36 ms·

CEOs are hugely expensive – why not automate them?

280 points by nixass 6y ago

Graffur 6y ago
I'll go against the common thought here. CEO pay is ridiculous. They can only pay that much because the workers have to work to pay their mortgage and pay for their health concerns. Noone would agree to making other people rich otherwise. The whole system is a mess and ready to be disrupted.
bobbydreamer 6y ago
Somebody have to make new CEO salary formula. (Standard salary * improving current performance ) - increasing debt + reducing debt + (long term strategy completion % by expenses) No stock options. If he wants stocks, he/she needs to buy.
sunstone 6y ago
Well this would certainly diminish the jockeying for position of those hoping to succeed the CEO.
throw_away 6y ago
Automate management before they can automate us
camjohnson26 6y ago
Because people will figure out how to exploit the algorithm.
- hammock 6y ago
  As if no one has ever figured out how to exploit the CEO...
  - nix23 6y ago
    Ha!! My miniskirt says true ;)
    - deleted 6y ago
      [deleted]
    - watwut 6y ago
      The high level paid positions dont seem to be filled with women in miniskirts. They are more likely to be filled by men according to pretty much all studies I have seen. If anyone is exploiting CEOs for personal benefit, miniskirts are not that.
      - corpMaverick 6y ago
        Someone in the position of exploiting the miniskirt loop-hole. Is probably smart enough not to become a high level executive. And rather become the ex-trophy-wife and enjoy half the money with none of the responsibilities.
        watwut 6y ago
        It is better to be executive then trophy wife. You have more agency that way, more respect and money are actually yours. Trophy wife are there to be looked at. Plus executive is not tied to n narcisstic partner that don't respect him. It is pretty easy to use money to controll trophy wife and let her know money are not hers. Harder with executive. And you can be pretty incompetent and still be failing upward if CEO likes you. There is no stress from responsibility if such thing does not stress you out. Smart mini skirt would took higher paid position and all those advantages of that was available. But, it is not. CEOs are I fact exploited differently and ultimately by dudes.
peshooo 6y ago
"If a role can be outsourced, it can be automated." I really don't see the logic in this statement.
- nocommentguy 6y ago
  To outsource something you have to be able to unambiguously specify requirements (otherwise costs blow up as you go back and forth). Once you’ve made it truly unambiguous, the next logical step is automation.
  - lainga 6y ago
    >otherwise costs blow up as you go back and forth I've seen that and it's apparently a viable business decision. I don't know why - I'm not an MBA
    - jacobr1 6y ago
      Inability to drive internal decisions and/or CYA. You can see it even more clearly with "consultancy." The reason consultancies can get away with using so many newly minted MBAs, is that what most of them do is just reflect back the to the company what their employees already knew, but in a form that is consumable and justifies the business case for that action. There is some internal reason why the organization can't just make the decision, even though plenty of employees know what needs to get done. It could be weak leadership, inability to take risks, analysis paralysis, fear of unfamiliar territory, unwillingness to own the risk (CYA) and even more dysfunctional characteristics (like different teams unwilling to talk to each other). Brining in someone external can cut through much of that mess.
  - burntoutfire 6y ago
    Not all automation is economically efficient - i.e. it's cheaper to hire outsourced janitors than building state of the art cleaning robots to automate their jobs.
    - mschuster91 6y ago
hammock 6y ago
Board still needs a throat to choke somewhere...
- deleted 6y ago
  [deleted]
- anaganisk 6y ago
  They could undervolt the CPU too XD
smoldesu 6y ago
The reason we don't automate CEOs is liability: the board of directors/shareholders want someone to hold accountable when bad decisions start getting made. If you pay $4000 for a brand new iCEO that lays off your entire staff, you can really only scream at whoever minted the software making that decision, which often comes with limited liability licenses. Remember, corporate structure is about minimizing your own work and maximizing your leverage against your co-workers. None of these shareholders want to live in a world where something can't be fixed by shouting at someone over the phone.
- alpha_squared 6y ago
  I can imagine a scenario where an approval board of 3 or 5 people paid 1/10th a CEO's cost must approve the actions that the iCEO is suggesting rather than give it full autonomy to act indiscriminately. They'd effectively become executive assistants with veto power. If there aren't many things for the iCEO to do, then the board doesn't even need to be employed full-time and perhaps it could even be offloaded entirely onto the company board with a rotating schedule. Though, I imagine many board members don't like the idea that their involvement would then become more involved and they wouldn't be able to sit on as many boards collecting some nice comp/benefits.
- jrwoodruff 6y ago
  But I don't think they're suggesting getting rid of the entire executive team, or carte-blanche implementing whatever iCEO says to do. They're saying replace the most expensive position with some AI, and let the executive team debate that. Seems like we could figure out a way to find accountability in that model by assigning it to whoever is best aligned with the decision - and could provide an interesting balance for the board to debate: Why did you decide to go against the machines recommendation?
- cdirkx 6y ago
  My new SAAS startup idea; scapegoat as a service. For a few million dollars you can hire me, put all the blame on me, I say "I take full responsibility" and resign my position.
klyrs 6y ago
Why is paying them less not seen as an option? I've seen multiple startups struggle because their CEO makes more than 10 qualified technical staff, where the employees burn out because there's no budget to hire the technical staff the company needs.
- myrandomcomment 6y ago
  This is a sign of a startup you should not work at. CEO comp in a startup should be tied to the success of the company in the form of stock. Generally in a tech type startup the salary (cash) of the key developers and the CEO are around the same. The highest comp is on the sales side. The sales team joins late (the founders and CEO should drive sales at the start) and tend to get way less stock. Their comp is based on a base salary and commission which should be uncapped.
- unfamiliar 6y ago
  Presumably because the market dictates their salary, not a vague notion of what they should be paid. Or, to reframe the question: why don't people hire cheaper CEOs?
  - hn_throwaway_99 6y ago
    > Presumably because the market dictates their salary Ahh yes, when the "market" is primarily made up of other CEOs (i.e. who sit on corporate boards), whose primary vested interested is to ensure CEO salaries stay astronomically high.
    - pasquinelli 6y ago
      isn't the solution, then, to put the workers on the board?
    - JohnPrine 6y ago
      Why don't we see more private equity firms snapping up companies and hiring cheaper CEOs then?
  - 6y ago
deleted 6y ago
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georgecmu 6y ago
As a counterpoint to whether the CEO role can be outsourced or automated (posted by the former CEO of reddit): https://www.reddit.com/r/explainlikeimfive/comments/210to8/eli5_what_does_a_ceo_of_a_large_company_do_in_a/ https://www.reddit.com/r/explainlikeimfive/comments/210to8/e...
- clarkevans 6y ago
  I like his post downstream on 3 factors of CEO pay: https://www.reddit.com/r/explainlikeimfive/comments/210to8/eli5_what_does_a_ceo_of_a_large_company_do_in_a/cg8tb9t https://www.reddit.com/r/explainlikeimfive/comments/210to8/e...
spamizbad 6y ago
At the very least, you could do a hybrid model: An AI that makes 80% of the decisions and routes 20% to a human to help guide the decision making process.
- polytely 6y ago
  Or just a centaur model where the ai generate courses of actions and the human picks from those and/or modifies them.
- anotheryou 6y ago
  Touches on an interesting point. I think the data input is highly unstructured and the output not very regular.
  - spamizbad 6y ago
    Sounds like the first step is figuring out a new standard to structure executive information.
    - anotheryou 6y ago
      That's certainly an interesting one. Clean, standardized Data is already often the bottleneck. And the CEO needs more than just data from inside the company.
      - CRConrad 6y ago
        I read "executive information" as information about executives, not for them... (But looking back up this sub-thread, I now guess I got it wrong.)
- deleted 6y ago
  [deleted]
williesleg 6y ago
Because China. What we need to automate is lawyers.
alexgmcm 6y ago
I can't help but feel that CEO's are over-valued and it's fundamentally an attribution problem as it's hard to know how much value they actually add. A comparison would be to fund managers and how the rise of index funds showed they actually added very little value in many cases, and weren't worth their fees.
- kaczordon 6y ago
  There was a Danish study that showed that a death in the family of a Danish CEO led, on average, to a 9 percent decline in the profitability of the corporation. If it was the death of a spouse, the decline was 15 percent and, if it was a child who died, 21 percent. From the study: “Interestingly, similar deaths experienced by individual members of the board of directors do not significantly affect firms’ outcomes. Our results provide strong empirical support for the idea that CEOs are extremely important to firm performance.” So I’d say they add significant value. https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/3177/valueceos.pdf https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfile...
  - ForHackernews 6y ago
    Technically, doesn't this study only demonstrate that a distracted CEO is a risk to firm performance? Sounds like all the more reason to replace them with robots that don't have families.
    - skystarman 6y ago
      My Amazon Alexa has like a 60% success rate when I ask it basic questions that take me 10 seconds to google on my phone. Something tells me AI isn't quite there yet to run multi-billion dollar firms and won't be for a while.
  - makapuf 6y ago
    To be honest, this shows that a dysfunctional CEO (for completely understandable reasons) leads to a nonprofitable firm, not that value is added. You could say that people with no or defective keyboard have a hard time programming, but the best keyboard does not add significant value to a developer.
karaterobot 6y ago
This article isn't actually suggesting that CEOs can be automated, it's making a modest proposal in order to point out that CEOs are overvalued and that automation is eliminating jobs for a lot of undervalued workers. Just putting that out there.
- koonsolo 6y ago
  prices are set by supply and demand
  - jl2718 6y ago
    Prices of fungible commodities are set by supply and demand.
MayeulC 6y ago
Because that's how you end up with paperclip maximizers? https://www.lesswrong.com/tag/paperclip-maximizer https://www.lesswrong.com/tag/paperclip-maximizer Realistically though, they are supposed to be here for liability purposes. I've read of some companies decreasing CEO salaries and employing people just out of university, only to fire them a few months later to satisfy the board.
ARandomerDude 6y ago
CEOs aren't paid for the day-to-day value they provide to the company. They're paid for the long-term, strategic value the owners think they might provide the company in comparison to other candidates. So if you think CEO Candidate X will make you a 3x return on your investment, but CEO Candidate Y will make you a 5x return, it's almost certainly worth it to pay him/her the extra $200K to get you there, if that's the market demand. You're paying for experience, contact network, etc. in a job like that much more than you are how many widgets they can produce on an assembly line. So it seems that the idea that a CEO could be automated misses the point of what CEOs do and how they get hired.
- mbrodersen 6y ago
  Extremely well paid CEO’s fail all the time. There is zero evidence that rewarding CEO’s with absurd amounts of money makes any difference to the long term outcome of the companies they manage. Any idiot can buy back shares to boost share prices and/or cut cost to make the company more valuable short term and fail long term.
- harperlee 6y ago
  They should then be compensated with a leveraged long-term derivative product that pays based on the stock difference between their company and the industry, 5 to 10 years apart. "You want to be insanely rich? Here's a huge company that's not yours as a resource, now make it so it is the best one in 10 years!"
  - andi999 6y ago
    All incentive models for ceos miss the point, that incentives do not work. People will just fulfill the metric, without incentive most people will do what is best for the company.
  - Taek 6y ago
    The problem is that the best CEOs might not go for that. There are a lot of long term things that can impact a company for the negative, and you don't want your CEO bailing to a different company the moment that some macro event (semiconductor shortage, new competitor, global pandemic, etc) comes along and alters the long term upside of your company. You want a CEO who is going to stick around and make the best possible decisions to improve the company's trajectory, even if that mostly means keeping the company flat as opposed to faceplanting.
andi999 6y ago
At least here CEO take the legal liability if like the company files bancruptcy to late, etc.
king_magic 6y ago
Reads like it was written by someone who is absolutely clueless about the current state of AI and how close we'll be to being able to "automate a CEO" anytime soon.
whoisjuan 6y ago
This article is just an aimless rant about CEO high wages. At no point there was a coherent argument or explanation of how such automation could be achieved. The author seems to think that just because there's AI that is relatively good at taking decisions then that's enough to argue that CEOs should be superseded by said AIs. "If an AI can make it, why pay millions of dollars to human CEOs?"... As it was that simple. The author also ignores completely the basic laws of economics. Does he think that this is some sort of AI that you will be able to buy from a shelf? Provided by a SaaS Vendor at 100 USD a month? Because that's the only way you can make a meaningful economic argument around this. But the reality is that if this is even remotely possible, it would have a huge R&D price tag and it won't be a product that can be sold at scale by a vendor. That would defeat the economic incentives behind having a good decision maker taking the crucial decisions of your company. All decisions would look the same across several competitors if those decisions are taken by the same type of AI. This effectively makes such AI obsolete and operationally disadvantageous. So, you must build a proprietary replacement for your CEO and building such AI could be several orders of magnitude more expensive than hiring and paying a CEO. CEOs can't be automated. At least not soon. People who believe abstract decision-making jobs can be automated don't understand what automation is about or what's capable of. AI as it exists today can't automate CEO jobs or any kind of job where the output of a worker is to take extraordinarily complex and multi-variable decisions.
rglover 6y ago
That's all well and good until your automated CEO decides to pivot the company to being a dildo manufacturer because it finds an arbitrage opportunity in Amsterdam.
imsofuture 6y ago
This is exactly the general hypothesis behind https://100dollarceo.com https://100dollarceo.com
caffeine 6y ago
Unlike CEOs, authoring idiotic clickbait IS a job that is rapidly being automated away..
lm28469 6y ago
Good luck automating an Elon Musk or a Steve Jobs. Your algorithm would never come up with new ideas like Amazon or Space X So far "automation" means a bunch of if/else statement or at most a biased deep learning algorithm, this is why they're used on entry jobs, because they're fundamentally not very useful for anything other than pre defined repeatable and easy tasks
- egypturnash 6y ago
  “Sell shit online” is such an inobvious idea. I don’t know how Bezos thought it up! Completely unexpected.
  - lm28469 6y ago
    Then why is he the richest man on earth and you're not ? It's always obvious and easy when you look back at history ...
    - netflixandkill 6y ago
      The keys to wild success are getting in early and being lucky. I'm entirely sure a lot of the early people at Amazon were in fact quite bright and hard working, and many good decisions were made, but plenty of other people knew selling stuff online was going to happen but couldn't get the stars to align on funding, or had a key member suffer a personal setback early on, etc.
    - ramtatatam 6y ago
      I remember when in early 90's somebody was saying there will be a computer in each house. At the time I thought - good luck with that, computers are so expensive (I was in my early teens back then so my opinion was not particularly useful because I had no money and computers in my country were very expensive compared with average wage). Then in late 90's somebody said internet will be in each house - again I could not believe :) Later somebody said people will do shopping through internet - guess what my opinion was ;) Later somebody said everyone will have a smartphone - at this point I thought my gut feeling is probably wrong - even if I was happy with my mobile I thought my spending habits are different than those of majority. Later somebody said everyone will be connected to the internet 24/7 on their smartphones. So I missed most of the wave purely because I had no imagination and no business acumen.. I can image value of people who do see those trends early.
MINPOOL 6y ago
My understanding of a good CEO is that the main work is to build and maintain business contacts that lead to future large revenue streams for the company (which is de facto networking to build contacts with customers in the first place, closing deals is the job of the sales department). I don't think that creating a strategy has that much value, most like it is wrong anyway¹. ¹ https://hbr.org/2010/01/why-most-ceos-are-bad-at-strat-2 https://hbr.org/2010/01/why-most-ceos-are-bad-at-strat-2
ouid 6y ago
CEOs are expensive because they form a clique, They sit on the boards of other companies and install CEOs who are on the board of the company they themselves CEO. Normally you would call this practice embezzlement, but because it only requires the most tacit of collusions to pull off, we call it shrug.
neonate 6y ago
https://archive.md/sT77U https://archive.md/sT77U
spullara 6y ago
The comments in here are hilarious. If you think the CEO doesn't matter in a company you have never been on a board of a company and had the responsibility to hire and fire them.
- nataz 6y ago
  Their comments matter, but they aren't well informed. Hacker news is full of bright ambitious folks who think they are very smart, or they can change the world, or they can make a lot of money. It's all about their personal impact. HN celebrates individual contribution. Which is fine and good. That said, I'd argue that many folks here would benefit from spending time on how to be better leaders, or gasp, managers and executives. Most people, by definition, aren't going to be 10x or 100x engineers. But a good manager, supervisor, executive will make everyone around them better.
- SavantIdiot 6y ago
  > you have never been on a board of a company and had the responsibility to hire and fire them. Think about that statement, just for 5 seconds. Please. You do realize very, very few people meet this criteria. And their opinions still matter because they are impacted.
  - spullara 6y ago
    People in the comments are making definitive statements that you can't evaluate CEOs. They should think about it for 5 seconds and realize that they are not experts in the domain.
    - SavantIdiot 6y ago
      So you never voice opinions about topics that you aren't in expert on, otherwise you'd be a flaming hypocrite, right? Cool!
      - deleted 6y ago
        [deleted]
MattGaiser 6y ago
> If a role can be outsourced, it can be automated. This line alone makes the article ludicrous.
woeirua 6y ago
I too used to think that CEOs were a waste of resources, and that they had minimal if any impact on most companies. But I think people grossly underestimate how important CEOs are, because the vast majority of them do a decent job. When you swap out somebody who does a decent job for another person who performs at about the same level it's not really that noticeable. That said, you'll come to appreciate those "decent" CEOs after you've had an experience with a truly bad CEO. One such experience was enough for me to decide that who runs the company at the top is critical to the success of most companies.
- BuyMyBitcoins 6y ago
  Indeed, and the majority of a CEO’s direction and decisions are fundamentally different from those that the other employees make. As a software engineer I’m simply not privy to the kinds of choices the CEO is making and “no news is good news” is often the case with C-Suite decisions. But, if they are making some bad choices it really shows.
- nataz 6y ago
  I'll second this comment. Armchair evaluation of CEOs suffers from survivorship bias. Decent/good CEO keeps the business moving. A bad CEO can sink a company. Boards/owners (dependant on corporate structure) can mitigate results.
  - mottosso 6y ago
    > When you swap out somebody who does a decent job for another person who performs at about the same level it's not really that noticeable. Which interestingly is the same effect as swapping out somebody who does nothing for someone else who does nothing.
    - bigwavedave 6y ago
      > When you swap out somebody who does a decent job for another person who performs at about the same level it's not really that noticeable. >> Which interestingly is the same effect as swapping out somebody who does nothing for someone else who does nothing. I disagree. Swapping out a decent senior dev for a decent senior dev doesn't have a net negative effect like swapping out a senior dev who does nothing for another senior dev who does nothing. In scenario one, you have a senior dev who ramps up in a decent amount of time, does the work they're paid for, and isn't a waste of time and money like a bad hire. In the second scenario, you have a senior dev who's just as damaging as their predecessor, but you've lost the time and money you've invested in onboarding them while also paying the ongoing opportunity cost you could have avoided with a decent hire and any technical debt they accrue gets tossed on the pile with the rest of the debt their predecessor accrued. It would have been better to have just kept the first guy instead of wasting time, money, and morale on someone new.
jxramos 6y ago
Yah, but they're a deal compared to the alternative!
iambateman 6y ago
There’s talk on this thread that boards choose a CEO based on their marginal competence. I doubt there’s much evidence this is true. Boards select “the best person they can justify to shareholders.” Being expensive is a feature. A board member invents reasonable criteria for choosing a candidate: years of relevant industry experience at the VP level, advanced business degrees, charisma and “It” factor, recommendations from influencers, etc. As a result, the candidate pool shrinks from “honestly, lots of people could do this job” to “we have to choose one of three candidates.” From there, it’s all supply and demand curves, where the company has artificially crunched the supply and the price skyrockets. The solution isn’t to automate the leader. The solution is to admit to ourselves that a highly-relational project manager with a decade at the company could lead it as well as the CEO, if not better.
- PeterisP 6y ago
  The owners (or, for public companies - which most companies aren't - voting shareholders) are free to select whatever criteria they want for CEOs and appoint whomever they want. If selecting a highly-relational project manager with a decade at the company would allow them to save a lot of money, they can try that out and potentially outcompete other companies due to slightly lower costs; and if selecting a very expensive outside CEO saves them some worry, that's a "service" they can choose to buy. If in the end the performance is the same and it's a waste of money, in the end it's their money (not, for example, the workers) to waste as they wish.
motohagiography 6y ago
People who have a problem with high wages need to have a problem with commanding high budgets, but none of them do. The entire issue is a canard.
shoto_io 6y ago
I wonder what a fully automated Steve Jobs would have scaled Apple into.
lbriner 6y ago
Is there a principle that says that we pay our peers high salaries to help justify our own? If I get away with paying all my devs $30K, I can hardly justify my own $100K salary!
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xallarap 6y ago
Because CEO-bot cannot attend a meeting longer than 1 hour without a cache reset or it might develop a personality or become exploitable in some way. Also because money doesn't grow on trees. On the plus side, it would be quite convenient for the police if all CEOs were hardcoded to prevent all law violations and unable to by passivity allow a human to come to harm.
zaychikk 6y ago
The value of a CEO is in the soft value that they produce. Be it within the organization as a leader, or externally when dealing with gov't or a counterparty. In the best case, this soft value is translated into hard value for the shareholders, when someone like Tim Apple does what he's done for the past ten years. If you consider an outlier like Elon Musk, the reason many CEOs can't be automated is even clearer: his cult of personality has added at least $100B to TSLA's market cap alone, and I say that while thinking that he's generally a pretty bad leader.
bilater 6y ago
Seems like an advertisement for DAOs
deleted 6y ago
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aerosmile 6y ago
So much "interesting stuff" both in the article and in the comments (my favorite is the guy claiming he knows of multiple startups where the startup CEOs are making 7 figures). I was initially perplexed when I saw this article doing well on the HN homepage, but I assumed that it's just some kind of an engagement metric that the HN algorithm is picking up on. Really disheartened to see that the article itself and so many of the comments are getting upvotes. But here's a hypothesis for why in my own view the quality here is so different than in other threads: Most of us here on HN are hunting for disruptable opportunities so that we can either build startups or at least inform other people who will hopefully go after them. Of course, many of the seemingly disruptable opportunities are not really disruptable, but their apparent inefficiency is due to some aspect of the problem that we're not aware of. So in order to disrupt something, you either have to have deep knowledge (or have done a ton of research) in a certain industry or you have to be ridiculously lucky. So that brings us back to the topic of disrupting the CEO salaries. At a surface level, the price is high and the performance is low - boom, the market must be nuts so let's disrupt this / solve this problem. But the issue with beating the market with your idea is that you have to have detailed insights into the price and performance of CEOs, and the reality is most of us have neither (special shout out again to the 7 figures dude). Simply saying "I can see that many startups fail, hence all CEOs must be idiots" is not exactly the level of deep knowledge you need to beat the market. Having worked directly with a CEO, including recruiting, firing, and replacing them, would be a good starting point to think about how to approach pricing differently. I apologize if this comment comes off as elitist - I am just simply stating the needed mechanics to be good at disrupting any problem out there, and it's really no different in this case. It took me many years and many failed startups to analyze my own issues with spotting disruptable opportunities, and I wish someone had told me earlier in my life how much effort and diligence I should be putting into validating my ideas versus just blindly trusting my gut.
- nemetroid 6y ago
  > Most of us here on HN are hunting for disruptable opportunities so that we can either build startups or at least inform other people who will hopefully go after them. Maybe that was the case several years ago, but I believe most people on HN are regular salaried employees without any particular startup ambitions.
jordanpg 6y ago
I would love it if someone could explain to me like I'm 5, why it is exactly, that CEOs are so highly paid. I get that it's hard. I get that there are long hours. I get that it requires long-term strategic thinking. None of that helps me understand O(100M) "compensation." I'm pretty sure that executives get paid so much because of (a) their rolodex (ie. their ability to get certain people on the phone) and (b) because the world has -- not accidentally -- become convinced that it must be so and now it is that way. And everyone believes that were it not for O(100M) CEOs companies would fail. Lots of jobs are hard and require extremely smart, gifted people. And yet somehow only executives get huge "compensation." Someone please break it down for me Barney-style because it seems like bullshit to me.
- jl2718 6y ago
  Most responses are trying to tell you why they ‘deserve’ their pay. True or not, this is irrelevant. CEO pay is set by the board in the same vote that sets their own compensation. ‘The company’ is not a sentient being. Nobody is looking out for its best interests. 5-year-olds from most cultures would have a hard time understanding this because it breaks their understanding from adult-child stewardship.
  - jordanpg 6y ago
    It reminds me of the immortal line from The Usual Suspects: "The greatest trick the devil ever pulled was convincing the world he didn't exist."
    - jl2718 6y ago
      We shouldn’t moralize this. The point is that CEOs and board members are going to act exactly like anybody else in their position. Find a different structure if you want a different behavior.
- slantaclaus 6y ago
  I’m not sure I could adequately explain this to a 5 year old, but it really just comes down to the perception of supply and actual demand. I say perception because even though a “random person off the street” might be able to successfully run a Fortune 500 company, most of them wouldn’t and the boards/shareholders won’t tolerate the risk of allowing untested leaders to run massive companies. On the flip side, just because someone has experience and a good track record of results doesn’t mean they will succeed in future endeavors—a good example of this is that Pepsi guy (John Sculley) who took the helm at Apple and drove its business to the brink of death, this despite being paid in 1987 the highest salary of any company in the valley.
BugWatch 6y ago
I nominate Firefox Corporation and their CEOs as a proving grounds and guinea pigs, respectively.
venantius 6y ago
I don't normally go in for insults, but the author of this article is a fool who clearly has no idea what the job of the CEO actually is. We are a very long way from being able to automate the job.
plaidfuji 6y ago
> Where automated management – or “decision intelligence”, as Google and IBM call it – has been deployed, it’s produced impressive results. Hong Kong’s mass transit system put software in charge of scheduling its maintenance in 2004, and enjoys a reputation as one of the world’s most punctual and best-run metros. Predictive maintenance != “automating a CEO”
brodouevencode 6y ago
No one has mentioned yet that not all CEOs are large enough to be listed/Fortune 500/etc. Take a look at the state of California - Q1 2020. 0.1% of all business had 1000+ employees: https://www.labormarketinfo.edd.ca.gov/LMID/Size_of_Business_Data_for_CA.html https://www.labormarketinfo.edd.ca.gov/LMID/Size_of_Business.... In fact 71.1% of all business presumably with a high level of incorporation, have 0-4 employees. In this case the CEO is also most likely filling all the roles of the C-suite, including lead <worker role here> and janitor. It's casually flippant to say that all CEOs must be automated out of their jobs without looking at the details and nuance of what the data bear.
abeppu 6y ago
The subfield of AI for handling decisions which are context dependent and which yield rewards (or minimize costs) is reinforcement learning. Even a shallow familiarity with this family of techniques raises a number of reasons why automating a CEO is deeply challenging: 1. Specifying the problem to be solved can be very subtle. The article throws in an example of scheduling maintenance in a transit system. That's a case where someone can specify some utility function around service disruptions, cost, etc. Companies are complex. 2. The space of actions available to a company at any point is extremely broad, and also hard to specify. 3a. An agent needs to learn from something. This can take a couple directions. Roughly, "off-policy learning" learns from the actions and outcomes of _another_ agent with different internal rules etc. Perhaps we have incomplete data of this sort (business school case studies etc leave much information out). But you need a _lot_ of data, and it needs to cover the same sorts of situations that your agent would get around to. And some actions probably the software agent _cannot_ copy (e.g. doing an interview on Sunday news program). 3b. "On-policy" learning is improving your agent from the past actions/outcomes of its own decision-making. Normally this means we need some simulation environment in which to let the agent learn. How do you simulate the whole economy, and market forces with which a company interacts? After learning in a simulated environment, you likely need to further improve (and test) in the real world. In this domain, I think that means you have to be prepared to let a computer program run many companies into the ground. 4. Without a decent model of the world around them, RL agents have a harder time attributing outcomes to specific past actions. You beat your earnings estimate, but which of the bajillions of decisions made over the past several quarters is most responsible for that? I think human CEOs actually do a questionable job of this, but an automated one would be worse.
Ericson2314 6y ago
This is all very silly. Upper management is payed a lot in stock to assure loyalty to ownership. This is a crucial component to enforcing the shareholder theory of value: a legal prerogative that was being eroded in the mid 20th century as industry became more complex, workers became more empowered, and absentee ownership had a harder time holding onto the reigns.
- rightbyte 6y ago
  Do you mean that the stockholders need to pay a ransom to not have the executives wreck the corp? It has long been mine suspicion too.
  - Ericson2314 6y ago
    Not wreck, but just run in their own interests. The modern corperation is internally a very large feudal society ("manors within manors"), shareholders are completely absentee, and the secondary markets do not directly effect the balance sheet. I should cite the posts in https://jwmason.org/slackwire/tag/corporate-governance/ https://jwmason.org/slackwire/tag/corporate-governance/, some of which I were paraphrasing, and others which I haven't read before but are also interesting in a forum ostensibly run for "founders" by "friendly VCs"!
contingencies 6y ago
The real job of upper management in the 20th and 21st century is to learn things, because change is the constant thing that's going on. - Alan Kay (2017) ... via https://github.com/globalcitizen/taoup https://github.com/globalcitizen/taoup
mythrwy 6y ago
Some CEOs could probably be effectively automated with a broken Excel spreadsheet, a copy of AutoHotkey, and a "Hello Barbie" series talking doll. Many however provide some serious value that won't be automated any time soon if ever.
ctocoder 6y ago
That's my goal, make it to CEO, automate my job and take a huge salary at 1000x the average scale to infinity. Then in 10,000 years make enough to resurrect me to enjoy it.
johbjo 6y ago
One aspect of leadership is symbolic. If the company falls on hard times and needs to restructure/fire people, we can let the current CEO be associated with all the ugly stuff, and then bring in a new CEO to raise hope. There is a need for the employees to believe the CEO is important. Pay is one dimension in which this can be accomplished. CEO pay functions as an aspirational goal for all career paths in the company. I think the actual role of CEOs is symbolic, in these and many other ways.
chriselles 6y ago
Can leadership be automated? Persoanlly, I don’t see automated CEOs as a viable option for the foreseeable future. Automation usually works best with consistent and repeatable functions right? And automation usually works worst with diverse, infrequent, and unusually functions right? Could a CEO’s roles and responsibilities be somewhat split(with some grey area delineation) between hard and soft skills? Automation support for senior leadership hard skills seems like a logical extension of recent automation capabilities. In fact, I could imagine a well branded AI/human teaming decision support service becoming the new high-end executive health service status symbol. If companies are willing to expand and experiment with very high end health care support to senior leadership as a means to ensure high cognitive functioning then it would be a natural extension to include bespoke AI/ML decision support for senior leadership. Where else would bespoke AI/ML decision support for individuals originate and gain traction? It seems inevitable that it would originate where the opportunity cost is greatest. So CEO/AI teaming seems ripe for exploitation today, but a fully automated CEO still seems completely unreachable. However, if it emerges I would imagine it will do so first in business units with extremely high simplicity, repeatability, and predictability.
ridethebike 6y ago
When I was in university(mid 2000s) we had this subject called "AI fundamentals" - series of lectures + testing in the end(~2hours per week for 6 months), taught by respected faculty member (or so we thought), it was going to be awesome. What it actually turned out to be - lecture were dude talking non-stop things like (almost a quote by the way) "AI is not like regular app, it should be capable of taking task in form of 'go somewhere don't know where and bring me something I don't know what' and it would actually solve it. Having that would be true AI and that's what this all is about" and how great would be to have such AI and how close humanity is to it and yadda yadda yadda AI/tech dreamy stuff that you'd see in general media. Once in a while he would mention one or two concepts from AI theory and that would be it. And like that 6 months went by, we learned nothing, passed his "test" (which was pretty much questionnaire about all that blue-sky thinking) to get some default "pass" marks into diploma and that was it. Lots of smart-y talk, ~zero useful content. This is what this article is. HN community provided way more substance in a single (of several) threads on "is ceo pay fair" topic.
PopGreene 6y ago
Back in the 70s, my mother was still paying her mortgage. She forgot one payment and the bank sent her a rather nasty, threatening letter. She rightly got in a huff, called them up, and asked them, "I've made every payment on time until I forget one payment, and you treat me like a deadbeat. Why is that?" Their response was that the computer did it. (This was a common explanation you got from bureaucracies in the 70s) This did not satisfy my mother so she wrote a letter to the bank president, explaining to him that she didn't but that explanation. "Computers are not stupid and arrogant." If what my mother says is true, you will never be able to replace a CEO with a computer.
anm89 6y ago
There's a funny thing about articles like this. There is zero overlap between people who actually have any control over this matter and the people who hold this opinion by nature of the fact understanding enough about how businesses work to understand why this makes no sense is exclusive to to being in a role to implement this suggestion. So basically it doesn't matter how many people believe this because the people who hold the opinion have zero overlap with the group of people who practically make decisions about CEO roles. I guess maybe, although unlikely, temporarily there could be an overlap between the two groups but that situation would quickly resolve itself.

280 points by nixass 6y ago

I'll go against the common thought here. CEO pay is ridiculous. They can only pay that much because the workers have to work to pay their mortgage and pay for their health concerns. Noone would agree to making other people rich otherwise. The whole system is a mess and ready to be disrupted.

bobbydreamer 6y ago

Somebody have to make new CEO salary formula. (Standard salary * improving current performance ) - increasing debt + reducing debt + (long term strategy completion % by expenses) No stock options. If he wants stocks, he/she needs to buy.

sunstone 6y ago

Well this would certainly diminish the jockeying for position of those hoping to succeed the CEO.

throw_away 6y ago

Automate management before they can automate us

camjohnson26 6y ago

Because people will figure out how to exploit the algorithm.

hammock 6y ago
As if no one has ever figured out how to exploit the CEO...
- nix23 6y ago
  Ha!! My miniskirt says true ;)
  - deleted 6y ago
    [deleted]
  - watwut 6y ago
    The high level paid positions dont seem to be filled with women in miniskirts. They are more likely to be filled by men according to pretty much all studies I have seen. If anyone is exploiting CEOs for personal benefit, miniskirts are not that.
    - corpMaverick 6y ago
      Someone in the position of exploiting the miniskirt loop-hole. Is probably smart enough not to become a high level executive. And rather become the ex-trophy-wife and enjoy half the money with none of the responsibilities.
      - watwut 6y ago
        It is better to be executive then trophy wife. You have more agency that way, more respect and money are actually yours. Trophy wife are there to be looked at. Plus executive is not tied to n narcisstic partner that don't respect him. It is pretty easy to use money to controll trophy wife and let her know money are not hers. Harder with executive. And you can be pretty incompetent and still be failing upward if CEO likes you. There is no stress from responsibility if such thing does not stress you out. Smart mini skirt would took higher paid position and all those advantages of that was available. But, it is not. CEOs are I fact exploited differently and ultimately by dudes.

peshooo 6y ago

"If a role can be outsourced, it can be automated." I really don't see the logic in this statement.

nocommentguy 6y ago
To outsource something you have to be able to unambiguously specify requirements (otherwise costs blow up as you go back and forth). Once you’ve made it truly unambiguous, the next logical step is automation.
- lainga 6y ago
  >otherwise costs blow up as you go back and forth I've seen that and it's apparently a viable business decision. I don't know why - I'm not an MBA
  - jacobr1 6y ago
    Inability to drive internal decisions and/or CYA. You can see it even more clearly with "consultancy." The reason consultancies can get away with using so many newly minted MBAs, is that what most of them do is just reflect back the to the company what their employees already knew, but in a form that is consumable and justifies the business case for that action. There is some internal reason why the organization can't just make the decision, even though plenty of employees know what needs to get done. It could be weak leadership, inability to take risks, analysis paralysis, fear of unfamiliar territory, unwillingness to own the risk (CYA) and even more dysfunctional characteristics (like different teams unwilling to talk to each other). Brining in someone external can cut through much of that mess.
- burntoutfire 6y ago
  Not all automation is economically efficient - i.e. it's cheaper to hire outsourced janitors than building state of the art cleaning robots to automate their jobs.
  - mschuster91 6y ago

hammock 6y ago

Board still needs a throat to choke somewhere...

deleted 6y ago
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anaganisk 6y ago
They could undervolt the CPU too XD

smoldesu 6y ago

The reason we don't automate CEOs is liability: the board of directors/shareholders want someone to hold accountable when bad decisions start getting made. If you pay $4000 for a brand new iCEO that lays off your entire staff, you can really only scream at whoever minted the software making that decision, which often comes with limited liability licenses. Remember, corporate structure is about minimizing your own work and maximizing your leverage against your co-workers. None of these shareholders want to live in a world where something can't be fixed by shouting at someone over the phone.

alpha_squared 6y ago
I can imagine a scenario where an approval board of 3 or 5 people paid 1/10th a CEO's cost must approve the actions that the iCEO is suggesting rather than give it full autonomy to act indiscriminately. They'd effectively become executive assistants with veto power. If there aren't many things for the iCEO to do, then the board doesn't even need to be employed full-time and perhaps it could even be offloaded entirely onto the company board with a rotating schedule. Though, I imagine many board members don't like the idea that their involvement would then become more involved and they wouldn't be able to sit on as many boards collecting some nice comp/benefits.
jrwoodruff 6y ago
But I don't think they're suggesting getting rid of the entire executive team, or carte-blanche implementing whatever iCEO says to do. They're saying replace the most expensive position with some AI, and let the executive team debate that. Seems like we could figure out a way to find accountability in that model by assigning it to whoever is best aligned with the decision - and could provide an interesting balance for the board to debate: Why did you decide to go against the machines recommendation?
cdirkx 6y ago
My new SAAS startup idea; scapegoat as a service. For a few million dollars you can hire me, put all the blame on me, I say "I take full responsibility" and resign my position.

klyrs 6y ago

Why is paying them less not seen as an option? I've seen multiple startups struggle because their CEO makes more than 10 qualified technical staff, where the employees burn out because there's no budget to hire the technical staff the company needs.

myrandomcomment 6y ago
This is a sign of a startup you should not work at. CEO comp in a startup should be tied to the success of the company in the form of stock. Generally in a tech type startup the salary (cash) of the key developers and the CEO are around the same. The highest comp is on the sales side. The sales team joins late (the founders and CEO should drive sales at the start) and tend to get way less stock. Their comp is based on a base salary and commission which should be uncapped.
unfamiliar 6y ago
Presumably because the market dictates their salary, not a vague notion of what they should be paid. Or, to reframe the question: why don't people hire cheaper CEOs?
- hn_throwaway_99 6y ago
  > Presumably because the market dictates their salary Ahh yes, when the "market" is primarily made up of other CEOs (i.e. who sit on corporate boards), whose primary vested interested is to ensure CEO salaries stay astronomically high.
  - pasquinelli 6y ago
    isn't the solution, then, to put the workers on the board?
  - JohnPrine 6y ago
    Why don't we see more private equity firms snapping up companies and hiring cheaper CEOs then?
- 6y ago

deleted 6y ago

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georgecmu 6y ago

As a counterpoint to whether the CEO role can be outsourced or automated (posted by the former CEO of reddit): https://www.reddit.com/r/explainlikeimfive/comments/210to8/eli5_what_does_a_ceo_of_a_large_company_do_in_a/ https://www.reddit.com/r/explainlikeimfive/comments/210to8/e...

clarkevans 6y ago
I like his post downstream on 3 factors of CEO pay: https://www.reddit.com/r/explainlikeimfive/comments/210to8/eli5_what_does_a_ceo_of_a_large_company_do_in_a/cg8tb9t https://www.reddit.com/r/explainlikeimfive/comments/210to8/e...

spamizbad 6y ago

At the very least, you could do a hybrid model: An AI that makes 80% of the decisions and routes 20% to a human to help guide the decision making process.

polytely 6y ago
Or just a centaur model where the ai generate courses of actions and the human picks from those and/or modifies them.
anotheryou 6y ago
Touches on an interesting point. I think the data input is highly unstructured and the output not very regular.
- spamizbad 6y ago
  Sounds like the first step is figuring out a new standard to structure executive information.
  - anotheryou 6y ago
    That's certainly an interesting one. Clean, standardized Data is already often the bottleneck. And the CEO needs more than just data from inside the company.
    - CRConrad 6y ago
      I read "executive information" as information about executives, not for them... (But looking back up this sub-thread, I now guess I got it wrong.)
deleted 6y ago
[deleted]

williesleg 6y ago

Because China. What we need to automate is lawyers.

alexgmcm 6y ago

I can't help but feel that CEO's are over-valued and it's fundamentally an attribution problem as it's hard to know how much value they actually add. A comparison would be to fund managers and how the rise of index funds showed they actually added very little value in many cases, and weren't worth their fees.

kaczordon 6y ago
There was a Danish study that showed that a death in the family of a Danish CEO led, on average, to a 9 percent decline in the profitability of the corporation. If it was the death of a spouse, the decline was 15 percent and, if it was a child who died, 21 percent. From the study: “Interestingly, similar deaths experienced by individual members of the board of directors do not significantly affect firms’ outcomes. Our results provide strong empirical support for the idea that CEOs are extremely important to firm performance.” So I’d say they add significant value. https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/3177/valueceos.pdf https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfile...
- ForHackernews 6y ago
  Technically, doesn't this study only demonstrate that a distracted CEO is a risk to firm performance? Sounds like all the more reason to replace them with robots that don't have families.
  - skystarman 6y ago
    My Amazon Alexa has like a 60% success rate when I ask it basic questions that take me 10 seconds to google on my phone. Something tells me AI isn't quite there yet to run multi-billion dollar firms and won't be for a while.
- makapuf 6y ago
  To be honest, this shows that a dysfunctional CEO (for completely understandable reasons) leads to a nonprofitable firm, not that value is added. You could say that people with no or defective keyboard have a hard time programming, but the best keyboard does not add significant value to a developer.

karaterobot 6y ago

This article isn't actually suggesting that CEOs can be automated, it's making a modest proposal in order to point out that CEOs are overvalued and that automation is eliminating jobs for a lot of undervalued workers. Just putting that out there.

koonsolo 6y ago
prices are set by supply and demand
- jl2718 6y ago
  Prices of fungible commodities are set by supply and demand.

MayeulC 6y ago

Because that's how you end up with paperclip maximizers? https://www.lesswrong.com/tag/paperclip-maximizer https://www.lesswrong.com/tag/paperclip-maximizer Realistically though, they are supposed to be here for liability purposes. I've read of some companies decreasing CEO salaries and employing people just out of university, only to fire them a few months later to satisfy the board.

ARandomerDude 6y ago

CEOs aren't paid for the day-to-day value they provide to the company. They're paid for the long-term, strategic value the owners think they might provide the company in comparison to other candidates. So if you think CEO Candidate X will make you a 3x return on your investment, but CEO Candidate Y will make you a 5x return, it's almost certainly worth it to pay him/her the extra $200K to get you there, if that's the market demand. You're paying for experience, contact network, etc. in a job like that much more than you are how many widgets they can produce on an assembly line. So it seems that the idea that a CEO could be automated misses the point of what CEOs do and how they get hired.

mbrodersen 6y ago
Extremely well paid CEO’s fail all the time. There is zero evidence that rewarding CEO’s with absurd amounts of money makes any difference to the long term outcome of the companies they manage. Any idiot can buy back shares to boost share prices and/or cut cost to make the company more valuable short term and fail long term.
harperlee 6y ago
They should then be compensated with a leveraged long-term derivative product that pays based on the stock difference between their company and the industry, 5 to 10 years apart. "You want to be insanely rich? Here's a huge company that's not yours as a resource, now make it so it is the best one in 10 years!"
- andi999 6y ago
  All incentive models for ceos miss the point, that incentives do not work. People will just fulfill the metric, without incentive most people will do what is best for the company.
- Taek 6y ago
  The problem is that the best CEOs might not go for that. There are a lot of long term things that can impact a company for the negative, and you don't want your CEO bailing to a different company the moment that some macro event (semiconductor shortage, new competitor, global pandemic, etc) comes along and alters the long term upside of your company. You want a CEO who is going to stick around and make the best possible decisions to improve the company's trajectory, even if that mostly means keeping the company flat as opposed to faceplanting.

andi999 6y ago

At least here CEO take the legal liability if like the company files bancruptcy to late, etc.

king_magic 6y ago

Reads like it was written by someone who is absolutely clueless about the current state of AI and how close we'll be to being able to "automate a CEO" anytime soon.

whoisjuan 6y ago

This article is just an aimless rant about CEO high wages. At no point there was a coherent argument or explanation of how such automation could be achieved. The author seems to think that just because there's AI that is relatively good at taking decisions then that's enough to argue that CEOs should be superseded by said AIs. "If an AI can make it, why pay millions of dollars to human CEOs?"... As it was that simple. The author also ignores completely the basic laws of economics. Does he think that this is some sort of AI that you will be able to buy from a shelf? Provided by a SaaS Vendor at 100 USD a month? Because that's the only way you can make a meaningful economic argument around this. But the reality is that if this is even remotely possible, it would have a huge R&D price tag and it won't be a product that can be sold at scale by a vendor. That would defeat the economic incentives behind having a good decision maker taking the crucial decisions of your company. All decisions would look the same across several competitors if those decisions are taken by the same type of AI. This effectively makes such AI obsolete and operationally disadvantageous. So, you must build a proprietary replacement for your CEO and building such AI could be several orders of magnitude more expensive than hiring and paying a CEO. CEOs can't be automated. At least not soon. People who believe abstract decision-making jobs can be automated don't understand what automation is about or what's capable of. AI as it exists today can't automate CEO jobs or any kind of job where the output of a worker is to take extraordinarily complex and multi-variable decisions.

rglover 6y ago

That's all well and good until your automated CEO decides to pivot the company to being a dildo manufacturer because it finds an arbitrage opportunity in Amsterdam.

imsofuture 6y ago

This is exactly the general hypothesis behind https://100dollarceo.com https://100dollarceo.com

caffeine 6y ago

Unlike CEOs, authoring idiotic clickbait IS a job that is rapidly being automated away..

lm28469 6y ago

Good luck automating an Elon Musk or a Steve Jobs. Your algorithm would never come up with new ideas like Amazon or Space X So far "automation" means a bunch of if/else statement or at most a biased deep learning algorithm, this is why they're used on entry jobs, because they're fundamentally not very useful for anything other than pre defined repeatable and easy tasks

egypturnash 6y ago
“Sell shit online” is such an inobvious idea. I don’t know how Bezos thought it up! Completely unexpected.
- lm28469 6y ago
  Then why is he the richest man on earth and you're not ? It's always obvious and easy when you look back at history ...
  - netflixandkill 6y ago
    The keys to wild success are getting in early and being lucky. I'm entirely sure a lot of the early people at Amazon were in fact quite bright and hard working, and many good decisions were made, but plenty of other people knew selling stuff online was going to happen but couldn't get the stars to align on funding, or had a key member suffer a personal setback early on, etc.
  - ramtatatam 6y ago
    I remember when in early 90's somebody was saying there will be a computer in each house. At the time I thought - good luck with that, computers are so expensive (I was in my early teens back then so my opinion was not particularly useful because I had no money and computers in my country were very expensive compared with average wage). Then in late 90's somebody said internet will be in each house - again I could not believe :) Later somebody said people will do shopping through internet - guess what my opinion was ;) Later somebody said everyone will have a smartphone - at this point I thought my gut feeling is probably wrong - even if I was happy with my mobile I thought my spending habits are different than those of majority. Later somebody said everyone will be connected to the internet 24/7 on their smartphones. So I missed most of the wave purely because I had no imagination and no business acumen.. I can image value of people who do see those trends early.

MINPOOL 6y ago

My understanding of a good CEO is that the main work is to build and maintain business contacts that lead to future large revenue streams for the company (which is de facto networking to build contacts with customers in the first place, closing deals is the job of the sales department). I don't think that creating a strategy has that much value, most like it is wrong anyway¹. ¹ https://hbr.org/2010/01/why-most-ceos-are-bad-at-strat-2 https://hbr.org/2010/01/why-most-ceos-are-bad-at-strat-2

ouid 6y ago

CEOs are expensive because they form a clique, They sit on the boards of other companies and install CEOs who are on the board of the company they themselves CEO. Normally you would call this practice embezzlement, but because it only requires the most tacit of collusions to pull off, we call it shrug.

neonate 6y ago

https://archive.md/sT77U https://archive.md/sT77U

spullara 6y ago

The comments in here are hilarious. If you think the CEO doesn't matter in a company you have never been on a board of a company and had the responsibility to hire and fire them.

nataz 6y ago
Their comments matter, but they aren't well informed. Hacker news is full of bright ambitious folks who think they are very smart, or they can change the world, or they can make a lot of money. It's all about their personal impact. HN celebrates individual contribution. Which is fine and good. That said, I'd argue that many folks here would benefit from spending time on how to be better leaders, or gasp, managers and executives. Most people, by definition, aren't going to be 10x or 100x engineers. But a good manager, supervisor, executive will make everyone around them better.
SavantIdiot 6y ago
> you have never been on a board of a company and had the responsibility to hire and fire them. Think about that statement, just for 5 seconds. Please. You do realize very, very few people meet this criteria. And their opinions still matter because they are impacted.
- spullara 6y ago
  People in the comments are making definitive statements that you can't evaluate CEOs. They should think about it for 5 seconds and realize that they are not experts in the domain.
  - SavantIdiot 6y ago
    So you never voice opinions about topics that you aren't in expert on, otherwise you'd be a flaming hypocrite, right? Cool!
    - deleted 6y ago
      [deleted]

MattGaiser 6y ago

> If a role can be outsourced, it can be automated. This line alone makes the article ludicrous.

woeirua 6y ago

I too used to think that CEOs were a waste of resources, and that they had minimal if any impact on most companies. But I think people grossly underestimate how important CEOs are, because the vast majority of them do a decent job. When you swap out somebody who does a decent job for another person who performs at about the same level it's not really that noticeable. That said, you'll come to appreciate those "decent" CEOs after you've had an experience with a truly bad CEO. One such experience was enough for me to decide that who runs the company at the top is critical to the success of most companies.

BuyMyBitcoins 6y ago
Indeed, and the majority of a CEO’s direction and decisions are fundamentally different from those that the other employees make. As a software engineer I’m simply not privy to the kinds of choices the CEO is making and “no news is good news” is often the case with C-Suite decisions. But, if they are making some bad choices it really shows.
nataz 6y ago
I'll second this comment. Armchair evaluation of CEOs suffers from survivorship bias. Decent/good CEO keeps the business moving. A bad CEO can sink a company. Boards/owners (dependant on corporate structure) can mitigate results.
- mottosso 6y ago
  > When you swap out somebody who does a decent job for another person who performs at about the same level it's not really that noticeable. Which interestingly is the same effect as swapping out somebody who does nothing for someone else who does nothing.
  - bigwavedave 6y ago
    > When you swap out somebody who does a decent job for another person who performs at about the same level it's not really that noticeable. >> Which interestingly is the same effect as swapping out somebody who does nothing for someone else who does nothing. I disagree. Swapping out a decent senior dev for a decent senior dev doesn't have a net negative effect like swapping out a senior dev who does nothing for another senior dev who does nothing. In scenario one, you have a senior dev who ramps up in a decent amount of time, does the work they're paid for, and isn't a waste of time and money like a bad hire. In the second scenario, you have a senior dev who's just as damaging as their predecessor, but you've lost the time and money you've invested in onboarding them while also paying the ongoing opportunity cost you could have avoided with a decent hire and any technical debt they accrue gets tossed on the pile with the rest of the debt their predecessor accrued. It would have been better to have just kept the first guy instead of wasting time, money, and morale on someone new.

jxramos 6y ago

Yah, but they're a deal compared to the alternative!

iambateman 6y ago

There’s talk on this thread that boards choose a CEO based on their marginal competence. I doubt there’s much evidence this is true. Boards select “the best person they can justify to shareholders.” Being expensive is a feature. A board member invents reasonable criteria for choosing a candidate: years of relevant industry experience at the VP level, advanced business degrees, charisma and “It” factor, recommendations from influencers, etc. As a result, the candidate pool shrinks from “honestly, lots of people could do this job” to “we have to choose one of three candidates.” From there, it’s all supply and demand curves, where the company has artificially crunched the supply and the price skyrockets. The solution isn’t to automate the leader. The solution is to admit to ourselves that a highly-relational project manager with a decade at the company could lead it as well as the CEO, if not better.

PeterisP 6y ago
The owners (or, for public companies - which most companies aren't - voting shareholders) are free to select whatever criteria they want for CEOs and appoint whomever they want. If selecting a highly-relational project manager with a decade at the company would allow them to save a lot of money, they can try that out and potentially outcompete other companies due to slightly lower costs; and if selecting a very expensive outside CEO saves them some worry, that's a "service" they can choose to buy. If in the end the performance is the same and it's a waste of money, in the end it's their money (not, for example, the workers) to waste as they wish.

motohagiography 6y ago

People who have a problem with high wages need to have a problem with commanding high budgets, but none of them do. The entire issue is a canard.

shoto_io 6y ago

I wonder what a fully automated Steve Jobs would have scaled Apple into.

lbriner 6y ago

Is there a principle that says that we pay our peers high salaries to help justify our own? If I get away with paying all my devs $30K, I can hardly justify my own $100K salary!

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xallarap 6y ago

Because CEO-bot cannot attend a meeting longer than 1 hour without a cache reset or it might develop a personality or become exploitable in some way. Also because money doesn't grow on trees. On the plus side, it would be quite convenient for the police if all CEOs were hardcoded to prevent all law violations and unable to by passivity allow a human to come to harm.

zaychikk 6y ago

The value of a CEO is in the soft value that they produce. Be it within the organization as a leader, or externally when dealing with gov't or a counterparty. In the best case, this soft value is translated into hard value for the shareholders, when someone like Tim Apple does what he's done for the past ten years. If you consider an outlier like Elon Musk, the reason many CEOs can't be automated is even clearer: his cult of personality has added at least $100B to TSLA's market cap alone, and I say that while thinking that he's generally a pretty bad leader.

bilater 6y ago

Seems like an advertisement for DAOs

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aerosmile 6y ago

So much "interesting stuff" both in the article and in the comments (my favorite is the guy claiming he knows of multiple startups where the startup CEOs are making 7 figures). I was initially perplexed when I saw this article doing well on the HN homepage, but I assumed that it's just some kind of an engagement metric that the HN algorithm is picking up on. Really disheartened to see that the article itself and so many of the comments are getting upvotes. But here's a hypothesis for why in my own view the quality here is so different than in other threads: Most of us here on HN are hunting for disruptable opportunities so that we can either build startups or at least inform other people who will hopefully go after them. Of course, many of the seemingly disruptable opportunities are not really disruptable, but their apparent inefficiency is due to some aspect of the problem that we're not aware of. So in order to disrupt something, you either have to have deep knowledge (or have done a ton of research) in a certain industry or you have to be ridiculously lucky. So that brings us back to the topic of disrupting the CEO salaries. At a surface level, the price is high and the performance is low - boom, the market must be nuts so let's disrupt this / solve this problem. But the issue with beating the market with your idea is that you have to have detailed insights into the price and performance of CEOs, and the reality is most of us have neither (special shout out again to the 7 figures dude). Simply saying "I can see that many startups fail, hence all CEOs must be idiots" is not exactly the level of deep knowledge you need to beat the market. Having worked directly with a CEO, including recruiting, firing, and replacing them, would be a good starting point to think about how to approach pricing differently. I apologize if this comment comes off as elitist - I am just simply stating the needed mechanics to be good at disrupting any problem out there, and it's really no different in this case. It took me many years and many failed startups to analyze my own issues with spotting disruptable opportunities, and I wish someone had told me earlier in my life how much effort and diligence I should be putting into validating my ideas versus just blindly trusting my gut.

nemetroid 6y ago
> Most of us here on HN are hunting for disruptable opportunities so that we can either build startups or at least inform other people who will hopefully go after them. Maybe that was the case several years ago, but I believe most people on HN are regular salaried employees without any particular startup ambitions.

jordanpg 6y ago

I would love it if someone could explain to me like I'm 5, why it is exactly, that CEOs are so highly paid. I get that it's hard. I get that there are long hours. I get that it requires long-term strategic thinking. None of that helps me understand O(100M) "compensation." I'm pretty sure that executives get paid so much because of (a) their rolodex (ie. their ability to get certain people on the phone) and (b) because the world has -- not accidentally -- become convinced that it must be so and now it is that way. And everyone believes that were it not for O(100M) CEOs companies would fail. Lots of jobs are hard and require extremely smart, gifted people. And yet somehow only executives get huge "compensation." Someone please break it down for me Barney-style because it seems like bullshit to me.

jl2718 6y ago
Most responses are trying to tell you why they ‘deserve’ their pay. True or not, this is irrelevant. CEO pay is set by the board in the same vote that sets their own compensation. ‘The company’ is not a sentient being. Nobody is looking out for its best interests. 5-year-olds from most cultures would have a hard time understanding this because it breaks their understanding from adult-child stewardship.
- jordanpg 6y ago
  It reminds me of the immortal line from The Usual Suspects: "The greatest trick the devil ever pulled was convincing the world he didn't exist."
  - jl2718 6y ago
    We shouldn’t moralize this. The point is that CEOs and board members are going to act exactly like anybody else in their position. Find a different structure if you want a different behavior.
slantaclaus 6y ago
I’m not sure I could adequately explain this to a 5 year old, but it really just comes down to the perception of supply and actual demand. I say perception because even though a “random person off the street” might be able to successfully run a Fortune 500 company, most of them wouldn’t and the boards/shareholders won’t tolerate the risk of allowing untested leaders to run massive companies. On the flip side, just because someone has experience and a good track record of results doesn’t mean they will succeed in future endeavors—a good example of this is that Pepsi guy (John Sculley) who took the helm at Apple and drove its business to the brink of death, this despite being paid in 1987 the highest salary of any company in the valley.

BugWatch 6y ago

I nominate Firefox Corporation and their CEOs as a proving grounds and guinea pigs, respectively.

venantius 6y ago

I don't normally go in for insults, but the author of this article is a fool who clearly has no idea what the job of the CEO actually is. We are a very long way from being able to automate the job.

plaidfuji 6y ago

> Where automated management – or “decision intelligence”, as Google and IBM call it – has been deployed, it’s produced impressive results. Hong Kong’s mass transit system put software in charge of scheduling its maintenance in 2004, and enjoys a reputation as one of the world’s most punctual and best-run metros. Predictive maintenance != “automating a CEO”

brodouevencode 6y ago

No one has mentioned yet that not all CEOs are large enough to be listed/Fortune 500/etc. Take a look at the state of California - Q1 2020. 0.1% of all business had 1000+ employees: https://www.labormarketinfo.edd.ca.gov/LMID/Size_of_Business_Data_for_CA.html https://www.labormarketinfo.edd.ca.gov/LMID/Size_of_Business.... In fact 71.1% of all business presumably with a high level of incorporation, have 0-4 employees. In this case the CEO is also most likely filling all the roles of the C-suite, including lead <worker role here> and janitor. It's casually flippant to say that all CEOs must be automated out of their jobs without looking at the details and nuance of what the data bear.

abeppu 6y ago

The subfield of AI for handling decisions which are context dependent and which yield rewards (or minimize costs) is reinforcement learning. Even a shallow familiarity with this family of techniques raises a number of reasons why automating a CEO is deeply challenging: 1. Specifying the problem to be solved can be very subtle. The article throws in an example of scheduling maintenance in a transit system. That's a case where someone can specify some utility function around service disruptions, cost, etc. Companies are complex. 2. The space of actions available to a company at any point is extremely broad, and also hard to specify. 3a. An agent needs to learn from something. This can take a couple directions. Roughly, "off-policy learning" learns from the actions and outcomes of _another_ agent with different internal rules etc. Perhaps we have incomplete data of this sort (business school case studies etc leave much information out). But you need a _lot_ of data, and it needs to cover the same sorts of situations that your agent would get around to. And some actions probably the software agent _cannot_ copy (e.g. doing an interview on Sunday news program). 3b. "On-policy" learning is improving your agent from the past actions/outcomes of its own decision-making. Normally this means we need some simulation environment in which to let the agent learn. How do you simulate the whole economy, and market forces with which a company interacts? After learning in a simulated environment, you likely need to further improve (and test) in the real world. In this domain, I think that means you have to be prepared to let a computer program run many companies into the ground. 4. Without a decent model of the world around them, RL agents have a harder time attributing outcomes to specific past actions. You beat your earnings estimate, but which of the bajillions of decisions made over the past several quarters is most responsible for that? I think human CEOs actually do a questionable job of this, but an automated one would be worse.

Ericson2314 6y ago

This is all very silly. Upper management is payed a lot in stock to assure loyalty to ownership. This is a crucial component to enforcing the shareholder theory of value: a legal prerogative that was being eroded in the mid 20th century as industry became more complex, workers became more empowered, and absentee ownership had a harder time holding onto the reigns.

rightbyte 6y ago
Do you mean that the stockholders need to pay a ransom to not have the executives wreck the corp? It has long been mine suspicion too.
- Ericson2314 6y ago
  Not wreck, but just run in their own interests. The modern corperation is internally a very large feudal society ("manors within manors"), shareholders are completely absentee, and the secondary markets do not directly effect the balance sheet. I should cite the posts in https://jwmason.org/slackwire/tag/corporate-governance/ https://jwmason.org/slackwire/tag/corporate-governance/, some of which I were paraphrasing, and others which I haven't read before but are also interesting in a forum ostensibly run for "founders" by "friendly VCs"!

contingencies 6y ago

The real job of upper management in the 20th and 21st century is to learn things, because change is the constant thing that's going on. - Alan Kay (2017) ... via https://github.com/globalcitizen/taoup https://github.com/globalcitizen/taoup

mythrwy 6y ago

Some CEOs could probably be effectively automated with a broken Excel spreadsheet, a copy of AutoHotkey, and a "Hello Barbie" series talking doll. Many however provide some serious value that won't be automated any time soon if ever.

ctocoder 6y ago

That's my goal, make it to CEO, automate my job and take a huge salary at 1000x the average scale to infinity. Then in 10,000 years make enough to resurrect me to enjoy it.

johbjo 6y ago

One aspect of leadership is symbolic. If the company falls on hard times and needs to restructure/fire people, we can let the current CEO be associated with all the ugly stuff, and then bring in a new CEO to raise hope. There is a need for the employees to believe the CEO is important. Pay is one dimension in which this can be accomplished. CEO pay functions as an aspirational goal for all career paths in the company. I think the actual role of CEOs is symbolic, in these and many other ways.

chriselles 6y ago

Can leadership be automated? Persoanlly, I don’t see automated CEOs as a viable option for the foreseeable future. Automation usually works best with consistent and repeatable functions right? And automation usually works worst with diverse, infrequent, and unusually functions right? Could a CEO’s roles and responsibilities be somewhat split(with some grey area delineation) between hard and soft skills? Automation support for senior leadership hard skills seems like a logical extension of recent automation capabilities. In fact, I could imagine a well branded AI/human teaming decision support service becoming the new high-end executive health service status symbol. If companies are willing to expand and experiment with very high end health care support to senior leadership as a means to ensure high cognitive functioning then it would be a natural extension to include bespoke AI/ML decision support for senior leadership. Where else would bespoke AI/ML decision support for individuals originate and gain traction? It seems inevitable that it would originate where the opportunity cost is greatest. So CEO/AI teaming seems ripe for exploitation today, but a fully automated CEO still seems completely unreachable. However, if it emerges I would imagine it will do so first in business units with extremely high simplicity, repeatability, and predictability.

ridethebike 6y ago

When I was in university(mid 2000s) we had this subject called "AI fundamentals" - series of lectures + testing in the end(~2hours per week for 6 months), taught by respected faculty member (or so we thought), it was going to be awesome. What it actually turned out to be - lecture were dude talking non-stop things like (almost a quote by the way) "AI is not like regular app, it should be capable of taking task in form of 'go somewhere don't know where and bring me something I don't know what' and it would actually solve it. Having that would be true AI and that's what this all is about" and how great would be to have such AI and how close humanity is to it and yadda yadda yadda AI/tech dreamy stuff that you'd see in general media. Once in a while he would mention one or two concepts from AI theory and that would be it. And like that 6 months went by, we learned nothing, passed his "test" (which was pretty much questionnaire about all that blue-sky thinking) to get some default "pass" marks into diploma and that was it. Lots of smart-y talk, ~zero useful content. This is what this article is. HN community provided way more substance in a single (of several) threads on "is ceo pay fair" topic.

PopGreene 6y ago

Back in the 70s, my mother was still paying her mortgage. She forgot one payment and the bank sent her a rather nasty, threatening letter. She rightly got in a huff, called them up, and asked them, "I've made every payment on time until I forget one payment, and you treat me like a deadbeat. Why is that?" Their response was that the computer did it. (This was a common explanation you got from bureaucracies in the 70s) This did not satisfy my mother so she wrote a letter to the bank president, explaining to him that she didn't but that explanation. "Computers are not stupid and arrogant." If what my mother says is true, you will never be able to replace a CEO with a computer.

anm89 6y ago

There's a funny thing about articles like this. There is zero overlap between people who actually have any control over this matter and the people who hold this opinion by nature of the fact understanding enough about how businesses work to understand why this makes no sense is exclusive to to being in a role to implement this suggestion. So basically it doesn't matter how many people believe this because the people who hold the opinion have zero overlap with the group of people who practically make decisions about CEO roles. I guess maybe, although unlikely, temporarily there could be an overlap between the two groups but that situation would quickly resolve itself.