CEO Bucks

September 15, 2007

CEO Bucks

1991_05_06.jpgI had fun reading Robert Reich’s opinion piece (CEOs Deserve Their Pay) today in the Wall Street Journal ($) (September 14). Reich, former U.S. Secretary of Labor under President Clinton, believes that CEOs deserve those big bucks. I agree.
 I loved how he described the differences in being a CEO several decades ago with now. Here is an excerpt:

“The CEO of a big corporation 40 years ago was mostly a bureaucrat in charge of a large, high-volume production system whose rules were standardized and whose competitors were docile. It was the era of stable oligopolies, big unions, predictable markets and lackluster share performance. The CEO of a modern company is in a different situation. Oligopolies are mostly gone and entry barriers are low. Rivals are impinging all the time — threatening to lure away consumers all too willing to be lured away, and threatening to hijack investors eager to jump ship at the slightest hint of an upturn in a rival’s share price. Worse yet, any given company’s rivals can plug into similar global supply and distribution chains. They have access to low-cost suppliers from all over the world and can outsource jobs abroad as readily as their competitors. They can streamline their operations with equally efficient software culled from many of the same vendors. They can get capital for new investment on much the same terms. And they can gain access to distribution.”

Sounds like an unwinnable job. Reich agrees. “So how does the modern corporation attract and keep consumers and investors (who also have better and better comparative information)? How does it distinguish itself? More and more, that depends on its CEO — who has to be sufficiently clever, ruthless and driven to find and pull the levers that will deliver competitive advantage.”

There are not so many CEOs to pick from these days that can pull all the levers. For that reason, their salaries remain high when they can find them. And boards are not going to say no when one of these tested CEOs are available.

 

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Leslie Gaines-Ross
Leslie Gaines-Ross
lesliegainesross@gmail.com

As Weber Shandwick’s Chief Reputation Strategist, I focus on the ever changing world of reputation. For the past 25 years, I have relentlessly observed, researched and commented on the rise and fall of reputations.

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