WSJ.com – Great Divide: CEO and Worker Pay

I’ve never been a fan of Garrison Keiler, but I’m reminded of his famous quote:

“Welcome to Lake Wobegon, where all the women are strong, all the men are good-looking, and all the children are above average.”

While globalization pushes down wages as a result of global competition, apparently “superstar” CEO’s are in such short supply that wages are pushed up due to scarcity. When do we start outsourcing to CEO’s from low wage countries?

“Increasingly, superstars are demanding outsized compensation,” said Richard DeKaser of National City Corp. “But at the same time, that’s not the whole story. Institutional aspects are in play as well. Compensation committees generally don’t like to pay CEOs below the median” rate of compensation, he said.

Wouldn’t it also be nice if all cars could have above-median gas mileage and had above-median quality? Wouldn’t it be nice if all employees worked at companies with above-median leadership?

When every CEO has to be above the median compensation, that’s not sustainable. That’s a never ending upward spiral, which is accelerated everytime a CEO jumps to a new company or gets a golden parachute.

We expect our CEO’s to be leaders, especially in our lean efforts. We talk about “executive buy-in”. But with the obscene pay scales, do we have executive “sell out” more so than “buy in?” How can they expect to be viewed as leaders when they are paid huge sums, even with failure? If we fail in our lean efforts, there’s not a huge payday waiting for non-executives.

About LeanBlog.org: Mark Graban is a consultant, author, and speaker in the “lean healthcare” methodology, focused on improving quality and patient safety, improving access, reducing costs, and fully engaging healthcare professionals. He is also the Chief Improvement Officer for KaiNexus.

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