3 ms·

Wages are determined by supply and demand, no? The number of subordinates doesn’t even figure in the equation

by buboard 7y ago

dwaltrip 7y ago
The market for executives is highly affected by many factors that don't fit easily into an economic analysis.
- randomdata 7y ago
  But those factors can easily be summed up as: Trust. Not many are able to demonstrate that trust to the board, and so the supply is vanishingly small.
  - sdenton4 7y ago
    And trust, as we see in the totally-free-and-definitely- not-completely-composed-of-back-scratching-b-school-flunkies market, is very very expensive.
    - ClumsyPilot 7y ago
      You forgot backstabbing on the side
    - repolfx 7y ago
      The boards of firms like Google, Apple and Facebook are hardly composed of school flunkies. Aren't they mostly made up of former tech CEOs and similar? I think the reality is that CEOs can get paid a lot because the number of executives who can meaningfully increase the value of a large organisation is vanishingly tiny. Look at Microsoft. When Gates left and Ballmer took over their share price stagnated for over a decade. The organisation missed major opportunities and went nowhere. Now Nadella is in charge and suddenly things are moving again. To us maybe it seems "obvious" that Nadella would be a perfect fit for Microsoft and maybe his good decisions seem obvious, but apparently it wasn't so easy to find such a guy during Ballmer's reign. What about Google? Does anyone really believe that since the Page/Brin/Schmidt triumverate stepped back that Pichai has been able to really fill those boots? The modern day Google is a visionless organisation that seems to spend its days cat-fighting over how many genders there are. Getting the right CEO at the top of organisations like these would be worth practically any amount of money at all, because even improving outcomes by 10% immediately drowns their comp into irrelevance.
- throwaway2048 7y ago
  Yes, they are deeply effected by much handwaving.
  - dwaltrip 7y ago
    Come again?
    - throwaway2048 7y ago
      There are always a lot of people looking to justify how things are, independent of how much sense it makes.
lambertsimnel 7y ago
Paying the CEO 1000x the average worker is more likely to be sustainable with 100,000 employees than with only 100 employees, so I think the number of subordinates figures in the equation somehow.

Wages are determined by supply and demand, no? The number of subordinates doesn’t even figure in the equation

dwaltrip 7y ago

The market for executives is highly affected by many factors that don't fit easily into an economic analysis.

randomdata 7y ago
But those factors can easily be summed up as: Trust. Not many are able to demonstrate that trust to the board, and so the supply is vanishingly small.
- sdenton4 7y ago
  And trust, as we see in the totally-free-and-definitely- not-completely-composed-of-back-scratching-b-school-flunkies market, is very very expensive.
  - ClumsyPilot 7y ago
    You forgot backstabbing on the side
  - repolfx 7y ago
    The boards of firms like Google, Apple and Facebook are hardly composed of school flunkies. Aren't they mostly made up of former tech CEOs and similar? I think the reality is that CEOs can get paid a lot because the number of executives who can meaningfully increase the value of a large organisation is vanishingly tiny. Look at Microsoft. When Gates left and Ballmer took over their share price stagnated for over a decade. The organisation missed major opportunities and went nowhere. Now Nadella is in charge and suddenly things are moving again. To us maybe it seems "obvious" that Nadella would be a perfect fit for Microsoft and maybe his good decisions seem obvious, but apparently it wasn't so easy to find such a guy during Ballmer's reign. What about Google? Does anyone really believe that since the Page/Brin/Schmidt triumverate stepped back that Pichai has been able to really fill those boots? The modern day Google is a visionless organisation that seems to spend its days cat-fighting over how many genders there are. Getting the right CEO at the top of organisations like these would be worth practically any amount of money at all, because even improving outcomes by 10% immediately drowns their comp into irrelevance.
throwaway2048 7y ago
Yes, they are deeply effected by much handwaving.
- dwaltrip 7y ago
  Come again?
  - throwaway2048 7y ago
    There are always a lot of people looking to justify how things are, independent of how much sense it makes.

lambertsimnel 7y ago

Paying the CEO 1000x the average worker is more likely to be sustainable with 100,000 employees than with only 100 employees, so I think the number of subordinates figures in the equation somehow.