Facts about CEOs

 

Facts about CEOs

There is a lot of misunderstand about what a CEO is and what he/she does.  In fact many believe these people run their corporations and make all important decisions.  Some believe they are critical to the success of the corporations they run. 

These myths are just that, myths.  None of the above statements are true. 

Most large corporations would run just fine if your mother was the CEO.  In fact the overall performance might actually be a lot better because your mother isn’t as greedy as most CEOs.

After spending 35 years in corporate America and getting an up close and personal view of some of these titans of American industry, I can assure you I would gladly have exchanged my CEO for your mother any day.

What do CEOs do?

They manage the people who manage the people, who manage the people who run the corporation.  Got that?  Let me be a little more specific.  The CEO has a few people who report directly to them.  These are the people who manage the various departments of any corporation.

The CEO also surrounds themselves with their own personal posse, called advisors.  These advisors are very smart butt kissers who do just one thing – protect the personal interests of the CEO.

That’s it. The CEO manages about 12 people. These people are the VP of Finance, Human Resources, Manufacturing, Customer Support, Sales and Marketing, Technology, Legal, Public Relations, etc.  Some have a few more, but that is about it.

Most of these VPs are the ones who have real knowledge about the area they manage.  But many times the VP is just a figure head, a buddy of the CEO and the real brains is the person who reports to the VP.  Usually the bigger the title the less the person knows and does to help the corporation.  So in most corporations the top 13 executives do very little and get paid enormous amounts of the stockholders money.

Each functional VP (finance, HR, etc) runs that function for the corporation.  They have a plan that maps to the corporate plan and they have a budget.  They report against the plan and budget every month and have joint meetings with the CEO to review the plan and make adjustments. 

This group of VPs are all playing politics and trying to get more power, more people and more influence in the corporation.

Important Corporate Decisions – 99.9% made without the CEO

I have been involved in a few, very few, of these personally.  I was chartered to find out facts about an issue affecting corporate performance and report to a committee.  This committee was made up of five of these functional VP who sent their representatives to the meetings.  In fact one VP was in the meetings because the findings and recommendations had a direct impact on his group and his power.  These groups usually make the decision and the CEO isn’t told what they decided.  In many cases important decisions are made and the CEO knows nothing about the problem or the decision.

One example is technology.  I witnessed corporations buying over $100 million in computer software and the CEO wasn’t involved at all.  This was technology to run the entire company.  He leaves this to the VP responsible for corporate technology.

In fact the CEO isn’t involved in 99.9% of all IMPORTANT corporate decisions.  The really important decisions are made at the functional level without the CEO.  Even when he is call in to resolve a stalemate, he usually does whatever the functional VP recommends.

What does the CEO focus on?

The CEO focuses on his/her own personal interests; bigger salary, more stock, bigger retirement plans and benefits like homes, boats, airplanes, private clubs, hobbies (golf) etc.  That is why CEO pay has gone up from 100 times that of the average worker’s pay to over 400 times and is still going up even in this recession.

Conclusion

Your mother or mine could do just as good a job and in many ways a better job than most CEOs.  Moms are less greedy, more honest and care more about fairness and would not focus on themselves.  They could certainly ask the functional VPs for advice, as the CEO does.  I think they would be less likely to favor a buddy over the best interest of the corporation.  They would not hire 12 to 20 of their personal friends as senior VPs and pay them tens of millions to be figure heads.  Being a CEO doesn’t require any specific knowledge – basic common sense is all that is required and most mothers have more of this than most CEOs.

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