CEO Pay Caps? You Bet!
As a LeanThinker I am most unabashedly a free market advocate. Free trade, absolutely. Love those imported fresh Mexican tomatoes in my sandwich on a freezing January day. Open skies, no question. I look forward to when I can fly Singapore Air from Chicago to LAX, experiencing the same outrageously great service they provide on some of my international trips. And Brazilian, ethanol – bring it on over! Let’s keep Illinois corn here in the Midwest where it belongs, fattening up that great-tasting Midwestern beef I’ll be having for dinner tonight.
But Lean Leaders can not allow a purely free market to exist in executive compensation when certain CEOs of American companies are receiving taxpayer (spelled: MY) dollars via U.S. government welfare handouts!
LEAN is about performance. And rewards, any way you’d like to define them, should go to those who perform well. And those who do not deliver performance should also receive a strong message: NO rewards. President Barack Obama was quoted earlier this week in the New York Times:
“This is America,” Mr. Obama said on Wednesday. “We don’t disparage wealth. We don’t begrudge anybody for achieving success. And we believe that success should be rewarded. But what gets people upset â€” and rightfully so â€” are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers.”
So let’s silently visualize the news headlines of the past few of months. Are you thinking of a company or two that has failed miserably in the market place? Even if you can’t remember the CEO’s name? We all know at least some of these folks (though we may not yet know ALL of them).
Now, think for a moment about some of the concepts which define LEAN performance-driven companies, and see if any of these all-star concrete-heads (automotive, financial services, transportation, etc.) looking for a hand-out could ever be connected with ANY one of these principles or practices.
Leadership? Value-added activity? Accountability? Employee engagement? Respect for people? High quality, fewer defects? Flow (well, I guess there was some cash out-flow in the form of toxic mortgages, but that doesn’t count)? Customer value? Continuous or constant improvement? Lower cost? Going to Gemba (as in, knowing what the hell is going on in my business)? Corporate social responsibility? Transparency? And how about just good old-fashioned plain honesty?
See many (LEAN) connections? Neither did I. Many of our “modern” executive compensation systems are built around rewards and incentives that simply don’t do what they were supposed to do. That in itself is a performance issue, and a topic for another day. I’m sure we could apply loads of LEAN improvement strategies and practices in the compensation arena. But how about doing something right now?
Solutions? Well, I’m not an economist and I’m not a political activist, but I’ve sure met a lot of top-performing executives who’ve gotten LEAN religion, then transformed their organizations and their corporate cultures. And then delivered performance, and been well-rewarded for it.
So in the spirit of LEAN I offer a simple suggestion which can be implemented right now: Every company receiving assistance in the form of our tax dollars MUST send its Chairman, CEO, CFO and all business unit (division, subsidiary, etc.) leaders to an intensive (say 3-5 days, perhaps 10 for the CFO) hands-on LEAN EXECUTIVE training.
I’ve got a short list of appropriate Senseis in case anyone’s interested.