There’s a lot in the press these days about the irresponsibility of CEOs who lied, covered-up and generally made a lot of cash while destroying billions of dollars of value. For example, here’s something from the Vault’s article on “Are CEO’s Ready To Face Career Instability?“:
As [reviled Lehman Brothers CEO] Richard Fuld’s Congressional testimony aptly underscores, if ever a job requires regular supervision, it is the CEO’s. The risk of a CEO’s poor decisions is socialized across the spectrum of a company … and all levels of workers take the hit when such executives drop the ball. As we see all around us, even strong businesses can be run to the ground in a year….
Gilded nameplates aside, being CEO is still a job. Jobs come with responsibilities, and with the natural expectation that these responsibilities will be fulfilled.
[Emphasis and revilement added]
That’s right: CEO is still just a job. It’s not being a boardmember or a major shareholder. It’s working for someone else.
Elliott Jaques described this succinctly during his work the works council of Glacier Metal Company and with their CEO, Wilfred Brown. CEOs head up a managerial accountability hierarchy. They are the place accountable for all actions in the organization, and should be held accountable by the board of directors, who represent the “association” of shareholders. But this rarely happens, for a variety of reasons.
We’ve let our CEOs run amok, setting their own compensation at 344x the average worker’s while shoveling the coal for the train to hell. Hell for us, that is: they have all made out like robber barons.
It’s time to reign CEOs in. This won’t happen until shareholders, especially major investors like retirement funds, start holding CEOs accountable for having “the courage, determination, discipline, and resource investment that it takes to forego the short-term Wall Street nod in deference to a truly healthy, sustainable organization” (in the words of Michelle Malay Carter).
It will take a major change not in the CEOs but in the boards to whom they are accountable. Directors will have to change their views of what is a good investment, seeing longer term tasks as the job of the CEO. Mark Van Clieaf, of MVC International, has written and spoken extensively on this issue for the governance audience.
The world is once again looking at CEO compensation and accountability, as it did after Enron and Worldcom. Perhaps now we will see a real change for the good.