Hacker News Reader

Comment by naikrovek | Hacker News Reader

Yeah CEOs never get enough respect. Also they're paid FAR too little for having an insight a child would have...

Good leadership is rare, you're right, and I don't think CEOs deserve credit for demonstrating good leadership. Good leadership should be table stakes for that position; the bare minimum.

What needs to change are the astonishingly weak disincentives (and sometimes, actual incentives) aimed at bad CEOs.

If you can worm your way into a CEO position of a company you didn't start yourself, and you DON'T demonstrate good leadership qualities with regularity, then a good old-fashioned CEO-blacklisting seems very appropriate, to me; you just don't get to be a CEO anymore.

View on HN

"Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith."

https://news.ycombinator.com/newsguidelines.html

It is not "an insight a child would have". Good ideas mean nothing unless it leads to a marketable product. And for one smart janitor with business sense there are thousands of people who will just cost the company money.

The CEO here managed to notice that among thousands, this is the janitor to listen to.

As for CEO being well paid, it is simply because their decisions can make the company lose or earn a lot of money. If a $500k salary earns the company millions, it is well deserved. And when things go wrong CEOs do get kicked out.

So yeah, we can say that spotting talent in a janitor and turning into a lot of money for the company is a CEO's job and the reason he is paid so well, but it doesn't mean he shouldn't be praised for a job well done.

And sure some CEO don't deserve their position, golden parachutes are a thing, but I have a feeling that most CEOs have merit.

> It is not "an insight a child would have".

Are you sure? Children listen to janitors just as much as they listen to anyone else. One's job doesn't matter to a child; they know they can learn from anyone. Very few CEOs know this. Hell, very few ADULTS know this.

I didn't intend "an insight a child would have" to mean that such an idea is a basic thing everyone knows, I literally meant "an inside a child would have."

You can become the world's first CEO with a boardroom full of janitors

Children will also chase a ball into a busy street, or eat candy for every meal if given the chance. Maybe there's a virtue to knowing which childlike behaviors are worth keeping.

Again, I am not commenting on the general skill of a child...

The trouble is that there's a torrential flood of information coming at you as a CEO.

You have to be selective with where you sample your information. Sometimes this filter is too strict (only listening to VP's), but if your filter is too loose then you will spend your days drowning in information that might not be all that useful

Good leadership is orthogonal to the amount of incoming information.

I am not saying that all CEOs should listen to all janitors; I'm saying that all CEOs should have, at a bare minimum, good leadership skills.

> If a $500k salary earns the company millions

If only CEOs were paid so little...

Aren't they though? I mean sure the CEOs of large, well known companies are paid many millions, but they are the highest paid CEOs. Seeing CEOs getting paid 100 million a year gets headlines, but most aren't paid that much. I wouldn't be surprised if the median CEO total compensation is less than 500k a year.

You seem to be in fact correct. Most CEOs actually earn less than that. Which makes the 2.2 million average even crazier.

>The average private company CEO total compensation package for 2017 was $2,213,679, but the median was a more modest $350,622.

https://chiefexecutive.net/ceo-and-senior-executive-compensa...

If that's accurate, also crazy is 90th percentile and mean are almost the same at 2.216 million vs 2.214 million. So the top 10% is completely dominating the total compensation for CEOs.

> As for CEO being well paid, it is simply because their decisions can make the company lose or earn a lot of money.

CEO pay has risen over 900% over the last forty years:

* https://www.marketwatch.com/story/ceos-are-paid-278-times-mo...

Somehow I don't see the value that they bring to have increased by the same amount. From a Harvard study entitled "Are CEOs Rewarded for Luck? The Ones Without Principals Are":

> CEOs are rewarded for luck. Moreover, pay for luck is as large as pay for general pay for performance. Pay for luck also appears on the most discretionary components of compensation, salary and bonus. Looking closer, we found that pay for luck is strongest among poorly governed firms. Adding a large shareholder on the board, for example, decreased the pay for luck by 23 to 33 percent. This finding weakens two prominent explanations of pay for luck: “Paying for luck is optimal” and “Filtering out luck is impossible.”

* https://doi.org/10.1162/00335530152466269

* https://scholar.harvard.edu/files/sendhil/files/are_ceos_rew...

Another study, "What Makes a Winner? Toward Resolving the Role of Luck and Skill in Sustained CEO Performance":

> This study is an empirical examination of the extent to which luck can explain sustained performance. Using a unique empirical strategy of bootstrap simulations that we compare to actual performances of public companies, we observe that over 95% of the differences in performance outcomes between “top” versus “average” performers can be attributed to luck, even if all CEOs are equally skilled. Through this novel empirical approach, we can better incorporate the role of luck into studies of sustained performance, and our findings suggest that more attention should be placed on the role of unanticipated and even uncontrollable changes on performance.

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2827132

CEO pay has risen over 900% over the last forty years:

No, pay for the CEOs of the 350 largest companies has risen over 900%.

Said 350 largest companies have also grown dramatically; "CEO of the 50th largest company in 2020" (Procter & Gamble, $67B revenue) is a much bigger job than "CEO of the 100th largest company in 1980" (General Foods, $5.4B revenue).

Why did you compare the smaller company in 1980 to the larger company in 2020? Surely if you wanted to really drive your point home, you'd do it the other way around.

The way it is, you've just made it much harder to actually compare numbers. Just accounting for inflation brings that gap down to 67B vs 17B. Still sizable, but also comparing the 50th largest company to the 100th, so...

Oops. Those are both the 50th largest companies by revenue for their years. Not sure why I typed 100 for one of them.

The end result of mass centralization of industries with plenty of political backing for mega-corps and the hackery of the massive finance industry. Meanwhile new small business registration numbers have been declining in the US.

It is not a single voice in a room of quietness. It is noise from a 1000 directions and you need to pick out that one signal that leads you to success.

That has nothing to do with good leadership ability.

A CEO, or any leader, has a vision, and inconsequential information is easily cast aside. Our ears can do this quite easily, when we have a conversation in a noisy conference room or whatever.

The temptation might be to treat the story like a rags-to-riches fairy tale, but it is instead a parable if you read it from the point of view of a leader (which admitedly would be resisting the author's narrative).

Reply on news.ycombinator.com