I have long thought that the reasoning described here in "remuneration committees, not wanting to attract below average CEOs, are continually tempted to pay slightly over the average" is suspect and actually erroneous. Surely there are thousands of business school grads who see themselves as potential CEOs. If we had anything like supply and demand, the desire by so many for the opportunity to lead a company should drive the top wage down. The problem may lie in the myth of the "below average CEO" you'd get by giving a less experienced person a chance. Many "top" CEOs, it seems to me, have the wrong kind of experience, namely prioritizing short-term profits over everything else with little ability to create a positive corporate culture for workers or clients. When a business is struggling it seems they always want to bring in expensive "talent" whose focus is to cut "softer" company assets such as innovative programs or collaborative leadership by women and minorities, and instill an intimidating military-style command structure. I wish someone would study the total effects of these high-priced "top" CEOs, compared to saving money and maintaining morale by hiring someone less sociopathic at a lower salary. I am sure they would discover that these decisions harm company success in the long run and create far more negative societal externalities that the larger society then has to absorb or pay for.
On Jun 5, 2017 djanick wrote:
I have long thought that the reasoning described here in "remuneration committees, not wanting to attract below average CEOs, are continually tempted to pay slightly over the average" is suspect and actually erroneous. Surely there are thousands of business school grads who see themselves as potential CEOs. If we had anything like supply and demand, the desire by so many for the opportunity to lead a company should drive the top wage down. The problem may lie in the myth of the "below average CEO" you'd get by giving a less experienced person a chance. Many "top" CEOs, it seems to me, have the wrong kind of experience, namely prioritizing short-term profits over everything else with little ability to create a positive corporate culture for workers or clients. When a business is struggling it seems they always want to bring in expensive "talent" whose focus is to cut "softer" company assets such as innovative programs or collaborative leadership by women and minorities, and instill an intimidating military-style command structure. I wish someone would study the total effects of these high-priced "top" CEOs, compared to saving money and maintaining morale by hiring someone less sociopathic at a lower salary. I am sure they would discover that these decisions harm company success in the long run and create far more negative societal externalities that the larger society then has to absorb or pay for.