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Old 03-07-2014, 09:49 AM  
KC native KC native is online now
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Big Company CEOs Just Aren't Worth What We Pay Them

I have not read the paper yet, but here's the link.
http://d1c25a6gwz7q5e.cloudfront.net...rong-paper.pdf

Forbes summary follows.

http://www.forbes.com/sites/mattsymo...t-we-pay-them/
Big Company CEOs Just Aren't Worth What We Pay Them

It isn’t every day that academic research comes along to tell you something you really wanted to hear and that you suspected was the truth all along? In this case it’s about the long running debate around top executive pay.

A recent paper by J. Scott Armstrong of the Wharton School and Philippe Jacquart of France’s EMLYON, seem to have finally established that paying top dollar simply doesn’t get a better job done. And, in fact, it might actually get a worse one done.

According to Armstrong and Jacquard, while there is plenty of evidence that financial incentives can be effective in motivating people to do mundane and boring tasks, individuals do the more interesting and challenging stuff…well, because it’s interesting and challenging.

Perversely, they say, very large financial incentives may actually hinder top performance. The paper argues there is strong evidence that individuals can become fixated on incentives and either become limited in their thinking, unable to digest and adopt new ideas or alternately become convinced that they will achieve the goal automatically so do not need to try as hard as they might otherwise. Whatever the outcome, every other stakeholder from the more modestly earning employee to the corporate stockholder loses out.

And finally the research also suggests that we might not really be getting the brightest and best talent at the top because the tools and processes used to identify candidates are either limited or downright faulty. There is simply too much emphasis on past performance, personal recommendation, unstructured interviewing, an unwillingness to ask really difficult and searching questions and that more dangerous selection criterion of all – gut instinct. Worryingly, it seems that the headhunters and in-house recruiters charged with hiring occupants of the corner office may be relying too much on perception and too little on good, hard facts. The paper points out that CEOs who win prestigious industry awards constantly out-earn those that don’t. Yet the stocks of the companies the award winners head up consistently underperform in comparison to those of their less publicity hungry peers. Perhaps because the latter spend their time running their businesses well instead.

So far, so good. I’d never quite got the fact that a CEO might be worth several hundred times the average person working for them (around 380 times, according to estimates from the AFL-CIO as recently as 2012.) But what do we do about it?

Unlike many academics, who might shy away from coming up with a solution, EM Lyon’s Jacquart is one willing to give the obvious if uncomfortable answer – namely that current incentive models need to be abandoned and overall executive pay should be reduced. And he’s also ready with a counter to those who will doubtless argue that this will make it impossible to recruit the right people and bring major banks and corporations crashing to the ground. “Yes, of course this may make it more difficult to recruit very senior individuals from outside an organisation, at least in the short term. However it would force businesses to focus more on the development of the talent it already has, the talent that is more likely to be more loyal to and understanding of its aims, goals and methodologies.”

As the old Bob Dylan lyric goes, “Don’t follow leaders.” And if Messrs Armstrong and Jacquart are right, don’t pay them quite so much either.
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Old 03-10-2014, 04:32 PM   #91
BucEyedPea BucEyedPea is offline
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Originally Posted by Loneiguana
There is no such thing as government force.
O.M.G! This is rich from our resident, let's force fast food businesses to pay a living wage for families!!

Of course govt is force! See what happens to you if you refuse to obey any govt laws. You'd be fined, prosecuted and jailed in some cases. That's called force. This is why govt power HAS TO BE LIMITED!

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Originally Posted by Loneiguana
And since this is a country made up of and for the Citizens, not for private companies, and the citizens have a voice in how this country runs and operates, if the Citizens want to choose to affect the market through the government, rather than through individual actions, it is well within the Citizens right to do so.
Not under our system of natural law and rights they do. Nor under our Constitution. Nope!

You are ignorant of the system you live under. The Constitution does not just address citizens....it uses the words, people, persons and citizens in a certain place.

Then you call for citizens, as if private business owners and members of corporations aren't citizens ( I saw what you did there.), to use govt to force others to do as they/you think is right or better, while speaking out of the other side of your mouth that govt is not force. This is cognitive dissonance and lack of critical thinking skills. Of course your ideological foundation is rooted in the idea that property of others is community owned and that the majority's will is valid to do what thou wilt with it.

You need a good historical lesson from our Founding Fathers and the men who influenced their ideas too. You have a sense of property that is communistic.
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Old 03-10-2014, 06:25 PM   #92
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Originally Posted by KC native View Post
...So what's with the 3 decade lag in the craft brewery explosion?
There wasn't. Sierra Nevada, Red Hook, Pyramid, Boston Beer Company, Old Dominion, Widmer Brothers, Goose Island, and Rogue Ales were all founded in the first decade after homebrewing was made legal again. Some of them just a year or two afterwards.

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Most of the Robber Baron's were in finance and the railroads. They were not producers of good.

You have a really skewed view of economic history.
Just because you made your money in services, doesn't mean you didn't produce value to people. Even the railroads which for the most part gained their monopoly from government decree and not from actual competition, provided a valuable service.

Take standard oil for example. During the life of the company the price of its main product, Kerosene, fell 80%. Hardly, the sign of a predatory monopoly. In 1882 Standard Oil had a 90+% share of the world refining market. When the company was broken up in 1911 it had a 70% share and dropping as oil fields and refineries opened up in Texas, Southern California, and internationally. Standard was limited to the Mid-Atlantic and Great Lakes.

Prices dropped during the time of the robber barons. If you had a predatory monopoly you would expect prices to stay the same or at least rise.
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Old 03-10-2014, 06:50 PM   #93
BucEyedPea BucEyedPea is offline
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Prices dropped during the time of the robber barons. If you had a predatory monopoly you would expect prices to stay the same or at least rise.
Monopoly is a creation of government--not the market. Particularly, "predatory" ones.
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Old 03-11-2014, 06:31 AM   #94
Loneiguana Loneiguana is offline
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Originally Posted by BucEyedPea View Post
O.M.G! This is rich from our resident, let's force fast food businesses to pay a living wage for families!!

Of course govt is force! See what happens to you if you refuse to obey any govt laws. You'd be fined, prosecuted and jailed in some cases. That's called force. This is why govt power HAS TO BE LIMITED!

If McDonald's doesn't want to pay a wage their employees can live off of, they don't have to do business here. No body forces them to make a profit off of American Society. But, Americans do get to choose how society should treat the business that make a profit off of society.

You don't want to follow the laws, don't live here.

You don't get to yell "Der der bad government force" at things you don't like. It's called society. You don't like society on the terms society provides, take your gun and hammer and leave.

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Originally Posted by BucEyedPea View Post

Not under our system of natural law and rights they do. Nor under our Constitution. Nope!

You are ignorant of the system you live under. The Constitution does not just address citizens....it uses the words, people, persons and citizens in a certain place.

Then you call for citizens, as if private business owners and members of corporations aren't citizens ( I saw what you did there.), to use govt to force others to do as they/you think is right or better, while speaking out of the other side of your mouth that govt is not force. This is cognitive dissonance and lack of critical thinking skills. Of course your ideological foundation is rooted in the idea that property of others is community owned and that the majority's will is valid to do what thou wilt with it.

You need a good historical lesson from our Founding Fathers and the men who influenced their ideas too. You have a sense of property that is communistic.
Corporations aren't people.

The people running them are. And they have a single vote like everyone else.

And society deciding how they want society to be ran isn't force. It is society. You don't like it, you are free to leave. No one is forcing you to live here so no one is forcing you to follow our government laws and regulations.

If the people of the United States want to say "enough socializing of private company loses raise the minimum wage," no one is forcing Companies to pay it. They can freely choose to not do business here.

But I know, you think owning a company makes you a little dictator who gets to do whatever they want no matter what society says. Corporate fascist, you are.

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Benjamin Franklin, to Robert Morris. Christmas, 1783. Source: The Writings of Benjamin Franklin. Edited by Albert Henry Smyth. 10 vols. New York: Macmillan Co., 1905-7.

---

The Remissness of our People in Paying Taxes is highly blameable; the Unwillingness to pay them is still more so. I see, in some Resolutions of Town Meetings, a Remonstrance against giving Congress a Power to take, as they call it, the People's Money out of their Pockets, tho' only to pay the Interest and Principal of Debts duly contracted. They seem to mistake the Point. Money, justly due from the People, is their Creditors' Money, and no longer the Money of the People, who, if they withold it, should be compell'd to pay by some Law.

All Property, indeed, except the Savage's temporary Cabin, his Bow, his Matchcoat, and other little Acquisitions, absolutely necessary for his Subsistence, seems to me to be the Creature of public Convention. Hence the Public has the Right of Regulating Descents, and all other Conveyances of Property, and even of limiting the Quantity and the Uses of it. All the Property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other Laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition.

He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.
You seem confused into thinking that everything society provides you is somehow yours alone, like the selfish little girl you are.
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Old 03-11-2014, 06:31 AM   #95
Loneiguana Loneiguana is offline
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Originally Posted by BucEyedPea View Post
Monopoly is a creation of government--not the market. Particularly, "predatory" ones.
This is just a stupid comment that has no basis in reality.
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Old 03-11-2014, 06:35 AM   #96
Loneiguana Loneiguana is offline
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Originally Posted by Amnorix View Post
I could fight with everyone about just about everything in this thread, but will focus on this.

That right there might be the single worst sentence you've ever written.

Figured I'd mention it.
Does government force you to live here? Or are you free to leave?

Does the government say, follow our laws and if you try to immigrate to another country we will kill you?

Do we live under a dictatorship were the American citizens don't have a vote to change things?

Government=force is something stupid people believe who have been conned by those who want to place private entities between public government and the people.
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Old 03-11-2014, 06:37 AM   #97
Loneiguana Loneiguana is offline
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You need to check out some other threads that he's chimed in on. But ,yeah, this one's in the running.
I'm sure you, Mr. have no understanding of capitalism or demand, can explain to me how our government forces you to live here and and forces you to follow our laws and there is not a single thing you can do to change it.

I'll wait. I'm sure you'll have an insightful answer. You always do.
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