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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

#171

Post by deberon »

User23 wrote: post #137
kibwen wrote: post #128

Earlier quoted context omitted.

Employee-owned companies aren't entirely unheard-of in the US. Legally, they're structured as companies where employees own more than 50% of its shares via an ESOP: https://en.wikipedia.org/wiki/Employee_stock_ownership

A fun example along those lines is the Green Bay Packers[1]. They are a public non-profit whose shares are largely owned by members of the Green Bay community. Shareholding is mostly a matter of community pride, as it confers very few rights[2]. It's actually a pretty good model, and I wonder why it isn't used for other municipal assets. [1] https://en.wikipedia.org/wiki/Green_Bay_Packers,_Inc . [2] https://www.wsj.c…

I agree it’s a great model! Unfortunately the NFL has banned it (last I heard) - https://web.archive.org/web/20110813051753/http://www.sports...

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

#172

Post by Elof »

NovemberWhiskey wrote: post #78
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…

I've been in preparation of board materials for Fortune 100 companies (primarily for the audit committee) and honestly that is not my experience.

From the opposite side I've regularly presented in board meetings at 3 small to medium sized startups and this has not been my experience as well. One CEO was even removed at one of them.

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

#173

Post by VoodooJuJu »

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…

You can resign. You're not a slave. This man is only your master insomuch as you desire.

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

#174

Post by lazide »

fdgsdfogijq wrote: post #52
lazide wrote: post #31

Earlier quoted context omitted.

Bwahaha, I take it you’ve never actually been near anyone who has done that, let alone done it yourself? That’s total fantasy. If someone is really really good , it can look like they’re not doing much for anyone who doesn’t know what to look for, for the same reason a ships captain who is looking like they aren’t doing anything is usually a really really good one. The folks who directly interact with them often are…

This point of view isn't supported by org charts at large companies. If you were to compute the correlation between age of org and time in org of the business unit leader, you will get a very high number. It's high because people grow into the capabilities you are describing, just like someone grows into a Java developer. The opportunities to learn those skills are rare, and generally are never just handed out. Again…

You’re reinforcing my point?

At every step, it’s a filtering function.

Of the hundreds who were there at the beginning, who has kept up and continued to grow, without screwing it up?

Who learned the new skills, who figured out the limiting factors and discarded them, vs who didn’t?

Personally, my ratio at the time I left for personal reasons was around 1 in 600ish, depending on how you counted.

I’ve known others that were higher, and a few that were lower.

It’s always less risky for the company to keep someone who continues to work, rather than roll the dice on an unknown quantity, of course, but the filtering mechanism is still harsh, and most don’t pass it.

Anyone who isn’t effective is a drag on progress, and unless someone has too large of an ownership stake to push out, it’s rare those with the larger stakes will tolerate expensive old friends for long.

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

#175

Post by bluefirebrand »

DebtDeflation wrote: post #157
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…

Many corporate boards have an "executive chairman" which means the CEO is also the Chairman of the Board. Perhaps even more importantly a substantial number of board members are executives from other companies, meaning CEOs sit on each others boards and wash each others' backs.

I have to wonder if it should be considered a legal conflict of interest for a CEO to sit on the board at all, forget being chairman.

The powerful really love rigging stuff in their favor huh

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

#176

Post by lazide »

Keegs wrote: post #58
lazide wrote: post #31

Earlier quoted context omitted.

Bwahaha, I take it you’ve never actually been near anyone who has done that, let alone done it yourself? That’s total fantasy. If someone is really really good , it can look like they’re not doing much for anyone who doesn’t know what to look for, for the same reason a ships captain who is looking like they aren’t doing anything is usually a really really good one. The folks who directly interact with them often are…

> It is very difficult to find someone who can do it, and they command a premium because of it. Is it difficult because people like this are rare, or because so few people are ever considered for these positions?

The stakes for the owners are very high - a wrong choice can easily crash a major part of the company in a non-retrievable way.

The number of potential candidates is usually pretty small, after all the filtering, because of this.

Because those people are rare.

In my personal experience, perhaps 1 in 1000 have the mental fortitude and raw capabilities for it, but then they need the experience and knowledge in the space for any of that to matter, so the pool of course gets smaller. Even fewer have the personal life circumstances to allow it (aka the right kind of support structures, the right kind of stability).

There are also a lot of folks faking it.

It’s unusual for even a dozen candidates, to make the short list.

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

#177

Post by HWR_14 »

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…

The board has other jobs. They have to sign off on the validity of financial statements in public companies, for instance. CEOs bring them decisions that need to be made like granting a conflict of interest waiver to a CXO employee. Just two examples that they usually are required to make. They also help with other major course setting.

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

#178

Post by XnoiVeX »

Isn't this where activist investors like Elliot management, Thirdpoint, Starboard come into the picture? granted they are divestiture activists. But activists come in all kinds these days including ESG. It a way to keep the balance and cull non-performing CEOs.

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

#180

Post by dopidopHN »

bluefirebrand wrote: post #175
DebtDeflation wrote: post #157

Earlier quoted context omitted.

Many corporate boards have an "executive chairman" which means the CEO is also the Chairman of the Board. Perhaps even more importantly a substantial number of board members are executives from other companies, meaning CEOs sit on each others boards and wash each others' backs.

I have to wonder if it should be considered a legal conflict of interest for a CEO to sit on the board at all, forget being chairman. The powerful really love rigging stuff in their favor huh

That whole setup could use some free market love.
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