The Poll Proposition : CEO's - we must search the world and pay what it takes to get 'the best of the best'. Do You agree?

Nearly 75% of respondents voted against the proposition.

Are all these people hopelessly wrong? Surely to goodness to-day's competitive circumstances mean that companies need real stars to lead them?
Surely Vodafone are right when they say in their annual report: The executive talent needed to maximise returns for shareholders in this industry is very scarce and the future success of the group will depend upon its ability to provide remuneration packages which are competitive in actual and prospective value when measured against the best in the industry.

Well, actually the 75% majority are right. What they probably understand is that the proposition has several flaws. These are:

Who puts out the propaganda? The press, large parts of which like to see industry as a sort of soap opera with heroes and villains; managers themselves, to make a case for high pay; executive search companies, for obvious reasons; and the financial markets, which take a short-term, simplistic view of what makes companies perform, and like to have one person to praise or blame.

The two special cases?

  1. CEO's can be tremendously powerful when it comes to ruining companies, and it needn't take too long! Just one disastrous merger, in fact.
  2. Major corporate crisis. These are often caused by the unwise or stupid actions of the powerful people referred to above! Crises need strong, direct and high profile leadership, and a high-impact, charismatic leader can often be right for taking the hard decisions needed to save companies.
    But, when the crisis is weathered, it is crucial to replace the high-impact 'big hitters', because it is almost certain that they will be quite unsuitable for the patient long-term business and organisation building that should replace the crisis style and is the only foundation for long-term success.

Further Material in this Site.

* The Curse of the Superstar CEO, Rakesh Khurana, Harvard Business Review, September 2002.
** Holes at the Top: Why CEO Firings Backfire, Margarethe Wiersema, Harvard Business Review, December 2002.

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