Wednesday, February 18, 2009

New Rules for CEOs

Executive pay is a topic du jour with all of those companies taking public money to "survive", but public desire to curb it has been brewing for a while. I've been thinking about this for while now and thought that we really need some new rules about executive compensation and engagement, so here they are.

  1. You are stewards of your company. You've been entrusted as stewards of your company to look after its entire well-being, you need to look after the shareholders (many of whom are employees), and the employees, as well as making your bottom-line look good.
  2. Focus on the long-run. You can lead the company to a bright future, if you can battle the stormy seas today. Don't fall to Wall Street pressure for quarterly results if it will hurt the long run viability of the company
  3. The buck stops here. Don't let management throw their ethics out the window.
  4. Listen to the employees. They do the work and know the company, they have lots of ideas of how to improve things and want the company to succeed. Isn't that what management wants afterall?
  5. Don't do things because your competitors are doing them. I have heard the argument made so often that companies have to do this and that because their competition does it. You can lead, you can do things differently and market it as such. Did your parents always ask you if your friends jumped off a cliff would you do it too?
  6. Focus on quality over being cheap. Trying to do things to make things cheaper is often easy to do but once you've positioned yourself as the low-cost leader in your industry, you get yourself in the position of having to constantly reduce costs and be cheaper still. Wouldn't you rather be the company that others look to wishing to emulate? Wouldn't it be great to be able to say that "I work for this company" have have a huge feeling of pride!
  7. Your company needs to think globally but act locally and be good corporate citizens of world. If you pollute in a country that is happy to get your business, you're still polluting. Why not make your company greener and work on leaving the planet better than we found it? Don't take tax incentives to move a factory or plant and then move again when the tax incentives are up. That local community made those allowances hoping that you'd stay and help that community to prosper through local employment and the tax base that they would eventually see. Many smaller towns are totally dependent upon one or two companies and are devistated when that company closes or moves.
  8. Remember that the bottom line is more than the botton line. Why not grow your business to match the number of employees you have instead of getting rid of people? Be creative and innovative. Anyone can fire people or relocate to cut costs. Think beyond the "normal" fast and easy solutions
  9. In our trying economic times, think of ways that you can hire more people instead of adding to the unemployment lines. If you truly need to make people redundant, maybe you can hold off for a while, but this should be a last resort, not a first step.
  10. Lead by example. If you're asking your employees to take pay cuts, you should be willing to do the same. Your employees are more than a "liability", everyone's cost of living goes up and many of them are struggling to live on the money they make now, how are they supposed to get by with less? If you put excessive travel and expense restrictions on the employees trying to do their jobs, you shouldn't be living high on the hog, entertaining would-be clients,upper management, and family.
  11. There should be no incentive or targets to get rid of people. If you have to lay off 1000 people (or you choose to do so without really needing to for that matter), you should not get any bonus for doing this. How are those 1000 people going to find new jobs, pay their bills, and feed their families, are you willing to share your bonus with them. If the company is doing poorly do you deserve a bonus just because you can have one? Do you feel proud about taking it? Did you truly earn it?
On a personal note, my company was bought by another large global company last year and we're in the process of realizing the "promised" synergy that is always sold with these deals, so my future with the company (as well as my co-workers), is being decided as I write this.

I do hope that our world's CEOs will see these rules and be compelled to act for the greater good of their companies, employees, localities, and the the world. Lee Iaccoca worked for $1 when Chrysler received government help. He engaged the employees of the company and they turned things around (too bad that leadership afterwards seem to have lost sight of their stewardship role!). I believe that he received stock as compensation, so he didn't starve, but his leadership is legendary, something that should be strived for by others. Sure CEOs and executives should be compensated but it is time to show some true responsibility and be stewards of your company.

Photo credit: Wall Street courtesy of linder6580.

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