CEOs would work as hard for one tenth the pay

According to a study last year by Carola Frydman, a doctoral candidate at Harvard, and Raven E. Saks, an economist at the Federal Reserve, the average top executive's salary was 170 times the average workers in 2004. This is up from 68 times in 1940. a few companies, such as Costco limit the CEO's pay to a modest multiple of the average worker's but most have no limits. We see CEOs "double dipping" by getting guaranteed severance packages, multiple years credit for each year's service towards a pension, and "consulting contracts" for doing no work at all.

This is one of the issues which most Americans agree on. As the multiple continues to grow without any controls, there is likely to be a backlash of some size.

Ultimately, as companies have become larger and more complex, the demands on the CEO have become greater, but the CEO has less impact on the company. The CEO does not even know most of what happens in the company, and since he or she relies on information channeled up, much of it is wrong or incomplete. so ironically, as CEOs are being paid more, even the wonderful ones, and there are some, are hadicapped.

We could also conclude that a CEO would work at least as hard for 17 times the average worker's pay - perhaps even harder since it would not be as easy to earn enough to retire on in a few years alone!

How naive can you get?

Today we see that the big news is that Lucent is merging with Alcatel, and Pat Russo of Alcatel is going to run the show from Paris. I wonder if she really belives that. When Mercedes-Benz bought Chrysler, it was trumpeted as a "merger of equals" - until Chrysler hit a wall, and Daimler moved a management team from Germany to take it over. When US West "merged" with Continental Cablevision, that was also supposed to be a "merger of equals." But one fine day, the folks from Denver ousted Amos Hostetter, Chairman, even though he was the biggest single shareholder in the merged company.

I will confidently predict that Pat Russo's position will be seen to be a smokescreen and in less time than expected, she will be replaced by an Alcatel person.

Any time there is a merger, there is a winner and a loser. Occasionally, it is not as expected, but it is usually predictable. The management of Gillette will soon learn how well they can succeed in the Procter & Gamble culture. So for all those involved in a merger, take the money and run!

More Effective Networking

I recently read a new book about using networking in job change. The principles apply in using networking for other activities too. The book is "The $100,000+ Career: The New Approach to Networking for Executive Job Change."

It always surprises me that so many people handle networking without finesse. Networking is not a "hey, give me leads and contacts so I can disappear from your life" game. Networking is about building a network of friends so that you have this network throughout your life. It means not simply reciprocity, not a "quid pro quo" approach, but a genuine desire to help others and act as a model for good behavior. In the long run, this pays off, not simply materially, but in terms of virtue being its own reward.

So go out and make some new friends. Any financial benefit is purely cream on the cake.

Effective Networking

A common question is how to network. A common complaint is the inappropriate use of networking. There is a saying that "the most popular girl in school isn't." The reason is that once someone is identified as "most popular" everyone wants to be his or her friend, but he or she cannot manage that many friendships, so people feel excluded and therefore resent the "most popular," even if they do not say so to others for fear of being ostracized. Often people with a huge network of acquaintances cannot manage all they have. I hear from people who complain about repeated invitations to join a virtual stranger's LinkedIn, or similar, network.

Let me give an example. While we all "know" that networking is the way to find a new job, it may be being overused and misapplied since its "recent" discovery. It is not a quick fix. Networks take time to build and maintain. They require reciprocity, not just use. Ask not what your network can do for you, but you for your network. If you are looking for a new job, in addition to quantity, why not try another approach. Find a small number of people (say 5-8) whom you trust and respect. Form a sort of co-operative in which each person focuses on finding the other members a new job. So this means that you are not soliciting recruiters in a self-serving way for a job for yourself. They have become inured to job seekers by now and are not exactly clamoring to talk to them. However, you are telling recruiters about someone they should get to know. This is still rare enough that it may get the recruiter's attention, and you can rave about your friend in extreme terms without seeming crass or immodest.

While social networks can be valuable, please ensure that you invite people whom you already know and trust. Please try to respect the invitee by personalizing the invitation instead of using the standard one. This approach will increase the value of the network.

The law of unintended consequesnces

It seems to be rare in business that people take the long view. So many apparently well thought through strategies turn out to be quick fixes, which then become albatrosses around the company's neck. For example, Western automobile companies were quick to leap into China, in spite of laws requiring giving control to Chinese partners. Now, just a few years later, when sales for many of these companies are in the '00s of thousands, we see that the Chinese partners are setting up their own state-of-the art factories to export many more cars back to the West. In the long run, the Western companies will have trained and set up their own worst nightmares.

The ghost of AT&T strikes back

This week it was announced that AT&T is taking over BellSouth. Now AT&T is really Southwestern Bell, which recently acquired what was left of AT&T. So instead of the old AT&T, plus SNET, plus GTE, plus MCI, we will have AT&T, plus Verizon, plus Quest. All via the "breakup" of AT&T into seven regional Bells plus a long-distance company. Yet they now compete with cable companies and soon others. As technology has advanced the entire competitive set has transformed. So do things change all the time. Sears Roebuck is no longer the threat to the consumer which it was once thought, nor is A&P. Trader Joes is growing faster than most better known chains. McDonnel Douglas, PanAm, Arthur Anderson, all are gone!

In the past year, I have known many people who lasted well under a year in new jobs. The pace of change is accelerating, and we have not realized it yet.