobs will be gone as well.
The fact that the western society finds job automation to be a danger (or dystopian) is an indicator that something is severely dated at best--or dangerously corrupt at worst--with our economic system. Such a thing would be a utopian outcome. If this kind work can be automated in a humane way, then the vast majority of work can be automated. That means people can be freed to spend every waking moment on art and play.