How much is enough? Headline grabbers such as senior executives from Hydro One and Bombardier defending 50% pay increases and compensation in excess of 100 times the average earnings of Canadians continue to baffle me. While the peons like you and me have to suffer the brunt of corporate restructuring, massive layoffs, lack of job security, continuing cost cuts, the few executives in C-suites are sitting back and counting their mega-millions stop options and bonuses. While our government are quick to defend that world class corporations requires world class leaders, and hence world-class compensation, in reality it is not difficult at all to do the job.
First, how often do you see the executives in office? If they are not jet-setting the world in luxury settings or playing golf, they are of hardly any use at all.
Second, do you ever see a senior executive answering customer’s call at time of crisis? Or if there an issue at the production floor, do you ever see them rolling up their sleeves trying to fix the problem? The answer is that they hire people to do the job and only reap the rewards at the end. It is also a no-lose situation for them. If they do a half-decent job, they are rewarded immensely. If they screw-up, which is more often than not, they get the golden handshake and walk away with millions of dollars, while leaving the company in a mess.
Third, one trick I often learned whenever there is a problem, the executives would always ask questions first and never answer any. And whenever a question is asked, the executive would look around and ask what you think instead?
Fourth, in difficult times, they always engage consulting companies to do the dirty job and to identify areas of improvement? Why are companies spending millions of dollars engaging consultants to tell them what the problems are when in fact, they should already should already know the problem and how to resolve them.
Fifth, it is true that the number of ‘qualified’ people is in short supply because the very people (Board of Directors) that hire them are also senior executives themselves. It is a very close circle of people who look after themselves first. Look at the number of executives who are also member of Board of Directors at other companies. I sometimes wonder where in the world they have so much free time to sit on other board (with huge compensation, too!). Somewhere in the world, they must be more than 24-hours in a day!
To say that I have lost faith in the ability of senior executives to lead effectively is truly an understatement. A monkey can do a better job. Just as in stock picking, the number of active fund managers underperforming the market is an astounding 80% or more on a consistent basis.