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Many companies aren’t prepared to replace underperforming CEOs

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Re: Many companies aren’t prepared to replace underperforming CEOs

#81

Post by danaris »

hn_throwaway_99 wrote: post #10
fdgsdfogijq wrote: post #3

Theres no accountability above a certain level. In a stable business (am excluding new innovations), proving or disproving the performance of an entire org, let alone company, is extremely difficult. Individual contributors are much easier to judge, and thus live lives of sub-ordinance. Their inputs and outputs can be easily mapped. The trick of working, and thus living a nice life, is to rise to a level of plausible…

Wut? At higher level in an organization, there is a much greater chance that you will be fired for things that you really have little control over. Now, at the highest levels, the compensation usually matches this level of uncertainty, sometimes with golden parachutes as well, so if you are fired you're still sitting pretty. But, for me, I wouldn't define "a nice life" with having to deal with that much stress as hav…

With or without a golden parachute, nearly none of these people would ever have to work another day in their lives if they were willing to live a bit less extravagantly. (And we're not talking "beans and rice" here; we're talking, at worst, "only one fancy house, no yachts".)

Re: Many companies aren’t prepared to replace underperforming CEOs

#82

Post by ISL »

thesuitonym wrote: post #29
Apocryphon wrote: post #4

Random idea- has any corporation operated with something akin to term limits?

Seems like it would be a terrible idea. CEOs are already incredibly short sighted, neglecting long-term disasters for short-term gains. Sometimes it seems as though CEOs aren't able to see beyond the next quarterly earnings report. Having a limit would incentivize running the company into the ground to get the highest quarterly profit possible. What do they care? Someone else will be CEO next year.

It is possible to combine term-limits with a long share-vesting period in order to (potentially) reap the best of both strategies.

Re: Many companies aren’t prepared to replace underperforming CEOs

#83

Post by candiddevmike »

BlargMcLarg wrote: post #74
whyenot wrote: post #70

Earlier quoted context omitted.

Managing other people can be difficult, especially when you need to make decisions that are in the best interest of the organization (and its owners), but what may not necessarily be a popular choice among the employees you are responsible for. Often times "clueless leaders" actually do have a clue, it's just that their decisions have to consider other factors, not just what is best for you . It can really suck to be…

This gets said so often yet it doesn't necessarily align. Personal responsibility is pushed aggressively, too. More often, ICs don't get all the information. It's not about having a clue as much as information asymmetry. All those meetings should imply as much, anyway.

See any managers response during stand up: "in meetings all day, oh btw Blarg I need to talk to you about a release process". That's it? That's all you want to share?

Re: Many companies aren’t prepared to replace underperforming CEOs

#84

Post by Gibbon1 »

whyenot wrote: post #70
candiddevmike wrote: post #39

Earlier quoted context omitted.

I really think everyone under any manager/director/VP (directly or indirectly via skip levels) should be able to call a "vote of no confidence" and get them replaced with a majority vote. It's the only way to combat clueless leaders and raise issues like this.

Managing other people can be difficult, especially when you need to make decisions that are in the best interest of the organization (and its owners), but what may not necessarily be a popular choice among the employees you are responsible for. Often times "clueless leaders" actually do have a clue, it's just that their decisions have to consider other factors, not just what is best for you . It can really suck to be…

I worked one place where they brought in a new director who wasn't functionally competent. I have theories of why which are all probably partly true. Like he saw actually engaging and managing his division as a distraction from social engineering a lateral move up the ladder.

Eventually everyone under him in mass went to his boss and HR and told them flat out he needed to go. And the company did nothing for 18 months. And then just pruned him and the whole division of 25 experienced RF chip designers.

Re: Many companies aren’t prepared to replace underperforming CEOs

#85

Post by kennend3 »

MuffinFlavored wrote: post #64
mkl95 wrote: post #18

One of the C-level guys at my current company should have been replaced a while ago. He ruins everything he touches but he's also one of the founders. There are virtually no processes for anything which makes him untouchable. Whenever he fucks up, some PM or low level manager is fired due to their "low performance". Is there anything non C-levels can do about it? Honestly I don't think so, all you can do is avoid the…

> He ruins everything he touches but he's also one of the founders. Statements like this are always so interesting to me online from the "there's two sides to every story" perspective. Why not devil's advocate it and try to walk through life maybe not thinking in blanket statements? How can somebody who ruins everything be successful at all in life? Maybe I just have more to learn...

> Maybe I just have more to learn...

As someone who has been with large multi-nationals for a very long time let me give you some examples.

1) "failing up".

Sometimes you cant deal with your manager or the situation except to make them look good, and eventually they get promoted up and out of your way.

2) "Protected class"

Think "nepotism". Let's say that "B" doesn't do well, but he is very close to the "CxO". who in their right mind would fire "B"? We call this a "CLM" - Career limiting move.

Alternatively, lets say I hired my best friend.. How wiling am I to fire them?

If you are the owner/founder, it is really hard to get rid of them no matter what they do (Go read up on WeWorks).

Re: Many companies aren’t prepared to replace underperforming CEOs

#86

Post by jonathankoren »

The implosion of Facebook and Zuck's inability to stave blood loss, and instead bet the company on a niche product line with little interest and even less product should be a emperor's new clothes moment wrt founder stock having 10x voting rights, but I doubt that it will be.

The college dropout got lucky with a money printing machine. Not screwing that up, and purchasing every competitor is pretty easy. Now the business is hard.

Re: Many companies aren’t prepared to replace underperforming CEOs

#87

Post by danaris »

rogerkirkness wrote: post #5
fdgsdfogijq wrote: post #3

Theres no accountability above a certain level. In a stable business (am excluding new innovations), proving or disproving the performance of an entire org, let alone company, is extremely difficult. Individual contributors are much easier to judge, and thus live lives of sub-ordinance. Their inputs and outputs can be easily mapped. The trick of working, and thus living a nice life, is to rise to a level of plausible…

CEO is the easiest to measure, because you just pass through how the company as a whole is performing against it's goals.

If ExampleCorp has an objectively fantastic CEO, one who genuinely cares about the company and the well-being of all his employees, and actually understands something about how to make those better...

...and then he retires...

how long would it take for you to be able to tell that his not-terrible-but-kinda-lousy replacement is actually not doing a good job?

The first CEO set things up so that they'd run well; the leaders he put in place will be there for years; the deals he made will be good for a while (and all the new guy has to do is re-up them when he gets the chance).

So for, say, 5-10 years, the new guy get slapped on the back and handed a fat bonus every year for Doing Such A Great Job CEOing...when he's barely doing anything.

But then the situation starts to change. The companies they had deals with start to get bought out, or maybe they just stop existing. The good managers and other leaders the original CEO put in place start retiring or getting hired for bigger and better things.

The new guy stops being able to coast. But obviously his leadership has been great this whole time, and he hasn't changed anything, so how could it possibly be his fault...?

Our society and our industry are chronically unable to measure actual excellence, let alone reward it.

Re: Many companies aren’t prepared to replace underperforming CEOs

#88

Post by eftychis »

whatshisface wrote: post #79
goopthink wrote: post #61

The company board’s sole job is to hire and fire the CEO when appropriate: https://reactionwheel.net/2021/11/your-boards-of-directors-i... However, having been on a team that prepares board materials and also having presented to a company board, I can tell you that the information they receive is extremely carefully managed in a way that allows responsibility to seem to flow downwards rather than upwards. What you se…

Are board members rewarded for digging in beyond what's provided to them?

They are not punished if they don't -- this is the right question. Except if they are a major-ish stock holder which is usually not the case (for publicly traded).

Re: Many companies aren’t prepared to replace underperforming CEOs

#90

Post by skippyboxedhero »

kranke155 wrote: post #19
quadcore wrote: post #11

Earlier quoted context omitted.

I like to believe Apple under Jobs was different.

It clearly was. It was a high performing organisation with few peers in corporate history. Apple under Jobs was perhaps one of the biggest value creating organisations in our recent memory, if not the most value creating organisation in the last 20/30 years. So whatever he did, it worked brilliantly. The only analogue we have now is SpaceX imo. Tesla, if they crack self driving, maybe.

> It was a high performing organisation with few peers in corporate history

Apart from the time he ran it into the ground.

Musk isn't up there, Jobs isn't up there. You need a multi-decade record of strong capital allocation decisions, Musk barely has five years. Jobs had a record of making mistake after mistake for decades until the IPhone. Musk, by his own admission, made huge errors and would likely have gone bankrupt in 2017.

Of those alive today: Buffett, Malone, and a handful of smaller-scale people (i.e. Leonard, Stiritz, and some firms with strong culture like 3G, potentially Costco). In most cases though, CEOs need to be saved from themselves. Tech CEOs are also some of the absolute worst...I can't think of any with very strong records (Leonard is one, but the scale is relatively small). You find far strong management teams, on average, outside tech (industrials is one area, you have quite a few companies that not only have good CEOs but very good succession). The incentives are just totally wrong in tech: you get rewarded for failing, so you end up with lots of incompetent CEOs (Pichai being one of the worst, Google generally is just a terrible shit-show).

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