CEOs & Corporate Performance: Assignable Cause?

[round12345@aol.com]

Dr. Deming would strongly agree, I believe, with the following "Letter to the Editor", appearing in the Kansas City Star, (7/23/2002).

Michael Round
Overland Park, KS

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Greed factor 

One CEO's compensation can be said to be "in line" with others, but it is in the context of a system that is fundamentally flawed.

First of all, top executives are accountable for the strategic direction of the company. This cannot be assessed on a year-to-year basis, but only over the course of two or three business cycles. This may take 10 years or longer.

Second, there is much more to the performance of leadership than narrowly focused financial factors. What about leadership in marketing and product development, quality job creation and human resources, and community involvement?

Third, linking compensation to the stock market often creates rewards based on factors for which the CEO had little accountability. Stock prices go up in a rising market. A rising tide lifts all boats.

Finally, the size of executive bonuses would have you believe only a few people were accountable for the performance of the company, when in fact it may take hundreds or thousands of people doing their job in a professional fashion to create profitable, long-term growth.

 


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