Management Blog Posts From December 2005

chart of executive pay 1990-2005

The executive pay excesses are so great now they will force companies to choose to:

  1. take huge risks to justify such pay and then go bankrupt when such risks fail (and some will succeed making it appear that the pay was deserved rather than just the random chance of taking a large risk and getting lucky).
  2. make it impossible to compete with companies that don’t allow such excesses and slowly go out of business to those companies that don’t act so irresponsibly.
  3. hope that competitors adopt your bad practice of excessive pay (this does have potential as most people are corrupted by power, even across cultural boundaries). However, my expectation is the competitive forces of capitalism going forward are going to make such a hope unrealistic. People will see the opportunity provided by such poor management and compete with them.

As long as the pay packages were merely large, and didn’t effect the ability of a company to prosper, that could continue (slicing up the benefits between the stakeholders is not an exact science). The excesses recently have become so obscene as to become unsustainable.

  • Innovate or Avoid Risk – “There are many reasons why avoiding risks is smart and should be encouraged. But when avoiding risks stifles innovation the risks to the organization are huge.”
  • Quality, SPC and Your Career – “I believe far too often we look for the newest ideas and miss all the great ideas that have been known for decades but are not practiced widely. The key to success is applying good ideas well – not just applying new ideas.”
  • America’s Manufacturing Future – “The best hope, as I see it, for retaining manufacturing leadership in the USA is through increasing the adoption of management improvement methods including lean manufacturing.”
  • Ford’s Wrong Turn – “The biggest change needed is an improvement in management. Other things would also help greatly, such as improving the health care system.”

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