The CEO has a much more important role of actually running the company and it is hard to find people capable of running such a large company.
I doubt that. In larger companies - the ones that actually have a CEO and not just a very hard working company owner - CEOs are usually pretty much isolated from any strategy, policy or organisation. For that they have upper management.
> One CEO
alone can do shit. A successful company needs competent workers, the right ideas from engineers and artists, diligent bureaucrats and most of all; a hell a lot of luck.
Given all that, even a company with a mediocre CEO can be vastly successful.
CEOs are mostly there for the handshakes and because they know people that know people. That's about it.
Ah, I don't know about that. In the end what CEOs get payed for is to have someone to blame in case anything goes wrong. medicore performance never got a CEO fired, it's just when something goes terribly wrong that they have to take their hats.
Usually there's a golden parachute attached.
CEOs are overrated.
I've yet to work in a (large) company where the CEO is actually relevant. Most of the decisions happen at lower, departmental levels.
In the initial years, CEOs can make or break a company, but after that it's pretty random. You can have a brilliant CEO that just gets stumped and the company goes bust. Or you can have an incompetent CEO that just stumbles from success to success.
In my experience, CEOs get hired because of their old-boys networks that will allow the company to participate to the pay-to-play games with e.g. financial institutes or similar industry handshake-wink-wink-partnerships. They know people that know people, that's it.
At the companies I've worked at, lower levels never make far-reaching decisions for the company.
That's what incompetent CEOs usually do; they get in the way of competent people doing a heck of a job.
Good CEOs know that they are figureheads and try to stay out of the crucial decision making, handing off responsibilities to people that actually know what they are doing.
Hasn't been the case for me. Even if they didn't come up with, say, a market strategy, they're important in executing it. They lead rather than getting the hell out of the way.
>Good CEOs know that they are figureheads and try to stay out of the crucial decision making, handing off responsibilities to people that actually know what they are doing.
A good CEO makes critical decisions. Handing off responsibilities if they know their limits is indeed part of being a good CEO.
We've known the answer to this question for decades: Very important. You can export entire factories to China, layoff everyone in manufacturing, keep management and design in country. Works just fine.
Don't believe me? How about this short list: Computing hardware. Hand tools. Medical equipment. Home appliances. Office supplies. Power tools. Etc.
What do they have in common? Offshore manufacturing.
This is definitely the case. There's a huge pool of talent outside of the US and Europe.
One of the mistakes people tend to make is this assumption that you can torture (being dramatic) capital and it will not react, it will just bend to the pressure. This is as wrong as can be. Capital is the easiest thing to move from place to place. And capital, with enough pressure, will always move where it can achieve the same outcome with a lower pain-in-the-ass factor.
Despite the popular indoctrinated meme, no, it isn't about greed. It's about getting shit done and staying in business.
Our "leaders" over the last 50 years or so, setup a perfect storm, a chain reaction, that is unavoidable for anyone in manufacturing save a few corner cases (military contractors being one category).
Say you manufactured coffee mugs. You are doing great. You have two other competitors with equal market shares. One of them decides they'll be smart, move manufacturing to China, lower their prices and grab more market share. They do the math: They are going to make LESS per unit, but think they can increase their market share to compensate for that, and more.
They come into the market with their new Chinese made line. You lose a bunch of market share. So does the other competitor. What do you do?
You can (1) lower your prices and operate at a loss; (2) lay off a bunch of people to reduce labor costs and use automation to lower your costs; (3) shut down the business and exit the market or (4) move your manufacturing to China.
That's it. There might be other options which are generally combinations of the four options given above. You move you manufacturing to China. A few months later, the remining competitor does the same.
A year later all three companies are manufacturing in China. They all have about the same market share they had before the move. They are all selling at lower retail price point, which means they are all making less money!
Oh, it doesn't end there. A few years later the same Chinese manufacture that makes their coffee mugs decides to sell directly in the US at a lower price. One of the advantages they have is that our "leaders" signed a treaty that makes shipping within the US free for any Chinese product (within certain limits). A Chinese company can get a product from Los Angeles to NYC for virtually free. A US company has to pay full rate for the same shipping.
Two out of the three companies go out of business and even more people lose their jobs.
> I wonder why that has not been done yet...
Oh, it has. Virtually every discipline you can think of has been offshored. From accounting to software engineering and more.
I have a quick personal example I can share: We needed to do a bunch of accounting analysis that required a bunch of data entry. Our accounting firm wanted somewhere in the order of $50K to get it done. We got it done by a team of business students in Romania for about a tenth of that. For security/privacy all we had to do was write code to redact (black out) private information (names, addresses, account numbers, etc.) on the thousands of documents they processed. This work required knowledgeable human analysis, so it wasn't a simple matter of OCR -> Excel -> summarize.
Capital always tends to find the most efficient way to get things done.
Except in government. In that case, assume half is wasted and that's probably about the right domain.
“How hard is running a company? Making “X” is what’s hard.”
They then point to the fact they are at the top of their game and an expert and have a post-graduate degree. Their job is very hard and they are very skilled, no doubt.
But once you get exposed to upper management you start to realize it’s really hard to get a large group of people to work towards a common goal. Stuff goes off the rails very easily when people don't understand, care of even know what the company is trying to accomplish and how that relates to their job. And convincing outside investors (public or private) that your business is actually worthwhile investing in and in "capable hands" isn't easy either.
Yes, giving speeches and making “best guesses” on where the business is going seem trivial. But it’s a critical role where if not done well shit falls apart quickly. Remember, some hedge fund doesn't want to know the intricacies of your CPU design - they want to know your company has a product people want and you can deliver it to them profitably. There is a definite "we trust this guy can deliver" filter when it comes to CEOs and it's often based on track record (fairly or not).
Look at Elon Musk. What is his value? Knowledge of rocket design? Knowledge of battery technology? Though I hear he’s technical his knowledge is trivial compared to the experts he hires. The depth of his expertise is likely asking his engineers which is best, asking some pointed questions and then making a call on the totality of everything at stake.
His value is also in being “the face” of Tesla internally and externally. Motivating his employees with a vision when everyone is betting the company will fail. Convincing people they can do something no one has done before. Very few people can do that well and even fewer can do it for years like Musk did.
Now of course very few CEOs are like that, but don’t underestimate the value of CEOs who successfully run even a small business. Those soft skills many technical people think are useless are critical and not many have them in one package.
As such, if you've demonstrated you have the chops to run a billion dollar business you can ask for (and will get) a pay package that dwarfs a typical job.
And of course you have grifter CEOs who are idiots, but say the right thing. No different than any other job. They don’t tend to last very long as CEOs either.
What this event in particular shows, and will likely continue at other organizations, is that absurd executive pay is absurd, and workers that are underpaid or given inequitable compensation for their work can demonstrably cease operations. The company does not hinge on a single CEO. The inequality is despicable, and the amount of paragraphs here defending that gap is beyond strange, at least from a hacker perspective.
And yes, of course, there are CEOs that are idiots. There are also moderately capable CEOs that surround themselves with idiots to insulate themselves from criticisms like "do you really need a $2MM raise?"
I'm not saying that all CEOs are like this, and I've known some incredibly dedicated founder/CEOs who truly bust their asses for the company. But charcircuit's insistence that it's the CEOs who actually make the business work ignores the other 99.9% of the people at the company doing back-breaking work, work the actual overtime, and don't get first-class (or private) flights to go play golf on the company dime. The fact that these people can be replaced is irrelevant. Treat them as disposable, and the company suffers. Underpay them and the economy suffers.
The current CEO is paid $15m, and is currently responsible for the biggest strike in the company's history, an expensive settlement, and a huge number of unhappy customers who complain that they can't mend their tractors themselves to the point where the government has considered passing laws to ensure they can.
Is it really so hard to find someone who'd do a better job than that for less money?
I'd say he's doing a pretty fantastic job for JD stockholders.
The CEO sets the overall business strategy with the advice of the board. They then have to delegate that strategy to their subordinates for the different activities necessary.
It's harder to find skilled workers with specific skills than it is to find a generic "CEO".
The studies im aware of show that quiet CEOs perform signicantly better than star CEOs on the long term (admittedly that is not equivalent to pay).
Anecdotally company performance does not change significantly with change of CEO.
I've often posited that many issues at large companies would be solved if the VP and SVP level folks were down doing the 'grunt' level work from time to time - like your VP of customer care should be on the phones one day a quarter, your VP of manufacturing should work the line once a quarter and so on.
It's pretty easy to say from on high "well, how hard can it be, they don't deserve that much!" when you've never done the work - it's a whole lot harder if you have and do from time to time. The CEO, needs to be on the floor, and needs to understand every aspect of how the company does business, if not that (like for very large companies like GE and Tyco), at a minimum the division president level does.
Being a CEO is more than just sitting in an office making strategic decisions, it's also having enough of a fundamental understanding of how your business works to know when you're being fed bullshit - you only get that by going out there and doing.
I can use my operating just fine without having ever developed any of the software in it.