
Ending the cult of the CEO - ekpyrotic
http://www.managementtoday.co.uk/its-time-end-cult-ceo/leadership-lessons/article/1431285#articleDetail
======
elihu
The way I look at it, there are two kinds of CEOs. There are the ones that
founded the company and have led the company according to their own personal
vision. Many of them hold stock worth billions and they're generally looked up
to as "captains of industry".

The other kind is the CEO who is hired by the board of directors. They're
usually very well paid and given a lot of stock, but aren't wealthy the way,
say, Bill Gates is wealthy. They also tend not to be as admired, since they
didn't build the business from the ground up.

People wonder why the second class of CEO receives such lavish compensation,
when they're essentially just a regular employee. I suspect that the
compensation is actually part of the qualification for the job. It makes
shareholders feel good if the CEO holds a lot of stock, because it's a strong
incentive for them to put the interests of the shareholders (whom it's easy to
stereotype as rich, entitled lazy people living lavishly off of passive
investment income) above the interests of the employees the CEO works with
every day (who are usually hard-working people who, if the company is
successful, generate far more wealth than they're compensated for).

Normal human behavior would be to put the interests of the employees above the
shareholders. Large stock grants counteract that. Sometimes I wonder if a
hired CEO were to refuse to receive large stock grants, would that cause the
shareholders to revolt and/or the board of directors to not hire or try to
fire him/her, simply because they're not comfortable with a CEO who doesn't
have an incentive to pump up the stock value.

(It's worth noting that shareholders can change their investments much easier
than employees can change employers, so shareholders are more likely to prefer
policies that pump up the stock value now even if they're bad for the company
in the long run.)

~~~
ktRolster
The way I look at it, a good CEO can save a company millions (or even billions
if it's a large company like Sony) by negotiating better contracts. That is a
skill some CEOs have.

Now, if you're going to hire a CEO with that skill, do you think he's not
going to also negotiate a good contract for himself? He has that skill.

~~~
aaroninsf
There is an unvoiced logic here that I question.

The contention is that a CEO saves $x million, and thereby 'earns' some
[preposterous] fraction thereof, as a finders' fee.

This is a similar logic to a broker taking a percentage of a large market
transaction.

That part I disagree with and think many upset about CEO compensation (or
market speculators/industry windfalls) is that this is earning in any
meaningful way.

In particular, the presumption that there is some intrinsic relationship
between the compensation earned and the numbers transacted seems baseless.

The CEO and market trader alike do not provide the value; they are simply in a
desk where the numbers are large.

The reason a CEO can 'save millions or make billions' is merely because they
have been seated where their quotidian decisions (however talented) have
disproportionate leverage and consequence.

That is not a result of ability or skill, except in the unconvincing sense
that they had the skill to weasel (my word) their way into that desk,
nominally on personal merit, in fact, usually by virtue of connection and
political merit.

That sort of 'earning' does not pass the smell test for most of us who have
not lucked into those seats, and never shall.

~~~
tertius
I would make the contention that it is up to the company and the board of the
company to decide the compensation of any of it's employees, including the
CEOs.

"Luck" has a lot to do with it, but it also has a lot to do with many other
types of success that most people don't have problems with.

~~~
jernfrost
It is largely random, and heavily influenced by culture. E.g. CEOs in
different countries make vastly different salaries yet don't have noticeable
difference in performance or outcomes. CEO salaries has more to do with
political ideology of a country than market realities. It is no coincidence
that the country were people have the most unrelenting belief in the magic
powers of the individual, America, also pays their CEOs the highest. Also no
coincidence it happened after the 80s philosophy of "greed is good".

Research, logic, and reason simply doesn't support the myth of the CEO. But
board members and CEOs themselves like to indulge in that myth.

------
JoeCortopassi
Reasons why CEO's make millions and I don't:

\- Business Network: If I had a billion dollars, I would never have been able
to acquire Instagram. I wouldn't even be able to get a seat at the table.
Zuckerberg closed it in record time while talking to a company that wanted to
be on it's own

\- Market Knowledge: I thought the iPad was the stupidest device ever, Steve
Jobs didn't. I now have 4 at my house along with two of those stupid iWatches
(actually they're pretty nice)

\- Portfolio: Marissa Mayer wasn't paid what she was paid because the board
expected her to perform well, she was paid her salary (and golden parachute)
because the company was dying and they had no idea what to do. Mayer had an
idea of something that might work, but why on earth would she risk her awesome
résumé with taking on the risk of a company on it's last leg?

\- Access: If my daughter has a birthday, I can schedule an early day to be
home and celebrate with the family. When Steve Jobs came down with cancer, he
was required to disclose his medical details publicly because of the fiscal
impact it could have on the public stock

\- Job Market: I'm a programmer. There are jobs everywhere for me. If the CEO
of Uber loses his job (fingers crossed), it might be a looong time before he
finds a new one and even then it's not likely to be remotely similar to what
he does now. I mean shoot everyone loves Gabe Newell, but if he lost his job,
what are his options? Not as many as me.

Look, I'm not saying that some CEO's pay isn't exaggerated. I'm just saying
that I'm not worth nearly as much as a talented CEO. If the company your
401k/pension was invested in hired me as CEO, you better believe you'd grab
your pitchfork.

~~~
CountSessine
The Marissa Mayer one is the one that really stands out to me. A lot of people
seem to think that she was brought in to save Yahoo; no one on the inside was
thinking that. Everyone understood that Yahoo was hopeless and they were
headed for a sudden collapse. Mayer was brought in to rescue whatever
shareholder value she could and as long as shareholders got something back
they would be willing to split some of it with her.

~~~
yuhong
Part of the problem is that it took way too long for someone like her to be
the CEO.

~~~
cbsmith
Shareholder value went up very quickly after she came on board.

------
dahart
> This focus has a devastating impact on the lives of CEOs... Leaders deserve
> to be happy too... solving the problems starts with communication... we need
> to wage war on this picture

A whole article about how hard CEOs have it, and not a single mention of CEO
pay or the ongoing efforts to even get reporting of CEO pay ratios?

I mean I agree that CEOs get a ridiculous amount of stress and an unfair share
of credit and blame, but if we want to fix it, I wouldn't start with
platitudes like 'why don't we talk more', I'd start by paying CEOs less.

> The result is that a startling 100% of CEOs report that they suffer from
> stress and, according to research by Apollo Life, one in four say they
> struggle with insomnia.

Yeah, 100% of the population suffers from stress too. And I just googled it:
30% of the population suffers from insomnia. LOL.

~~~
tertius
> I'd start by paying CEOs less.

I would say that it's a good thing that you're not king then...

And no, the stress of C level jobs does not compare to the mean like you would
have it.

~~~
self_assembly
I agree that the stress level of C jobs does not compare to the mean. It must
be nice not to have to stress about a mortgage, kids college, affordable
healthcare and all the other things that ordinary people in western society
struggle with.

I think a lot of people would trade stressing about their families financial
well being with the needs of the shareholders. I'm not saying it is not a
tough job but at the end of the day I don't think CEOs stress compares to
regular middle class people just trying to get by.

~~~
crush-n-spread
You don't know what you're talking about. CEOs have mortgages, healthcare, and
families to worry about. They also have a handful of very demanding, very
intimidating investors to please, to each of whom they owe millions, they have
employees that are constantly getting poached, they have users that are
shitting on their product online.

At large, people are terrible. CEOs are working with these terrible, dumb,
rude, and sometimes harmful people to get them to invest, to work, to be
productive, to just help get a product out the door. And if they don't get
products out the door - If companies do not succeed - You can say goodbye to
your nation. We are built on the fruits of technology-selling companies
through and through; our wealthy nations do not come from nowhere, someone has
to do the work, and CEOs are all doing the work in addition to family,
healthcare, and mortgage woes.

~~~
throwaway_374
I was about to fly off the handle until I realised your sarcasm.

~~~
crush-n-spread
It's not sarcasm

------
jathu
This is reminiscent of auteur theory in film, which essentially says that the
director is the author of the film. Similar to corporations, making a movie
requires a lot of people with different skills/talent. The director
overshadows everyone and is the person primarily credited with authoring a
film, they even overshadow the writers of the screenplay. One of the leading
arguments for auteur theory is that the director has the vision of the film
and they set out to create it. This is the same narrative used in the startup
world: the founders have the vision. So this extends to why we credit founders
for the invention of products, just like how we credit directors for films.

Maybe 100 years from now we will say "Steve Jobs invented the
iPhone/smartphone", just like how we say "Thomas Edison invented the light
bulb" or "Martin Scorsese made Taxi Driver".

~~~
mattnewton
It's older than that, how many innovations are credited to Emperors, and
victories in battle to Generals? I think it must be the product of some parts
of human nature.

~~~
kelnos
Yes, I think people naturally need well-defined figures to look up to, to
praise, and to try to emulate. It's a lot more powerful to say "George
Washington" won the US Revolutionary War than to talk about all his
subordinates, even when those subordinates made many independent wartime
decisions that were essential to winning the war. And yet I can't even name
one of those people offhand.

~~~
WorldMaker
Alexander Hamilton is the next easiest to mind, due directly to the musical.
One of Hamilton's complaints in real life and emphasized in the musical was
that he wanted as much, if not more, to be as brave/glorious as the generals
and soldiers of the War, but was "stuck" in such an inglorious position of
being Washington's aide-de-camp and helping Washington run the war.

ETA: The explicit irony being that most of Hamilton's work during the war is
of course attributed to Gen. Washington, and in the current zeitgeist the only
reason people remember his involvement today being the popularity of a musical
of a biography of his.

------
hkmurakami
I really hope that we can end the cult of the entrepreneur as well.

It's not some special thing to incorporate and start a company, and it's not
inherently superior to any other line of work.

~~~
jimbeam77
There's nothing special about starting a company for sure, but successfully
growing one takes a lot of grit.

~~~
hkmurakami
Sure.

But I'd want to see a world where headlines like "Entrepreneurs are just rich
kids" cease to be, because that headline is only created when entrepreneurship
is put on a pedestal and is seen as something that is inherently superior to
everything else.

People wouldn't feel indignant that it is "unfair that rich kids have an
advantage" at the entrepreneurship game (which they absolutely do), if
entrepreneurship weren't seen as this holy grail mount Kilimanjaro thing.

~~~
knieveltech
I'm pretty sure people are going to continue to be pissed off about some lucky
assholes winning the birth lottery and cashing in their ticket to further
profit off the labor of others less fortunate regardless of what kind of media
spin you try to put on it.

~~~
WalterBright
What do you attribute the success of Bruno Mars too?

~~~
knieveltech
I don't know who that is but I strongly doubt their career in any way
dismisses the lack of class mobility in the US.
[https://www.theatlantic.com/business/archive/2015/07/america...](https://www.theatlantic.com/business/archive/2015/07/america-
social-mobility-parents-income/399311/)

~~~
WalterBright
By the way, high taxes makes upward class mobility much more difficult.

~~~
knieveltech
I'm guessing you aren't conversant with how taxation and class mobility have
changed over the last 40 years. Let me save you the suspense: you're wrong.

~~~
WalterBright
Taxes went up, class mobility went down.

~~~
jernfrost
Marginal tax rate in the US has fallen like a rock since Reagan got into
government. The exact same time class mobility went down as well. If you look
at the statistics class mobility is highest in high taxed Nordic countries.
Low tax anglo-saxon countries are usually pretty bad at this. The UK follows
much of the same ideology as the US and also has among the lowest mobility in
Europe.

It is nothing weird about this really. Higher taxed countries are able to
offer better public education and health care which gives the lesser of
actually stand a chance of making it.

In the US the system is especially rigged. There is no free school choice, so
you are forced to go to the public school in your shitty neighborhood if you
are poor, while the rich through never ending donations enjoy schools with
abundant resources. And even if the schools were good you would be screwed
before you even get in, because the US does not offer quality child care to
poor people. Research shows the years before school is the most important for
future development.

I live in a poorer area of Oslo, but I could if I wanted to send my kids to
the schools in the richest part of town without any extra cost to me. But it
isn't really important as school quality is pretty even, through proper public
funding rather than relying on private donations. Also we get subsidized child
care of a quality that typically only upper middle class buy in the US.

If you don't even the playing field in a persons early years you are not going
to see much social mobility.

~~~
WalterBright
The marginal income tax rate is only a small part of the taxation story in the
US.

[http://www.usgovernmentspending.com/us_20th_century_chart.ht...](http://www.usgovernmentspending.com/us_20th_century_chart.html)

Note the ever larger share of government spending as a percentage of the GDP.
This doesn't happen unless taxes, in one way or another, go up.

------
pnutjam
Over 60 years ago, Frederick Lewis Allen published "The Big Change". He noted
that we do not live in a Capitalist Society, we live in a Managementist
society. Capital is too often diced up and spread around so that it has no
bearing on decisions and the "owner" has no responsibility or even ability to
track things.

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prodmerc
Yeah, it's time to end human nature.

Please, how often do you see anything credited to more than 10 people, even
though maybe thousands worked on it?

It's human nature to look for the leader, or leaders if there's no clear
leader or if that seen leader is actively advertising the others, but no one
will ever credit 100+ people actually working on anything.

A single death is a tragedy, a million is a statistic.

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jernfrost
Good this topic gets brought up. I've blogged about this in the past:
[http://blog.translusion.com/posts/CEO%20Salaries/](http://blog.translusion.com/posts/CEO%20Salaries/)

Studies by Gabaix and Lanier, who were in favor of performance based pay
showed that the difference between the best CEO and the 250th best was 0.016
percent.

Meaning if one replaced the 250th best CEO with the best, then the companies
market capitalization would grow by 0.016 percent.

Perhaps what really matters is how bad the CEO is not how good he/she is. E.g.
it is like studies of parenting, there is no difference in outcome for kids
with awesome parents and those with average middle-class parents. The big
difference is between bad parents and average parents.

Something similar with IQ. There is no difference between having 130 in IQ and
having 200, with respect to your chances of winning the nobel prize. But there
is a noticable difference between having say 100 and 130.

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jobcreators
i can't read this without shaking my head. boo hoo. when CEOs' compensation
starts to mirror their output/tangible contribution to the company, i'll be
able to take stories like this more seriously. i.e., i agree that CEOs are
given far too much credit and cannot possibly be looped in on everything that
leads to the successes or failures of a company, but they certainly pay
themselves as if this was the case.

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pixie_
I'd say the CEO acts as the primary role model and the employees/company often
reflect the attitude of the CEO. Think of the workplace stereotypes of amazon
- customer focused, google - side projects, spacex - mission, uber/oracle -
aholes, apple - design, microsoft - developers , facebook - hackers, etc.. the
CEO sets the tone and if you agree with it you'd probably like working there
:)

~~~
Neliquat
Facebook = hackers?! To whom?

~~~
pixie_
Like hoodies and hackathons, not like hacking into stuff.

------
cortesoft
This is just how humans view the world. We attribute everything the government
does to the President, we attribute everything in a film to the director, and
everything in a company to the CEO. We view the world this way, when in
reality things happen at every level.

------
bg4
Pack order mentality is probably not something humans will ever be able to
overcome.

[https://www.theatlantic.com/magazine/archive/2015/06/why-
it-...](https://www.theatlantic.com/magazine/archive/2015/06/why-it-pays-to-
be-a-jerk/392066/)

edit: typo

------
theprop
This is true. And not true.

It is SO true that a company is a team effort. It is also sadly true that CEOs
get most if not all the credit of what their teams accomplish even if they
didn't have much of a part in it. The current CEO "God" Jobs said as much, and
in fact had wrong intuitions on a number of the most critical things today in
Apple's business... a gigantic one being a hesitance to open up the iPhone to
3rd party apps. I think other Apple team members eventually convinced Jobs
(probably didn't take that much effort) to open things up. Jobs was rightfully
concerned 3rd party apps could crash your phone which wasn't a good idea!!

That said, when Apple didn't have a strong product-focused leader we saw where
it went earlier, and one can see how it's floundering today -- under Cook,
Apple was maybe 2 years or more late with a large screen phone and the iWatch
is not good at all. Tesla under a certain CEO has in less than 15 years what's
widely considered the world's best car...beating few dozen companies with long
histories of making cars and limitless resources. Amazon took big risks with
AWS, Prime, and many other things and failed miserably many times e.g. the
Fire phone...but they have a leader who kept pushing things forward. Compare
Amazon to say Walmart (to my view largely the same company it is today that it
was 20 years ago) or any other e-commerce company. The visionary leader who
can deliver revolutionary products relentlessly really does matter.

------
marplebot
Was anyone else bothered by the way studies were cited in this article?

> 100% of CEOs report that they suffer from stress Anytime I see 100% I assume
> the study was bullshit.

> the death of a CEO causes a company's value to fluctuate by $65 million more
> today than it did 60 years ago (adjusted for inflation) I'm guessing the
> sample size here is pretty small or at very least a measure of absolute
> "fluctuation" doesn't seem like the right thing to measure. I can imagine a
> world where the death of Steve Jobs alone could have caused this effect.
> Also what was the fluctuation before was it $100 million? $1 million?

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gavinpc
The "cult" underlying this phenomenon is our celebrity culture. We fetishize
the 0.01%. The role of overpaid CEO is established; it no longer needs any
more special justification than top athletes, entertainers, or TV
"personalities."

Conveniently, we have lots of companies that need saving. And it seems to me
that, for a country where people still like to pretend there's a "free
market," we sure hate to see companies fail. I think of the old saying, "Many
a good hanging has prevented a bad marriage." But hey, who asked me.

------
coldpizza
> Think of a prominent global-company CEO. Sir Martin Sorrell? Indra Nooyi?
> Elon Musk?

> Now, name the CFO and CMO. I bet you can’t.

I can't, but it's because it's not the CFO and CMO representing the company on
the public realm, so they're not the faces and names I see when there's news
about a company in which I do not work at or with.

If this "exposure" happens within a company as well, that's an issue for each
company to assess and deal with accordingly.

------
erikb
I always wonder why people happily give up the rewards they earned for their
hard work. Prestige, connections, bonusses. I think that's a big part for the
guy at the top getting most of it as well.

And the reason is self-preservation. While all these things are nice, to most
people it is more important to not experience the opposite: public criticism,
haters, losing your job. In many situations it is also reasonable, since for a
middle-income person a save reliable income is usually the most valuable asset
they have. Losing it is much more hurtful to their lifes than losing a bonus.
Therefore they give up some higher-risk opportunities for safety.

Summary: The employees probably also want the success and failure associated
to their boss not themselves.

------
wand3r
I found it hard not to disagree with this article. I am not sure I agree with
the premise but this argument wasn't persuasive. Of course a stock drops when
the CEO abruptly dies. Of course 100percent of people responsible for the well
being of others (employees and shareholders) and countless decisions is
stressed.

A counter example to jobs (cliche pic on every article like this) is Ive. The
cult of personality is an obvious way to humanize a company. It can be good or
bad. Kalanick bad right now; Musk good right now.

Being a good CEO is more important than simply branding yourself.

IDK, article fell flat for me I see both sides and it's subjective in my book

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cosinetau
I'm guessing a possible resolution is to disseminate the responsibility that a
CEO holds.

I've never been at that level of management, but it appears that other players
(inside and out of an org) require a single point-of-contact, or ultimate
authority. I think this might be better, simply because 1:1 relationships are
easier to coordinate than 1:n (chair and council), or n:m (council and
lieutenants), which dissemination might bring.

My counter question is: where would the buck stop?

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dilemma
》The result is that a startling 100% of CEOs report that they suffer from
stress and, according to research by Apollo Life, one in four say they
struggle with insomnia. Many multinationals have launched expensive well-being
programmes in response, but these just wallpaper over the core problem: CEOs
unnecessarily carry the full weight of company performance on their shoulders.

It is the job and responsibility of the CEO to delegate so that decisions can
be made elsewhere.

------
vonnik
I think this article misunderstands one of the roles of the CEO, which is to
be the face of the company, the individual to whom the media can attach its
narrative. Group stories don't have the same appeal. Harder to tell. Even if
they're more true. CEOs are traveling salespeople. They represent a larger
group. They persuade. And one of the groups they sell to is the media.

------
amjaeger
I'm sure the majority of the article is valid, but Apple's stock skyrocketed
after Job's death. I'm sure it's an outlier but kind of wish that had been
acknowledged given the image used.

~~~
kelnos
I think that was a somewhat unique situation:

It was fairly well known for months before Jobs' death that he was ill, and
that he wasn't very involved in the day-to-day operations of Apple anymore,
and that Tim Cook was clearly going to be his successor, and had already taken
on many if not most of the CEO's duties.

Even then, AAPL dipped a little during Oct 2011 (Jobs died on Oct 5th),
recovered in November, and then started really moving upward over the next 2-3
months. I think the large jump can be attributed to how well and how
successfully they handled the transition, and to the point that people -- as
much as they viewed Jobs as key to the company's success -- realized that
Apple could still perform well without him, based on the idea that the "cult
of Jobs" didn't end with his death.

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soufron
It's very nice to say that business is almost always a team effort, but it
does not explain why some teams succeed and other don't.

------
rileymat2
It is hard to tell, but it appears the death of the lifeway ceo in 2002 had
very little lasting impact.

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LeicaLatte
Yes, let us all stop being humans because some humans are bad.

------
cafard
Given that a fair chunk of today's NY Times front page is devoted to Steve
Cook rebuking Travis Kalanick, I'm not going to short to incense stocks quite
yet.

~~~
cafard
Umm, Tim.

------
rglover
No.

