Wednesday, July 19, 2006

CEO Salaries Inversely Correlate to Performance

This study looks at the "technology" sector, which is a mix of manufacturing and software apparently. It basically states that higher paid CEOs don't actually give their companies an edge. It also brushes past the largest travesty in business today: salaries are based on what your contemporaries are making rather than the value you provide for the company.

Imagine for a moment a world where teachers were paid by their contribution to children's learning. Assembly line workers were paid based on how safe and efficient they were. Programmers were paid based on their successful contribution to projects. Would such a world have flatter organization charts because of the relatively small contribution that increasing layers of bureaucracy provide? Would the contribution of the people that actually make the products be deemed as much or more important than the ones that decide which markets to enter? As the old Tootsie Pop commercial states: the world will never know.

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