May 26, 2007
The New York Times cover story yesterday reported on the widening pay gap between CEOs and top executives. I was particularly interested in some of the comments about CEOs. Some say that that CEOs can make a tremendous difference to stock price and others say that CEOs have too much authority. Some say that CEOs are paid like celebrities and sports stars and others say that CEOs are too greedy. I guess it is somewhere in-between.
What interested me most was a statement by Wal-Mart’s
CEO Lee Scott. The quote was not in response to the article but was taken from a luncheon that he attended one month earlier. “As we enter a world that is more complex, the company places value on things that go beyond the running of the business. There are aspects of interfacing with the external world that are more like running a presidential campaign than running a business.”
CEOs that can effectively lead multinational companies today are not easy to find. The job requires a different set of skills than those needed one decade ago. The “communications/collaboration” requirement is not a skill that every CEO has. One only needs to think about Home Depot’s
former CEO Nardelli’s communications style and how his “command/control” approach damaged the company’s reputation, as well as his. The Home Depot’s board reputation was also wounded in the process.
All the research and commentary of the past few years increasingly points to the crying need for “narrative” CEOs who engage and communicate transparently. This is not to say that living in a glass house is something that anyone can get used to but it’s an entirely new world. As Scott smartly noted, CEOs run for office every day. Their reputations are on the line 24/7. Every action is magnified and dissected and then disseminated. The dirty politics of the previous presidential campaign seems to be part of corporate life today. There is no armor strong enough to withstand the bows and arrows. All CEOs find themselves in swift boats.
It may pay to be chief executive but the rewards and requirements are not what they used to be.
The New York Times, CEO pay, CEO premium, communications, glass houses, damaged reputation, CEO complexity, political campaigns, CEO reputation, board reputation, Home Depot, Wal-Mart, Lee Scott, Nardelli, narrative CEO