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Taking a risk that doesn't pan out can also be a bad idea, though. It depends on what the possible outcomes were and what the chances of each outcome were. The

Taking a risk that doesn't pan out can also be a bad idea, though. It depends on what the possible outcomes were and what the chances of each outcome were. The important thing to evaluating someone's decision making ability is to look at the decision they made with the information they had. Was it a good bet to dramatically overhire? I don't know!, but analysts can and should (rather, have no excuse not to). It's possible to determine what information the C-suite had access to and how risky they believed the decision to be. Did they play fast and loose with peoples' livelihoods for a tiny chance of unsustainable profit? Might be a bad decision.

RestlessMind 3y ago
It is board's job to evaluate C-suite's decisions. It is shareholders' job to appoint a proper board. Ultimately, the system has some flaws but generally it has worked pretty well over the past many decades.
- bigtex88 3y ago
  So well. We've destroyed the planet but we have cheaper TV's, so that's a win in my book. /s
- digging 3y ago
  I'm not talking about who is doing the evaluation. That's an obviously flawed process because the board has a stake in the company making unethical decisions for short term profit. I'm just describing what good decision making actually is. If you take an option with 20% chance of success, but few downsides if it fails and large returns if it succeeds, that's usually a good decision. If, however, the downsides are catastrophic, that's probably a bad decision. The situation here is that the downsides were arguably catastrophic, but completely externalized. The C-suite selfishly made bad decisions because it didn't affect them negatively. Doing so should reasonably have repercussions for them, but where's the incentive? An organization that places profit above all is intrinsically immoral and/or corrupt. This is obvious, we've just been allowing it for generations because we keep telling those who get hurt that things should probably work out on their own, eventually, or in the aggregate. And we convince people that an organization that places not being evil (not even martyring itself, just not doing horrible shit) just above profit can't exist. Would it be competitive? Maybe not, which is why regulation is actually useful - it can change the playing field so a company doesn't have to make that decision. (Of course, we already do this exact thing, but for extremely limited definitions of evil, and we also don't punish those evils very badly when they're committed.)

RestlessMind 3y ago

It is board's job to evaluate C-suite's decisions. It is shareholders' job to appoint a proper board. Ultimately, the system has some flaws but generally it has worked pretty well over the past many decades.

bigtex88 3y ago
So well. We've destroyed the planet but we have cheaper TV's, so that's a win in my book. /s
digging 3y ago
I'm not talking about who is doing the evaluation. That's an obviously flawed process because the board has a stake in the company making unethical decisions for short term profit. I'm just describing what good decision making actually is. If you take an option with 20% chance of success, but few downsides if it fails and large returns if it succeeds, that's usually a good decision. If, however, the downsides are catastrophic, that's probably a bad decision. The situation here is that the downsides were arguably catastrophic, but completely externalized. The C-suite selfishly made bad decisions because it didn't affect them negatively. Doing so should reasonably have repercussions for them, but where's the incentive? An organization that places profit above all is intrinsically immoral and/or corrupt. This is obvious, we've just been allowing it for generations because we keep telling those who get hurt that things should probably work out on their own, eventually, or in the aggregate. And we convince people that an organization that places not being evil (not even martyring itself, just not doing horrible shit) just above profit can't exist. Would it be competitive? Maybe not, which is why regulation is actually useful - it can change the playing field so a company doesn't have to make that decision. (Of course, we already do this exact thing, but for extremely limited definitions of evil, and we also don't punish those evils very badly when they're committed.)