4 ms·

Not only is it work, but as you say, beyond a certain scale, it's really, really hard work that can only be done by a person who is perfectly able to earn that

by ksdale 7y ago

Not only is it work, but as you say, beyond a certain scale, it's really, really hard work that can only be done by a person who is perfectly able to earn that kind of salary working at a for-profit. If you're not willing to pay for that ability, and you can't find someone with that ability who is already independently wealthy and willing to work their butt off for no compensation, then you're going to end up with someone who is absolutely not qualified, which in my opinion, amounts to saying that you don't believe charities should be large or efficient, which I suppose is a valid opinion, but doesn't seem like a better use of resources than paying a competent manager.

salawat 7y ago
Describe an example of this hypothetical really, really hard work to me, if you have the time. I find that there's always someone willing to clamor that CEO's are with their weight in gold, but I find it excruciatingly difficult to find an elucidation of how what a CEO does is dependent on a particular person rather than to an arbitrary individual making a decision based off of high level information collected about the state of the company. I'm really curious, because it bugs me that everywhere I go I never seem to be able to jive this view of CEO's as unique in their own right, with the fact that what they are doing is just enabled by carte blanche access to the internal state and business affairs of the company in question.
- yters 7y ago
  My understanding is a CEO's main capability that earns them a large salary is being able to influence company salaries.
  - munk-a 7y ago
    Most CEOs are quite detached from managing company salaries and have delegated that responsibility - CEOs do work, sure... but not a proportion of work in line with their earnings.
    - yters 7y ago
      How much role do CEOs have in directly determining their personal salary?
      - kgwgk 7y ago
        Directly? Not much, supposedly. But maybe they sit in the boards determining the salaries of the board members who determine them.
        yters 7y ago
        Yes, that's my simple explanation for the hugely disproportionate salaries CEOs earn. Two possibilities: 1. They are somehow superhumanly increasing the company's bottom line 2. They target companies with enormous amounts of money and intentionally influence their salary to become very large, independent of their job performance Insofar as #2 is possible, that seems the most plausible explanation for large CEO salaries. Unless the people determining the CEO's salary are somehow completely firewalled off from his influence, it is hard to see how #2 is not possible.
        s1artibartfast 7y ago
        Or 3. CEO's are superhumanly capable of DECREASING the company's bottom line. The board is paying to minimize their risk of ruin. With consistent good management, mature organization should hope to see incremental growth. Bad management can destroy a company overnight.
        Yetanfou 7y ago
        CEO's sit on board for other companies where they get to decide on the salary for CEO's who sit on the boards of companies where they get to decide on the salary for CEO's who... well, you get it by now. Like the revolving door between politics and business these people generally do not bite the hand that feeds them so generously.
      - lazerpants 7y ago
        CEO salaries are typically determined by the board of advisors or at smaller companies, by the company's investors.
- Dove 7y ago
  You need someone who can do this at the right time and about the right thing: https://blog.seattlepi.com/microsoft/2008/06/24/full-text-an-epic-bill-gates-e-mail-rant/ https://blog.seattlepi.com/microsoft/2008/06/24/full-text-an... The ability to see where you suck and see your opportunities and above all, fight hard to fix it, is rare. It is much more than making a decision based off of information collected by advisors - it is vision and wisdom and political sense and grit. This is no less true when the particular mission is reducing suffering than when it is making money. Solving hard problems is always hard, and there are never enough people around who can make it happen.
- ksdale 7y ago
  Lots of people run things, and lots of them are really bad at it. I've known people who I would classify as way above average managers, and their success is not just due to having carte blanche access to internal state. It's due to being able to manage the goals and expectations and workflow of many groups of people, and being able to keep all of the different plates spinning. Ensuring that everything is moving in the right direction all the time in an organization bigger than a few people is not trivial, and if you think it is, perhaps you are not getting paid enough. I also think if you can replace a given manager with anyone and the right information, then that manager is as worthless as you think they are. While that may be true of many managers, it's not at all true of good ones. I think there's the daily work of the business, and there's the managing of the daily work of the business, and while the skill-sets often overlap, they are not the same, especially as the business grows. On the other hand, I find it hard to justify many (most?) of the highest end CEO salaries, but generally a competent manager at a company doing just several million dollars worth of business per year is worth at least several hundred thousand dollars per year (roughly how much someone who owns and runs a business with that much revenue would make). At the end of the day, I'm going to have to take the cop out though and say that if you've never met a manager that can't be replaced by just anyone with the right information, you haven't met a good manager, because I definitely know at least a few people who can step into many roles, whether it's running a business, or coaching a youth sports team, or helping a local non-profit, where everything starts running better once they start providing direction and it's not because there was no one providing direction previously.
- Sohcahtoa82 7y ago
  > I find that there's always someone willing to clamor that CEO's are with their weight in gold Keep in mind that HN has a disproportionately high number of owners of startups compared to most Internet communities. You'll see a lot more CEO worship on this site than reddit or any other site.
  - ksdale 7y ago
    I think there's a whole lot of ground between worshipping CEOs and pointing out that managing a large organization is an actual skill that is not particularly common.
- SkyBelow 7y ago
  Are CEOs highly compensated because of scarcity or artificial scarcity? How would one tell the two apart? Answer the second question, apply it to the first, and I think even if we don't find an answer to your original question we would be in a better place. Personally, I don't know. It does seem to be a lot of 'who you know' over 'what you know' at that level. Some special knowledge, but nothing that couldn't be taught with a 4 year degree. But it would be foolish of me to think I fully understand all that is needed. So I'm left wondering which is the case.
- merpnderp 7y ago
  So you're saying any rando could have accomplished what Steve Jobs did? Leadership matters as demonstrated by all the similar companies which made horrible decisions in hindsight, and now are no longer around.
  - magduf 7y ago
    Sure, but those similar companies all paid their CEOs an absolute fortune too, so it seems that paying CEOs buckets of cash isn't a very good gamble.
    - merpnderp 7y ago
      I knew a person who worked in the food service industry and I worked in IT. I once asked her what she thought most people made on the upper half of one of the 40+ floor buildings in town. She said they likely made at least $50k/year. To her rich people made over $50k/year. It made no difference if some made $350k and others made $50k, they were effectively the same to her.
- bryanrasmussen 7y ago
  It's difficult for me to describe what makes a CEO worthwhile as I do not have much understanding of the job past the barebones startup level in which case it doesn't really mean much of anything, so let me ask you a question - is there anything about what you do that means you can't just be replaced by anyone off the street, give them the info pertinent to the job, and set them loose? I think most people on HN would say no I can't be replaced like that, I think I can't easily be replaced in the job I'm currently on. Not saying it's impossible just saying it is difficult, which is why they pay a lot of money for me. I've worked non-technical jobs in construction and the like, and unless it was the stupidest low-level stuff you couldn't really pull anyone off the street and tell them well here's the job have at it. But for some reason there does seem to be some people who think management can be replaced like that. It seems unlikely to me. Now of course this calculation changes if the person being replaced is no good at the job, then yes when I worked construction you could probably have replaced me with some idiot off the street. And I suppose there are bad managers and CEOs that can be replaced the same way. As for why they are worth their weight in gold, it is because that is what the market will pay, just as I am worth what the market will pay for my skills and the best construction worker I ever knew was worth what the market would pay which was quite a bit less than the money I get paid which is in turn less than a CEO gets paid for their skillset.
nothing7448 7y ago
How does your tongue taste after polishing all those boots?
- ksdale 7y ago
  You're very rude.
pfortuny 7y ago
Are there no retiresd CEOs willing to volunteer? Like, really?
- ksdale 7y ago
  I'm sure there are, that's where a lot of small non-profits find their leaders and board members, but past a certain size, the amount of time required means that they would not be retired anymore, and I presume most of them retired because they had interests to pursue beyond managing large organizations.

by ksdale 7y ago

salawat 7y ago

Describe an example of this hypothetical really, really hard work to me, if you have the time. I find that there's always someone willing to clamor that CEO's are with their weight in gold, but I find it excruciatingly difficult to find an elucidation of how what a CEO does is dependent on a particular person rather than to an arbitrary individual making a decision based off of high level information collected about the state of the company. I'm really curious, because it bugs me that everywhere I go I never seem to be able to jive this view of CEO's as unique in their own right, with the fact that what they are doing is just enabled by carte blanche access to the internal state and business affairs of the company in question.

yters 7y ago
My understanding is a CEO's main capability that earns them a large salary is being able to influence company salaries.
- munk-a 7y ago
  Most CEOs are quite detached from managing company salaries and have delegated that responsibility - CEOs do work, sure... but not a proportion of work in line with their earnings.
  - yters 7y ago
    How much role do CEOs have in directly determining their personal salary?
    - kgwgk 7y ago
      Directly? Not much, supposedly. But maybe they sit in the boards determining the salaries of the board members who determine them.
      - yters 7y ago
        Yes, that's my simple explanation for the hugely disproportionate salaries CEOs earn. Two possibilities: 1. They are somehow superhumanly increasing the company's bottom line 2. They target companies with enormous amounts of money and intentionally influence their salary to become very large, independent of their job performance Insofar as #2 is possible, that seems the most plausible explanation for large CEO salaries. Unless the people determining the CEO's salary are somehow completely firewalled off from his influence, it is hard to see how #2 is not possible.
        s1artibartfast 7y ago
        Or 3. CEO's are superhumanly capable of DECREASING the company's bottom line. The board is paying to minimize their risk of ruin. With consistent good management, mature organization should hope to see incremental growth. Bad management can destroy a company overnight.
      - Yetanfou 7y ago
        CEO's sit on board for other companies where they get to decide on the salary for CEO's who sit on the boards of companies where they get to decide on the salary for CEO's who... well, you get it by now. Like the revolving door between politics and business these people generally do not bite the hand that feeds them so generously.
    - lazerpants 7y ago
      CEO salaries are typically determined by the board of advisors or at smaller companies, by the company's investors.
Dove 7y ago
You need someone who can do this at the right time and about the right thing: https://blog.seattlepi.com/microsoft/2008/06/24/full-text-an-epic-bill-gates-e-mail-rant/ https://blog.seattlepi.com/microsoft/2008/06/24/full-text-an... The ability to see where you suck and see your opportunities and above all, fight hard to fix it, is rare. It is much more than making a decision based off of information collected by advisors - it is vision and wisdom and political sense and grit. This is no less true when the particular mission is reducing suffering than when it is making money. Solving hard problems is always hard, and there are never enough people around who can make it happen.
ksdale 7y ago
Lots of people run things, and lots of them are really bad at it. I've known people who I would classify as way above average managers, and their success is not just due to having carte blanche access to internal state. It's due to being able to manage the goals and expectations and workflow of many groups of people, and being able to keep all of the different plates spinning. Ensuring that everything is moving in the right direction all the time in an organization bigger than a few people is not trivial, and if you think it is, perhaps you are not getting paid enough. I also think if you can replace a given manager with anyone and the right information, then that manager is as worthless as you think they are. While that may be true of many managers, it's not at all true of good ones. I think there's the daily work of the business, and there's the managing of the daily work of the business, and while the skill-sets often overlap, they are not the same, especially as the business grows. On the other hand, I find it hard to justify many (most?) of the highest end CEO salaries, but generally a competent manager at a company doing just several million dollars worth of business per year is worth at least several hundred thousand dollars per year (roughly how much someone who owns and runs a business with that much revenue would make). At the end of the day, I'm going to have to take the cop out though and say that if you've never met a manager that can't be replaced by just anyone with the right information, you haven't met a good manager, because I definitely know at least a few people who can step into many roles, whether it's running a business, or coaching a youth sports team, or helping a local non-profit, where everything starts running better once they start providing direction and it's not because there was no one providing direction previously.
Sohcahtoa82 7y ago
> I find that there's always someone willing to clamor that CEO's are with their weight in gold Keep in mind that HN has a disproportionately high number of owners of startups compared to most Internet communities. You'll see a lot more CEO worship on this site than reddit or any other site.
- ksdale 7y ago
  I think there's a whole lot of ground between worshipping CEOs and pointing out that managing a large organization is an actual skill that is not particularly common.
SkyBelow 7y ago
Are CEOs highly compensated because of scarcity or artificial scarcity? How would one tell the two apart? Answer the second question, apply it to the first, and I think even if we don't find an answer to your original question we would be in a better place. Personally, I don't know. It does seem to be a lot of 'who you know' over 'what you know' at that level. Some special knowledge, but nothing that couldn't be taught with a 4 year degree. But it would be foolish of me to think I fully understand all that is needed. So I'm left wondering which is the case.
merpnderp 7y ago
So you're saying any rando could have accomplished what Steve Jobs did? Leadership matters as demonstrated by all the similar companies which made horrible decisions in hindsight, and now are no longer around.
- magduf 7y ago
  Sure, but those similar companies all paid their CEOs an absolute fortune too, so it seems that paying CEOs buckets of cash isn't a very good gamble.
  - merpnderp 7y ago
    I knew a person who worked in the food service industry and I worked in IT. I once asked her what she thought most people made on the upper half of one of the 40+ floor buildings in town. She said they likely made at least $50k/year. To her rich people made over $50k/year. It made no difference if some made $350k and others made $50k, they were effectively the same to her.
bryanrasmussen 7y ago
It's difficult for me to describe what makes a CEO worthwhile as I do not have much understanding of the job past the barebones startup level in which case it doesn't really mean much of anything, so let me ask you a question - is there anything about what you do that means you can't just be replaced by anyone off the street, give them the info pertinent to the job, and set them loose? I think most people on HN would say no I can't be replaced like that, I think I can't easily be replaced in the job I'm currently on. Not saying it's impossible just saying it is difficult, which is why they pay a lot of money for me. I've worked non-technical jobs in construction and the like, and unless it was the stupidest low-level stuff you couldn't really pull anyone off the street and tell them well here's the job have at it. But for some reason there does seem to be some people who think management can be replaced like that. It seems unlikely to me. Now of course this calculation changes if the person being replaced is no good at the job, then yes when I worked construction you could probably have replaced me with some idiot off the street. And I suppose there are bad managers and CEOs that can be replaced the same way. As for why they are worth their weight in gold, it is because that is what the market will pay, just as I am worth what the market will pay for my skills and the best construction worker I ever knew was worth what the market would pay which was quite a bit less than the money I get paid which is in turn less than a CEO gets paid for their skillset.

nothing7448 7y ago

How does your tongue taste after polishing all those boots?

ksdale 7y ago
You're very rude.

pfortuny 7y ago

Are there no retiresd CEOs willing to volunteer? Like, really?

ksdale 7y ago
I'm sure there are, that's where a lot of small non-profits find their leaders and board members, but past a certain size, the amount of time required means that they would not be retired anymore, and I presume most of them retired because they had interests to pursue beyond managing large organizations.