The Elusive Righting Arm: Why Greed and Glory Don’t Mix

The view from the C-Suite is disturbing. In this microcosm of an executive’s life, where the pinnacle of career may last a mere 1-5 years, the power that surges through the veins of corporate Chiefs is values-numbing. Like hormonal teenagers, frontal lobes seem to be turned “off” and the chief priority has shifted to maximizing Executive Compensation. In the Chief-Suite (a.k.a. Compensation-Suite), personal wealth is C-Suite’s priority.

Power business publications like the Wall Street Journal, The Economist, and Forbes emphasize executive compensation in their editorial mix. The power play is pay. It’s about the Compensation! The corporation has become the ship transporting civilization, for better and worse, and the C-Suite is the bridge from which social leadership evolves.

While America’s C-Suite is emulated globally, Asia is setting their sales as never before.  Chinese and Indian economies are growing disproportionately fast, and reshaping markets and social norms. That Dubai and Singapore are home to spectacularly tall corporate towers indicate egos of C-Suites and radical consumers alike. In times of despair and decline in America, some of its best and brightest are now overseas teaching foreign C-Suites how to succeed at business in a now global economy: floridly demonstrating that power occurs by monetizing personal gain.

Perhaps we’ve run through our hourglass, and the feeding frenzy migrates elsewhere.  But the gap between the least paid and most paid in America shows a very interesting relationship. According to one cited study, comparing average income for US hourly workers and CEOs reveals a remarkable trend.  “In 1970, the average CEO compensation was 11 times the average hourly worker’s wage. In 1980 the gap was 42 times, and in 1990 CEO compensation was 85 times greater than average hourly wages. CEO compensation in 2000 demonstrates a pay gap of over 531 times the average hourly worker wage.”

Since then, the disproportional pay gap has widened, along with the justifying rhetoric of C-Suites, and corporate boards who govern CEO compensation. But do these ratios track our collective social power: The improvements in world peace? Growth in the sense of happiness or contentment shared by people on this planet?  The degree of respect and tolerance for diversity among human beings? You know the answers. As you read this, the poverty rate for children in the US is approaching 25%, according to a recent report by CBS News. (Based on an annual family income of less than 22,000 USD.) How long can C-Suites expect revenue and profit growth from depleted consumer power?

There is a very real power in the C-Suite, however, that is not corrupt. Whether in embryo or actively exercised, there is a North Star for true leadership in C-Suites that merit civil appreciation and is economically rewarding. Those who calibrate their compass to core social values, instead of executive compensation, appear to be growing in numbers and significance. Their legacy derives from the realization that C-Suite prominence carries with it a social responsibility.  They realize they can shape their income statements and balance sheets with a corresponding intention of shaping civilization for humanity.

The late Peter F. Drucker, a survivor of two world wars, eloquently illustrated this point. His wisdom, so shaped, was amplified largely by his eminence in political science and business management. Here is what he said:

  • I would hope that American managers–indeed, managers worldwide–continue to appreciate what I have been saying almost from day one: that management is so much more than exercising rank and privilege, that it is much more than “making deals.” Management affects people and their lives.
  • And yet who else is there to take care of society, its problems and its ills? These organizations collectively are society…Power must always be balanced by responsibility; otherwise it becomes tyranny. And organizations do have power.
  • Leaders in every single institution and in every single sector … have two responsibilities. They are responsible and accountable for the performance of their institutions, and that requires them and their institutions to be concentrated, focused, limited. They are responsible also, however, for the community as a whole.
Do you intend for your leadership authority to convey a greater responsibility than the growth of shareholder value? How’s this working for the world?

(Adapted from the article published in the column, Life In The C-Suite in Charlatan Magazine of July 2011.)