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The compensation is a function of supply and demand. A CEO is hard to replace and their experience is vital to the company's performance. Corporate drones are e

The compensation is a function of supply and demand. A CEO is hard to replace and their experience is vital to the company's performance. Corporate drones are easy to replace with minimal training, so it's the lowest bidder market. There used to be a cycle. Companies would grow huge, eventually becoming overbureaucratized inefficient behemoths where personal competence is replaced by carefully designed corporate manuals. And in the next economic turn they would crash, opening the market to the next wave of lean founder-driven companies. We broke this cycle in 2008 with bailouts and we are printing money ever since to keep the party going [0]. So yes, CEOs and shareholders now have considerably bigger leverage than workers. The companies are tactically inefficient (good luck getting a competent person anywhere), but strategically unbeatable due to scaling. Competing with them is practically impossible because offering services below cost is now a widely accepted practice, and if by some magic you managed, they will just buy you off. People who didn't get the foot in the door before 2008 are miserable and walking around with pitchforks looking for the next target. But thanks to what the media does, they only end up stabbing each other over made-up differences. [0] https://tradingeconomics.com/united-states/money-supply-m0 https://tradingeconomics.com/united-states/money-supply-m0

hogFeast 6y ago
"Corporate drones" aren't replacable. CEOs are, you can find almost anyone willing to a sub-standard job for $1m/year...the supply is really infinite. The issue with high employee turnover is they are producing your product. As an investor, high employee turnover is almost always very bad. CEO turnover is usually totally fine (it depends, if a new CEO comes in and attempts to do anything bold...it is usually curtains).
- john_moscow 6y ago
  It doesn't work this way. Unless you have a union or some large economic event, people will make resignation decisions independently. This means that the number of resignations on a typical day will follow a normal distribution a.k.a. bell curve. Say, you have 3650 employees with an average tenure of 1 year. It means that on 90% of the days you will have between 0 and 10 resignations, averaging at 1 per day. You also know that out of 10 applications, 1 leads to a hire, so you have an HR team with a target of reviewing 10 applications per day and hiring 10% of them. Due to scaling, you can redistribute the same amount of work between 3650, 3550 or 3750 employees without any difference in output. If a single employee comes demanding a raise, they have 0 leverage over you. If you fire them, you will have 3659 employees for a day or two (until more candidates get hired) with your business designed to handle fluctuations between 3660 and 3750. It costs you zero, literally ZERO. High turnover for low-wage jobs actually makes it better for the business. It's like if you already have a leaky basement with a sump pump in place, you won't even notice if you spill a single bucket of water there. For a smaller business of 10 employees, replacing one could be harder. Sharing their workload over 9 people is harder. The owner will have to spend their own time searching for a replacement, remembering the things that the departed person knew and trying to teach them to the replacement, etc. That's why smaller companies treat people better. As for the CEO, you can find people willing to do the job, but there's a big difference between willing and being able to. The main role of CEO besides giving a good public image is to keep the internal corruption and infighting at a level where it doesn't kill the company's business. Despite the fake smiles and positivity, it's a pretty dirty backstabbing environment and you need to know certain unwritten rules to play that game.
  - hogFeast 6y ago
    Resignations are not independent. At all.
    - john_moscow 6y ago
      People at scale work differently from people in person. They will not be independent if there's a sudden drastic change (let's say a ban on work-from-home) or if there is a parallel hierarchy among your employees (e.g. a union) that would orchestrate a coordinated strike/resignation. Such unions are typically driven by power-motivated people that for some reason are not interested in the regular management ladder. The corporations are handling it very well for their own bottom line: the people that could theoretically organize unions are now happily giving talks about privilege and forcing others to hate each other and compete for the artificially restricted pool of positions and zero-expense privileges (hello, pronouns), rather than coming together and refusing to do their work until everyone gets better terms.

hogFeast 6y ago

"Corporate drones" aren't replacable. CEOs are, you can find almost anyone willing to a sub-standard job for $1m/year...the supply is really infinite. The issue with high employee turnover is they are producing your product. As an investor, high employee turnover is almost always very bad. CEO turnover is usually totally fine (it depends, if a new CEO comes in and attempts to do anything bold...it is usually curtains).

john_moscow 6y ago
It doesn't work this way. Unless you have a union or some large economic event, people will make resignation decisions independently. This means that the number of resignations on a typical day will follow a normal distribution a.k.a. bell curve. Say, you have 3650 employees with an average tenure of 1 year. It means that on 90% of the days you will have between 0 and 10 resignations, averaging at 1 per day. You also know that out of 10 applications, 1 leads to a hire, so you have an HR team with a target of reviewing 10 applications per day and hiring 10% of them. Due to scaling, you can redistribute the same amount of work between 3650, 3550 or 3750 employees without any difference in output. If a single employee comes demanding a raise, they have 0 leverage over you. If you fire them, you will have 3659 employees for a day or two (until more candidates get hired) with your business designed to handle fluctuations between 3660 and 3750. It costs you zero, literally ZERO. High turnover for low-wage jobs actually makes it better for the business. It's like if you already have a leaky basement with a sump pump in place, you won't even notice if you spill a single bucket of water there. For a smaller business of 10 employees, replacing one could be harder. Sharing their workload over 9 people is harder. The owner will have to spend their own time searching for a replacement, remembering the things that the departed person knew and trying to teach them to the replacement, etc. That's why smaller companies treat people better. As for the CEO, you can find people willing to do the job, but there's a big difference between willing and being able to. The main role of CEO besides giving a good public image is to keep the internal corruption and infighting at a level where it doesn't kill the company's business. Despite the fake smiles and positivity, it's a pretty dirty backstabbing environment and you need to know certain unwritten rules to play that game.
- hogFeast 6y ago
  Resignations are not independent. At all.
  - john_moscow 6y ago
    People at scale work differently from people in person. They will not be independent if there's a sudden drastic change (let's say a ban on work-from-home) or if there is a parallel hierarchy among your employees (e.g. a union) that would orchestrate a coordinated strike/resignation. Such unions are typically driven by power-motivated people that for some reason are not interested in the regular management ladder. The corporations are handling it very well for their own bottom line: the people that could theoretically organize unions are now happily giving talks about privilege and forcing others to hate each other and compete for the artificially restricted pool of positions and zero-expense privileges (hello, pronouns), rather than coming together and refusing to do their work until everyone gets better terms.