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 see as an IC or as a manager or ever director is extremely different from the cause and effects a board sees in a monthly or quarterly update. Hence they often come to different conclusions than the people in the trenches would. That said, I’m sure this is true for any large organizational unit (government, military, corporations, nonprofits, etc).
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.
It is know since companies have existed that this is indeed bad corporate governance. The CEO should be firable at the leisure of the board, and the board at the leisure of the shareholders.
What seems to happen often is blurried lines: the ceo founder is majority shareholder, the board is his family, friends and paid lawyers, the shareholders are asleep at the wheel as long as some profits rain in, the regulator finds no law broken.
Tesla is a model of bad governance, to the point the harshest sanction a regulator could levy against their chairman/ceo for manipulating the stock price, a capital sin, is to make him only CEO, while not removing his family members from the board... a systemic european bank is the model of good governance: you can see epic ceo vs board fights, shareholder revolutions etc etc.
Actually this isn't the whole truth. There is a substantial body of literature around the effect of merging both positions or not and it is not really conclusive in any direction.
You mention Europe but for instance in France it has been a corporate tradition too have both merged and separation has statistically lead to a significant underperformance.
FYI it is called the agency vs stewardship theories and currently it seems like a academically the stewardship is slightly favored.
Unfortunately, no organizational structure exists which guarantees optimal outcomes. Everything depends on the actual individuals who occupy the roles.
Such structures should ultimately be up to the shareholders.
> no organizational structure exists which guarantees optimal outcomes
I like the structure of bee colonies.
The queen controls the temperament, the workers control the queen and adjust the rate of growth or contraction. Periodically workers replace her with one her of daughters (via regicide).
I'm not sure what the takeaway here is though, as I don't like the idea of a monarchy or of communism.
Kinda strange which parts you decided to view as metaphorical and transplant, such as shareholders, and which you decided we're integral to the idea and needed to stay, such as the death of hive members.
I think there might actually be some interesting things to consider if a hive-like approach was used for a business, but I'm not sure your assessment really gets to the heart of it.
The really interesting part would be when winter hits and the Queen stops producing workers to downscale the hive (i.e. mass layoffs), then the insane period in spring where mass hiring starts...
First, its not like bees get to negotiate their salaries and seek employment elsewhere.
Secondly, at scale you have to consider large beekeeping operations or even small ones which all have…shareholders.
So either the co-op needs to take into consideration societal and personal needs (ie. crime, health, housing) or your comparison needs to be rooted in basic economics (ie. supply, demand, labor markets).
Which is what the OP meant by “monarchy or communism” because fundamentally bee societies are more akin to government than business.
BUT, lets ask the bees what they think. I’m sure they’d prefer modern Westernized human employment over a labor camp like existence ;)
> First, it’s not like bees get to negotiate their salaries and seek employment elsewhere.
They switch hives by accident, the beekeeper can cause it (to beef up a weak colony or by accident) and sometimes they do it intentionally, the males in particular.
I'm referring to the money printer that hid most problems plaguing corporate America. Why would shareholders care about mismanagement when their shares were going up 10x regardless?
This is usually resolved by requiring a minimum ownership stake for each prospective board member, and to make sure it represents a significant fraction of their total net worth.
To guarantee that the board would lose their shirts if they make decisions completely opposite to reality, thus motivating a more thorough investigation of what they see and hear.
What you’re saying is implied. They’re proposing requiring a minimum ownership percentage (I assume legally) would make board members care more about decisions because, as it is now—-according to the comment parent—-board members largely don’t care as long as their wallets get fatter.
It is quite similar, the most widespread usage historically would likely be the 18th century trading companies such as the British East India Company which used this method along with others to operate with a relatively tiny managerial workforce by modern standards.
There was another post on HN a few weeks back with an article that looked into it and the numbers were really staggering.
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.
> the information they receive is extremely carefully managed in a way that allows responsibility to seem to flow downwards rather than upwards.
The Plan
In the beginning, there was a plan,
And then came the assumptions,
And the assumptions were without form,
And the plan without substance,
And the darkness was upon the face of the workers,
And they spoke among themselves saying,
"It is a crock of shit and it stinks."
And the workers went unto their Supervisors and said,
"It is a pile of dung, and we cannot live with the smell."
And the Supervisors went unto their Managers saying,
"It is a container of excrement, and it is very strong,
Such that none may abide by it."
And the Managers went unto their Directors saying,
"It is a vessel of fertilizer, and none may abide by its strength."
And the Directors spoke among themselves saying to one another,
"It contains that which aids plants growth, and it is very strong."
And the Directors went to the Vice Presidents saying unto them,
"It promotes growth, and it is very powerful."
And the Vice Presidents went to the President, saying unto him,
"This new plan will actively promote the growth and vigor
Of the company With very powerful effects."
And the President looked upon the Plan
And saw that it was good,
And the Plan became Policy.
> sometimes the co-founders really want to be the CEO for career or ego reasons (even though the investors usually don’t keep these promises: after taking out the CEO, the co-founders are usually next, partly because nobody can ever trust someone who stabbed a friend in the back, even the person who asked them to)
Everything I Need to Know in Life, I Learned from Mobster Movies
>That said, I’m sure this is true for any large organizational unit
It is characteristic of all committee discussions and decisions, that every members has a vivid recollection of them, and that every members recollection of them differs violently from every other members recollection, consequently we accept the convention that the official decisions are those, and only those which have been officially recorded in the minutes by the officials, from which it emerges with an elegant inevitability, that any decision that has been officially reached will have been officially recorded in the minutes by the officials, and any decision which is not recorded in the minutes is not officially reached, even if one or more members believe they can recollect it, so in this particular case if the decision had been officially reached, it would have been officially recorded in the minutes, by the officials and it isn't, so it wasn't.
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.
This is why it is so extremely important to get out there and meet with people in the company, talk to them, look at stuff, rather than only get fed information by people. See what is really happening.
Insofar as board members are compensated by stock grants, they are incentivized to increase the stock price. But if a board member starts trying to do independent verification of what the CEO/team is telling them, that's a sign of mistrust. Because the board primarily interfaces with the executive team, would they know where to start?
That said, I've seen some board members try this out by offering to help/chat with some under-performing teams that they have expertise working with and asking light questions/giving advice... but having been on the receiving end of a conversation like that, it often feels like there is a lot of politics going -- you don't know if someone genuinely wants to be helpful, is vetting your capabilities and fit for the role (based on the trickle-down responsibility), or is trying to do independent fact finding (trickling it back up).
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).
In some rare cases the board has retained outside counsel to conduct an independent investigation when there is potential wrongdoing or conflict of interest involving the CEO or other senior executives. The board doesn't receive any extra direct rewards for this, beyond protecting their own holdings and reputations.
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 guy as much as possible and assume it's not the kind of company where you want to spend 5+ years.
There’s nothing you can do because the companies are dictatorships or oligarchies at best, not democracies or meritocracies. If he’s the founder presumably he had enough ownership in the company to force the company to keep him in that position.
Changing that up requires a radical redesign of how companies are legally constrained in the US or a cultural change that causes an expectation of worker ownership so that they get a say. For examples look at Germany requiring a representative of the workers on company boards
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.
Legally speaking I think that might be in a different category than what I was referring to (nonprofit vs corporation). And there are other legal structures, like co-operatives (and credit unions?), with similar ideas.
It's also meh. The money gets tied up in the company until the shares vest (my wife had to wait like 8 years or something). It's performance is tied to the performance of the company and you can't diversify. Lots of times it doesn't end up giving you all that much extra. I'd much rather just get a bonus I could invest elsewhere.
ESOPs were invented as a way for owners to cash out. Not really an altruistic thing that works well imho.
I cannot stress this enough - employee-owned companies are still dictatorships, the employees being shareholders doesn't change that at all. Employees get zero, and I mean ZERO, say over day-to-day operations or even major decisions.
The SOLE difference between a non-employee owned company and an employee owned company is who the shareholders are.
Source: personal experience working at multiple employee owned companies
We don’t need to bring crypto into it for some amount of control. The poster above is referencing the same problem with any direct democracy which what you get with employee ownership being just shareholders and what you would get with handing out tokens. The solution is to vote on a representative/s who sit on the board much like the German example I mentioned.
I’ve seen two situations one that sounds a bit like your is poorly managed but isn’t bad, one that is really bad:
1. Co-founder likes to make stuff, build stuff, sell stuff, raise money, etc. but does not like, or care for leading 50+ people. Typically he (always he) keeps the title, a small team of senior or very dedicated people, and do whatever he is actually good at. At the same time, a newly appointed, experienced VP does the actual management of the larger team, while nominally reporting to the CxO. This is a good way to avoid drama while the reality of the situation dawns on the co-founder: his report is doing all the grown-up work. You don’t like that work. It’s CxO type of work… so you shouldn't squat the title any longer. It takes a while, though.
The benefits: the VP has ample time and an incentive to prove they can handle the weirdness of a board, and get promoted to SVP, or CxO when their role gets more obvious. They are easier to replace if they underperform or don’t indulge in the CxO delusion long enough. It’s unfair, but it works and most people end up finding what they need in time.
2. Someone was CyO at the previous company, and was able to coast long enough while that first project crashed and burn. Before it did, that someone was hunted to be a new company to be CyO because… well, they look like they know what they are doing. No one at the new company knows what a good CyO does. So they can continue coasting. And it can hurt so many great people who need support.
I’ve seem both at the same time, and it’s painful to see so many people miss what is the problem.
“But so-and-so it’s really CxO!
— Who cares? VP of x is doing great work
— They fight with CyO all the time
— Yeah, because CyO is incompetent and does nothing…”
Titles don’t really matter: if someone has an inflated one, it shouldn’t make them too dangerous. Lack of feedback does: the CxO gets asked to work on special projects and is happy. The CyO is not told to get his shit together, and everyone suffers.
Non C-levels can try to do something about it if and only if they have strong and safe relationships with other C-levels who would be in a position to influence the CEO on the issue.
That's not necessarily common, especially the larger the company gets.
Otherwise trying to do something about it can quickly turn into a "ok, clearly these two people can't work together, I as CEO don't really know this particular person, I do know this C-level person, I think the easiest thing to do here is to remove the one of them that I haven't been working closely with." And then something would only actually happen if, say, there's a pattern over multiple years of several VP Engs (or similar high-profile people) all having the same issues with the same C-level.
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 the person in that position.
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.
I have a theory that when the C-suite decides to slay an entire division they assign an incompetent boss. Give them a few months to mess it up. Then go for the kill. The incompetent new boss magically absorbs all the blame.
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?
I have been in that position delivering that update. The kind of work you have to do as VP/Director does not translate well into the task oriented stand up updates that developers give. Often times I would be working across multiple projects/initiatives - some I am responsible stakeholder, some I am an informed stakeholder, some are with external teams or companies - and most of these projects are over long periods of time - as in it is not 2 point or 4 point story item that can be updated in 60 seconds over stand up.
In essence, they are. Shareholders elect board members who hire for important roles.
This is similar to democratic governments. In no democracy will voters elect the Minister of Energy or Transport or Defense or Labor or the foreign secretary. This is chosen by the elected officials.
You claimed it's a democracy - obviously that's not the case.
If you think it shouldn't be a democracy, thats fine, but is just an opinion and not a factual claim.
You are, ofcrouse entitled to your opinion. Classically company consists of employees just like your body is made uo of organs. When you damage them by treating them badly, you damage the company.
In neoliberal idea employees are disposable and company is not harmed when you harm them.
Company is a separate entity that lives by itself, like a holy spirit, maybe it posseses the stock market on the 'brand value', i don't know.
The current stunt by Elon musk will show who is right, if Twitter does well when he is done destroying the talent pool, then you are right. If the company combusts, then you are wrong.
The USA "ideals" taught in school say that democracy and democratic republics are the best forms of government.... yet (almost) all our companies are autocratic dictatorships.
The actual machinery of government is not a democracy either. People who work at Federal agencies have to do what their managers tell them to do.
We elect the head of the executive branch. The rest of it is basically run like a bunch of corporations. We certainly don't elect the people who work at the IRS, for example.
The people to whom the org is responsible are the (Greek) demos[1]. For governments, this is the people. For corporations, this is the shareholders. Corporations are somewhat democratic WRT their demos.
"Meritocracy " isn't a thing, since the "merit deciders" (ala kingmakers) decide whatever they want. (Or the next question in that line: who decides what merit is and who has it?)
And, the gist also has very strong vibes of Ronald Wright's misattributed John Steinbeck's quote:
“John Steinbeck once said that socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
I think the only thing a non-C-level can do is get another C-level person to take action. Present a well-thought-out and well-documented case, and see if they will take action.
This may sound risky. But:
1. If you succeed, you may dramatically improve your working environment.
2. If you fail in a way that damages your job, you probably should have been looking for a way out of there anyway, because he's going to continue to make that a crummy place to work.
Note well: You probably shouldn't try this until you're ready to leave, both emotionally and financially, because you may get fired on the spot.
I've had a few "well documented cases" shared with me in my time. Generally they are lengthy rants that make it clear that the author doesn't understand the constraints or goals of the business.
Occasionally, there will be some useful insights mixed in, but that is rare. I'd suggest rather than trying to make the case independently, find a trusted party, tell them that you have concerns about X, and let them drive the conversation. You may pique their interest, or give them a chance to validate concerns they already have.
If anything bad happens in any company, whether incompetence, or something illegal, it is best to just leave. Don't fight it, unless the company is so huge that if you find a tax non-payment issue you get from 15% to 30%, and that would be worth $10 million or something like that.
But it is folly to report wrong-doing to the company. Just leave. The business will almost always close ranks to the superior.
There was a story I read recently, the head of personnel was a woman. A woman employee reported some kind of harassment to her. The company started giving the complaining women bad reviews, whereas before they were good. And they fired her. This was a woman who let another woman know. That woman human resources person took the side of the company.
I myself have been subject to a lot of situations where I was extremely uncomfortable to the point of where I wanted to throw up and leave. I'm a man. All of the people that made me feel this way were women. Talking about porn, their periods, sex life - you name it. And it was so many, not just one woman.
If I complained, they would have to fire 1/2 the female work force at the office. Do you think that there is any way in fluck that they would do this? No is the answer. And I eventually left. Easier to do that than stay there. I don't have the time to be bogged down by crap, I don't want to go to court for 10 years asking for some kind of payout for harassment.
If he’s a co-founder, he probably has enough stake that no one is able to fire him, or there is no coalition of other owners large enough to do so that is tired enough of the antics to do so.
One of the privileges of ownership is being able to fuck yourself over by destroying your own stuff, after all.
A strike wouldn't be to remove a C-level as much as really drill home the consequences of poor decisions. Individuals are still too lenient in letting themselves go through the burnout treadmill for the upper trenches to feel it.
"On October 30, 2022, the Canadian Union of Public Employees (CUPE), issued a strike notice, after the Government of Ontario refused their demands for an 11.7% salary increase alongside other requests for improved working conditions."
They are not after any "change" to how things are done, just a massive 11.7% pay hike every year for the next 4 years.
Again, any example of a strike which was to force the replacement of a C-Level?
I'm not trying to refute your point. You're allowed to be a little less aggressive.
Point being strikes typically hit C-levels indirectly, not directly. A short term loss and display of collective power which could be avoided with foresight. Individuals are more often targeted through boycotting.
So in the case of CUPE asking for 11.7% increase in pay, who is the C-Level involved, and what is the "point" they are trying to make besides simply demanding more money?
How about this "strike"?
"The 2019 General Motors strike began September 15, 2019, with the walkout of 48,000 United Automobile Workers from some 50 plants in the United States. Demands by workers included increased job security, gateway for temporary workers to become permanent, better pay and retaining healthcare benefits."
what was the impact to the C-level? how did them demanding job security and better pay relate to them at all?
There is pretty much NO case of union action ever attempting to impact directly or indirectly a C-Level person.
They strike for Benefits, money, job security and that is about it.
> 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?
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).
Yes. It is interesting over the years watching people play "hot potato" with the boss' friend or such.
Eventually they land somewhere and it doesn't take long to figure out the deal and then they start working on a strategy on how to move them somewhere else.
Obviously the person i responded to hasn't spent much time with a large org to see this first hand.
This isn’t even that extreme. Malicious people can be highly successful. The founder doesn’t even sound deliberately malicious necessarily. There is a lot of room to be successful between “brilliant and well meaning” and “unable to deliver value or persuade others you do so”.
Here's a more likely explanation: luck + first mover got them to a position, and their current strategy risks a downfall by a competitor in the long run.
Once in power, it is in fact really easy to stay in power.
Or just completely taking credit from others without sharing it.
And as a corollary, flat out stealing ideas/code/whatever. If it's still just a startup, no one (that matters) may have every done a thorough search yet to be sure that the technology provided by the founders is original. Or course it won't survive scrutiny from the press or due diligence from a potential buyer or anything.
A friend of mine worked with a startup where there were three founders and they were all notorious for taking unearned credit. I think at least one was a pathological liar. As time when on, the true origins of everything they "contributed" came out. Depending on how good they were at bs'ing and raising money at least, a couple were were fired quickly and the last one took years to get rid of (a big enough fraud scandal finally went public).
This is why free software is a grift when the real problem is we are slaves to an ownership class and all the control of software can’t save us from their ability to infect companies, markets, governments, cultures and fuck them up. Democracy in all of these structures gives us the same benefits of FOSS with many more added freedoms and a handful new responsibilities.
I'm thinking of a Jadzia Dax in Star Trek: Deep Space Nine. Jadzia is among the lucky few among her race, the Trill, implanted with a "symbiote" carrying the memories of all of its previous hosts. Carrying a symbiote is an unrealized dream for many Trill who wash out of the rigorous application and training process and are told they're incompatible. In one episode, one such disgruntled fellow tries to steal Jadzia's. In another, we learn a twist: compatibility is actually very common. There just aren't enough symbiotes to go around, so they lie about it.
My pet theory is that grossly-paid C-suite executive jobs are like this. Plenty of middle-managers could do as well as the average CEO. But there's only so much room at the top of the hierarchy, and we need to pay them hundreds of millions of dollars.
> Plenty of middle-managers could do as well as the average CEO.
I’ve worked with several CEOs and countless senior executives, both at very large companies and small, who had varying degrees of competency. I don’t think this is generally true. Being successful at that job entails a specialized skill set that is rarely evident in middle management. What you are “managing” at the most senior levels of large organizations is very different than as a middle manager, it becomes an entirely different kind of role. The vast majority of people aren’t even able to competently run a small company or startup, never mind a large enterprise.
I think very few people are really cut out for that role. It is a case where demand exceeds supply, which drives up prices. There are many mediocre people in those roles because supply is so scarce.
I think you are right that the skills to be a successful CEO are rare, but I think the main problem is that the hiring process for CEO is so incestual that the majority of the people who would be good for the job aren't even considered. Instead the applicant pool consists of "son of current CEO", "son of CEO's favorite politician", and several "CEO that is currently failing a different company". The applicant pool feels small because they never look beyond the boundaries of "billionaire families who go to the same country club".
There are a few CEOs that seem to truly make a difference, and maybe those would be worth the money, but for the most part companies are grossly overpaying for people who are mediocre to terrible at the job and will deploy the golden parachute in a couple of years to go fail at a different company.
The CEOs that belong to the club (network) can draw on the resources available to that network. It is widely believed that this ability is more important than the technical skills. It used to be correct when e-mail, LinkedIn or Google were not a thing. Now this is simply a cargo cult.
That smells like rationalization to me. "No candidate outside of my personal circle of friends could possibly do this job because being in the circle is required to do the job."
I think that there are a lot of people that are cut out to be CEO, but most of them are already working as CEO - of a small business, or household, or one-man consultancy. There are very few people that are cut out to be CEO of the particular big corporation that is hiring for CEO. If you take the Ribbonfarm essay at face value, the quality that qualifies a person to be CEO is that their natural personality is in total alignment with the direction that the organization needs to go, and so they can merely be themselves, loudly and brashly, and they will attract followers that take the organization in that direction. There are just a handful of people, oftentimes one or none, whose natural personality is perfectly aligned with where the board wants to take the company. When you find that one, you should pay top dollar to get and retain them, because you may not find another.
and for each genuine such personality the board will find a dozen psychologically problematic implicit conman (or conperson) that seems a close enough fit. and these scammers are the very visible symptom that folks talk about usually.
Can you elaborate what those skills are in your view? Meaning no disrespect, your current comment sounds like a hand-wavy opinion with zero actual justification.
I mean, we don't need to pay them that much. These obscene salaries weren't the norm a few decades ago. They're the end result of Reaganite tax policies failing to tax super-high-earners progressively.
In fact, I see no obvious connection between the marginal tax rate and how much companies choose to set CEO's pretax compensation. Can grandparent explain?
You might think that paying a 45% marginal rate tax instead of 94% would mean you could be paid less while keeping more! How did lowering personal income tax increase compensation?
I imagine it's much easier for a CEO to justify divesting money from the company's profits to himself and to the government at a 1:1 ratio than it is at a 1:20 ratio.
I would posit that the CEO-to-government ratio acts, in a roundabout way, as a profit-to-pushback ratio. As a CEO, it may not be worth facing the board's reaction to spending two million dollars just so that you get an extra hundred thousand dollars.
CEOs have a ton of leverage and use it to use to their personal benefit. But they really are important- stock prices will change the value of a company by hundreds of millions of dollars based on a good or bad CEO joining or leaving, and it's not like the investors are all in on the scam.
There are mechanisms in the existing system to fight high CEO pay, EG activist investors will get involved with companies and occasionally force CEOs out or cut their pay.
I've never seen a CEO with any actual accountability. There's always someone else who failed and caused THEM this inconvenience.
I hear it's a hard job that's deserving all of that money. True, I don't want to talk and lie to customers all day. I just want to build things. Does the CEO want to build things? It's probably a different skill set they're not interested in. I could do it though, just like any job.
With some practice and a guiding team I can do literally anything. Even better if I don't have to worry about production bugs over the weekend. Even better if I know if I get fired tomorrow, I could retire and be set the rest of my life. Or use my golden privileged network + stamp of success to start back up whenever I want.
Not that they "do" even customer relations type of work. That's what their staff is for. They just have to be the face that reads the prompts.
I constantly see a lot of humble bragging, of course, immediately followed by pictures from ultra luxury places or a second vacation home in an extremely expensive place.
From what I see, it's just someone who has a few zoom meetings every day where they're essentially host at a party. Their team does all the actual work going into any of it. They pick the drinks and the scenery, note all the guests' allergies and even call in the catering. Host just shoes up for a little bit.
Then they take a long lunch, and come back an hour before everybody leaves for work. "Taking off already? Ha ha, I miss those days where I could do nothing all day too and then head out early. Have a good one."
Write a blog entry and then it's time to hurry off and talk to meet the interior decorator for lunch and vacation planning committee. Of course this all counts as work because the host NEEDS somewhere to entertain the guests.
When they have a bad day and have to do layoffs, for example, they can't even truly take accountability then. It's just wrapped up as an learning experience, or "the rest of the company needs this to not lose even more jobs."
Maybe they even describe how they failed, but you can just tell it's just words. They don't truly believe that in the heart. Like a child lying about being sorry.
It's probably better than the worst of them who say, "Actually, you deserve this. If only you'd worked harder." Or is that the best of them because they're finally honest? I truly believe that's the real feeling behind any humility-appearing outward-facing apology.
(Wouldn't you cut your salary before layoffs, for example, if you truly felt real sorrow? Even if it you could cut it just enough to save 1 more person. Let alone taking a humble standard salary and saving a few. The opposite of this action would be receiving a large bonus that year. Something we see and hear happening in actuality almost every time.)
I've only seen a CEO let go once in my career. And it wasn't due to performance, it was due to an alleged sexual assault which quietly and quickly disappeared.
I imagine with the various golden parachute clauses and valuable social connections with other companies (I'd wager there's some skeletons in closets being held hostage too), it's too damned expensive to let a CEO go for anything less than a scandal.
I've seen a few leave willingly to other similar companies before ever succeeding at the current one, or even doing poorly. The qualifications for the next CEO position seems to be that one was a CEO before, regardless of performance. Much like DC, after a certain level on the org chart, one "fails up".
Having had interactions with board members at 2 Fortune500 companies I worked for, I have pretty much lost faith in the "board members reflect the shareholders and manage the executive team" model.
In one case, the board member said that the only material about the company they were ever given was carefully constructed/managed by the CEO/executive team and was not detailed enough to support any critical analysis of executive team decisions.
In all cases, the board members seemed to feel that they were there merely for "helpful advice" rather than "proactive intervention" and the only decision that was clearly in their domain was "replace the CEO", which is pretty grand step.
The directors I have known were all quite competent, sincere people, but knew that their continued presence on the board was predicated on being just a sounding board for the CEO and/or Chairman.
In addition, I was told that, in the US, conflict of interest and other legal liability for directors is now so intricate and severe, that it was no longer possible to hire directors that were competent in the field and not yet fully retired (so hiring directors in the 45-65 age range is impossible, a bit of a problem for high tech!)
For those among us who think that steep liability for directors is a good thing, I have a question: would you take that job, when you are just paid a fixed, modest sum for board appearances (perhaps $50-100k/year, total)?
In any case, I don't know how to get "responsibility" and "authority" tightly connected at the top of any modern company. (The only exception I know of is when the company is still run by the founders)
I personally have not looked into this very much, but the difficulty of recruiting active, competent members for the board of directors was mentioned often by 2 directors I knew.
edit: Thinking more about this, I think that the difficulty recruiting directors with related competence came from a fear of Sarbanes-Oxley laws and “imputed” conflict of interest complaints for the prospective director. In practice, SOX could be really difficult.
Suppose you wanted to hire a driver for an armored truck that contains a billion dollars on an average day.
What kind of person would you look for and what would you pay them?
Would you try to find the most intelligent person, with the best driving skills, who is willing to work for the least pay?
Suppose you were interviewing that person, and s/he told you that you were an idiot for hiring the previous driver, who, despite impeccable references, disappeared with a truckload of cash after a week.
Are you convinced that you should hire the low bidder with the best skills?
obviously the solution is what organized crime came up with. tie performance to heartbeat of loved ones.
for accountability to work it needs motivationability
important to know whether the job is impossible or not, because if it is you will only ever get desperate unlucky less-than-useful idiots.
and also very big issue is the strength of the causal relationship between quarterly earnings and "job performance" ... hiring miracle workers, like GE did, who will massage the numbers, whatever it takes, will look nice initially, but then the long winter sets in and it turns out it was all theater. (that's when the mob connections come in handy, for exercising that accountability ... and of course these bonus clawbacks are happening, but probably due to the aforementioned causal inference problem they don't do much)
I've seen a couple of CEO replacements, who were brought in for various reasons. You'd expect a B-school like Stanford to stress "planning" since that's their solution to everything.
For the new CEOs I've seen, "they've been there before" seems to receive WAY more weight than it ought to. Often they're people who just keep failing up.
You can take the Civil War as a useful analogy. Neither Grant nor Sherman had really "been there before" the war, and their resumes were decidedly unimpressive. Somehow the test of actually doing it won out over their lack of formal qualifications.
Many CEOs have very one-sided contracts that makes firing them expensive. A great number of companies have boards that are highly sympathetic to the CEO which makes it take even more effort. In a lot of cases bigger shareholders referred the CEO to the board when they hired the CEO, so the board members that represent that shareholder's interests are invested in the bad CEO. So, you basically end up having to fire a friend that your friends invested in and lose a lot of money, and then have to find a new CEO.
I really like companies where the board isn't friendly to the CEO, and their meetings start with a vote on, "Shall the CEO be retained?" If there's a "No", then the floor opens for a discussion of CEO performance.
It can, but my point is rather around "CEO changes should be carefully thoughtout".
In otherwords, sometimes it's better to keep the existing CEO even if the performance isn't spectacular because turfing them out makes the market think things are worse than the company is letting on.
So if you do replace a CEO, it's usually accompanied by a deliberate change in strategy and very carefully planned out.
In theory the Board's only job is to fire the CEO (and hire the next one) but if you've ever been to a board meeting they hardly are like that at all. They mainly are to align the company's "journey" with the "journey" of all the other companies the board members are involved with.
Discontinued website theyrule.net had a really cool visual web of board members of high profile companies [0]. Amazing how many board members of one company are board members of a handful of others. It's like there's a breed of person who is just "board member".
It’s called an interlocking directorate[1] and is why a lot of access to power and capital is class based and not meritocratic. It’s also part of why C level pay has skyrocketed as the members of the boards all happen to have C level positions and they all end up approving the pay increases of the people who get to vote on their pay increases
I once heard a joke that, in the right environment "If you know what you're doing and show a little enthusiasm, you'll wind up on 6 boards before you can turn around and realize what's happening".
It makes sense that certain types of people would wind up on a lot of boards very quickly.
The biggest issue the board seats have become status ornaments. People grab these board seats and most of them don't understand the company or product are shy of taking responsibilities. You would see two kinds of people who are on the board - first they are in some executive positions in other organization and are already very busy and the second category of people who grab these board positions for fame but don't want anything to do with it.
As a Delaware CEO, there is more than this. It depends on if the company is private or public. There is a duty of loyalty and a duty of care. Both of them have specific obligations, including hire/fire the CEO, sales, resourcing (e.g. financial plan approval), compliance, a neutral voice on comp and other stuff.
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.
How is a company that did $27 billion in revenue last quarter and has 3 billion users imploding? The stock price is down (a similar amount to Netflix,PayPal and other quality companies). There is a difference.
As best I can tell it is all one big boys' club. The network of CEOs who sit on one another's boards, are personal friends etc. is a pretty well connected graph.
When they hire, fire, negotiate wages and so forth a primary concern is exchanging favours. Why would a board member say no to granting a $100M payment package when it is a step on the way to getting a similar deal themselves some day?
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.
Maybe tying their severance, retirement package or stock options to the performance to the companies long term growth would help alleviate that problem.
But surely if CEOs had term limits then the good ones would be jumping from one company to another, so if they think too short term then no board would hire them.
Boards would hire the CEOs that set the next one up for success.
Kinda like how term limits for the us president doesn’t usually result in that type of behavior since it would screw over their party.
Boards are the ones hiring the bad CEOs now. They're not equipped to tell the difference, even when they're not actively colluding to juice the short-term share prices so they can get out with a yachtload of money.
It’s actually quite common at certain types of organizations (typically foreign-owned) to appoint a local as CEO on a specific term and then to revisit when that’s up.
I had an airplane conversation with a manager at a multinational. He said they shuffled managers every couple of years. Bunch of reasons for that but partly gave the company better visibility into what's going on with a group because you have several managers on tap who've managed that group before. And if they have to fire a manager they have a number of people to tap for that role.
Huawei has a very unusual leadership/ownership structure, even amongst its peers in the tech industry. Legally, its a worker-owned cooperative, but unlike most cooperatives, its workers don't directly vote on policy; rather they choose 51 shareholder representatives and 9 alternate representatives, who in turn select a politburo, which in turn selects a CEO from the standing committee.
I understand they also don't get compensated much, relatively speaking. I think it fits with an Asian approach to business where companies are big conglomerates with much more cautious leadership (and therefore less expectation from them). At least historically.
It seems pretty obvious (#) that more democracy inside companies is going to bring benefits. I mean we believe that our past two hundred years of growth is in part down to the ability for a democracy to harness new chnage and ideas and adapt as needs be. So if it works for countries why not companies? Especially as there are plenty of companies who employ more people than some countries have citizens and many companies who control more funds than GDP of dozens of countries?
It's something we should believe, balls to bone.
So why have we still got dictators in our private markets when we won't tolerate them in our ballot boxes?
My guesses :
- it really is about the wealthy and the elites. Only cataclysms seem to seperate the wealthy from their grasp on power - the end of WW2 led to the birth of pretty much all modern democracies, and the death of the USSR found the rest.
- There is a lot of baby in modern capitalism, but also a fair amount of bathwater. We could throw out one and keep the other if we are careful. I honestly don't think that "I own all the voting shares so FU" is a great way to organise Facebook's billions, and a lot of people tend to agree. However why stop at dualmclass voting shares. Why is the AGM vote on director remuneration non-binding? Why don't employees get to vote for their boss? Vote on the yearly budget? I think if we chose the C-suite like we choose our parliament we might read the manifesto a little more closely.
- Imagine a world where UBI magically worked and we all chose to work based on
not can we make rent this week but "is this group of people actually any good and able to deliver the thing that's needed?" How often would we chnage jobs? How large a company is too large?
I don't have any real answers - I barely can articulate the questions. But Where we are today is incredible compared to the past ten thousand years of human history. But how we organise our selves today, how we react as a species to the coming storms will determine if there is another ten thousand years or not. And I am damn sure that billionaires and hero leaders are not the solution we need.
(#) From a middle class man raised and educated in a modern democracy
Warren Buffett discussed this in his 2007 letter to shareholders
Buffett says that "90% of your job as a director is having the right CEO."
"There is a natural tendency for people with big egos and big motors who get to be CEOs who like to do big things and to become bigger spending other people's money. Normally, when big deals come along [for approval] management has already made the deal anyway, they have investment bankers there that will go through a little ritual - I've never seen one come in and do a presentation which says it's a dumb idea! They know what the answer is supposed to be, and it becomes a little game."
Harvard publishes a report every quarter on investor activism vulnerability by industry and they quote about potentially $200B in dry powder. If the board is complicit, investor activism is one way to address it.
ok so what do CEOs do? hell, what does my manager do?
other than calendars full of meetings, I don't know what any manager does. as a technical person my entire career, the only things that my managers have ever done is to have regular meetings where we talk about non-work stuff, or they tell me that I am in trouble and/or fired.
the only thing that I know that they actually do is make technical decisions based on non-technical criteria, which makes for a very bad decision, in my experience.
I worked for a lawyer once who hired me to make technical decisions, and then made them himself anyway. "why are we spending so much money on rewriteable CD's?" well, you made an executive call and mandated that we archive documents to CD using uncompressed TIFF. so we get about 10 pages per disc. I told you not to do that but you said you knew what you were doing.
then it becomes my problem to fix while the lawyer screws off to some foreign beach.
Don't know what CEOs do, but a good manager is just supposed to unblock you from business. They are there to make sure you don't have to worry about the CEO stuff and whatever, you can just focus on your job.
If your manager is making technical decisions for you, something might be wrong!
Well, hiring and firing is a key part of management, as is setting performance standards and/or the desirable vs undesirable goals (one way of doing that being "tell me that I am in trouble and/or fired.")
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.
There's a big ego issue. Admitting the CEO failed requires admitting they failed.
The board picked out the CEO in the first place. They decided it was worth spending millions on them. And they likely approved of the CEO's plans whe it was discussed.
<flameon>
CEOs can't underperform, wage earners aren't working hard enough and are just there for money
</flameoff>
I'm a bit surprised this article only mentions replacing the CEO.
It takes for granted that companies are top-down organisations
Some companies perform well without even a CEO, as featured in _Capitalism: A Love Story_ from Michael Moore, and several press cases, like a national teabag brand close to my place.
Also, in every company that I saw, improvements were made by applying ideas from the lowest levels of management (like automating boring tasks), and neither HR nor CEO level.
I don't get why we need CEOs, if it's not to tweet and to have friends to get contracts.
<serious question, i'm not an investor>
Why won't investors experiences with other models of management, when the CEO is underperforming ?
When is the particular CEO underperforming, and when is the model underperforming ?
> <flameon> CEOs can't underperform, wage earners aren't working hard enough and are just there for money </flameoff>
For such a markup, it would make more sense to have some kind of delimiter to more easily match tags e.g. <flame-on> ... </flame-off>, where the second term is a reserved keyword that defines the scope.
That said, I think that <flame-comment></flame-comment> where the tags are matching would make more sense since they would probably be more compatible with existing markup languages.
I dont find this surprising. Look at how many companies keep on CEOs that burn their business to cinders and do nothing to curb scandal after scandal. Especially in tech and video games.
I can only assume I'm being downvoted by a CEO who, despite underperforming, is confident that their overpriced cheerleading can't be replaced by a large language model.
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 deniability, which begins ~3/4 levels of management up.
In Big Tech, most high level management was just there first. They started when that business unit started, and have been there for 20 years. An old stable business unit promoting a low level go getter way up the chain is basically unheard of
And as you rise, your pay increases along with other benefits (time off, "business lunches"/conferences/golfing with vendors, etc). The furthest you are from doing actual "grunt work", the better off you are it seems.
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 having so many things outside of my control.
In theory, I agree with you. In practice, it is mind-bogglingly rare how often high-level executives are fired for any reason, whether their fault or not.
Don’t want to be defending plutocrats, but consider how hard it is to be fired in general whatever the role. Honestly think it’s just par for the course.
I have worked at three large household names, two are in the top five market caps in the world. Logically what you say makes sense, I just havent seen it in reality.
I was part of a layoff affecting 100s of employees because of a boneheaded decision, corrupt project manager, etc. There was nothing at all I could do about it.
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".)
That's partly the point though, isn't it? You're not accountable for your performance, you're accountable for the performance of the company. And the performance of the company could be extremely good or extremely bad, very much independently of your contributions.
Higher level executives typically have very strong networks built up. Even if they get fired, they're financially already well off and can easily find another role through their networks.
I think layoffs matter too. ICs may be fired more for performance reasons, but they disproportionately face uncertainty created by rounds of layoffs, uncertainty that isn’t compensated.
The reason why is quite clear if you ask whether this would happen at a company that you owned 100%.
The problem of a diverse shareholding base supervising a company has not been solved. If you are an unhappy shareholder, you don't push for change...you just sell and move on to the next one.
Within tech, there is also a cultural issue because so many of these companies end up with VC-led boards or VC-selected managers who are, to be frank, quite terrible (that is the problem with 20 year management teams...the problems of a large company are different to those of a smaller one). Growth at any cost always ends badly. Interestingly, I think some of the companies that went through the late 90s ended up internalizing that...telecoms did, some of older chip companies, unf most companies will always end up learning this lesson too late.
I’d say this is false. Accountability becomes easier as you go up.
For then owner, everything is on them. They’re the owner. They pick the CEO. They can lose their money.
For the CEO, everything is on them as well, but the worst that can happen is they get sued or fired. They pick the people who are responsible for sales, costs, etc.
Any failure in these areas is very simple to attribute to the executive in question because it all flows into their area of responsibility.
A large company is like an oil tanker. Its never clear whether that oil tanker can be turned fast enough to avoid the ice berg. And thus, its never clear whether its the CEOs fault, or the circumstances. Too much complexity.
Perhaps. But the profit and loss accrues to the owners, no matter what. The buck stops there, fairly or unfairly. So the investor has to allocate capital wisely, and pick CEO's as best they can.
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 well aware of this, but in a large org that may only be a couple percent of the organization.
Because they set the right culture to get things done smoothly, they’ve hired and trained the right leaders to make sure the right decisions get made (and oversee them appropriately), they chart a course that produces the right outcomes without a lot of drama, they delegate what they need to, but not things they should not, have problems dealt with proactively before they cause major issues, etc.
If you see a ships captain running around looking busy all the time, or even worse, dealing with major issues all the time, that’s a terrible captain.
Same with a business unit leader.
Paying attention to what needs to be paid attention to for all that to work correctly, and integrating that into the correct action is extremely difficult.
Especially under stress, and with constant distractions, which that level in Tech has a huge amount of.
It is very difficult to find someone who can do it, and they command a premium because of it. Hands on experience with the tech and people over a long period of time is a huge help, but just being around awhile is no guarantee of success. The filter is very harsh.
Lack of someone who does it effectively, or if they lose their ability to be effective, gets really obvious really quick, and has major consequences for the organization.
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 this comes from experience at two FAANGs. Most high level business leaders started 20 years ago. You can present whatever type of logic you want, the data doesnt support the logic.
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.
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.
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.
You have conveniently forgotten a serious part of apple's history so let me remind you.
"
Steve Jobs and Bill Gates’ rivalrous friendship is the stuff of tech lore. The most poignant moment of that fraught relationship happened 20 years ago. In August of 1997, Gates stepped in and saved Apple, which, at the time, was on the brink of bankruptcy.
“Bill, thank you. The world’s a better place,” Jobs told Gates after the Microsoft exec agreed to make a $150 million investment in Apple.
"
So was it working brilliantly when it was 90 days from bankruptcy and was thrown a lifeline by Gates?
> 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).
I think Apple is excluded when Jobs was there, as an innovative company. The iPhone, iMac, Macintosh, etc. Along with that, theres exceptions to every rule.
The CEO has the most opportunity to set the goals, make excuses, blame scapegoats and gaslight the board.
Today OKRs have Narcissists running the asylum because they're always going to convince management that their glass is 70% full whereas yours is 30% empty.
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.
How are goals set? How do goals account for macro economics? How do goals account for market constraints/problems? How do goals account for measuring against a theoretical "alternative" CEO that could have done better?
It's much easier to be a bad CEO in a good market than it is to be a good CEO in a bad market.
I'm not even sure it should be "against [its] goals", because the goals are chosen by the CEO. (Choose bad goals and accomplish them, and you're still a bad CEO.)
Yes but company performance is based on financial outlooks. You say 'We will be this efficient with our assets and hit these revenue numbers' and then you do or do not.
CEOs need to be lookout ten years out. They have little control over this quarters numbers, or even this years. All they can do is changes that won't affect the bottom line for a while.
This is true in a phase three company that is in efficiency and future cashflow harvesting mode, but in practice you end up doing shorter term things too involving a crisis of people or execution.
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 see as an IC or as a manager or ever director is extremely different from the cause and effects a board sees in a monthly or quarterly update. Hence they often come to different conclusions than the people in the trenches would. That said, I’m sure this is true for any large organizational unit (government, military, corporations, nonprofits, etc).