By The Business Insider Editors
Well, here we are, the day after the bankruptcy of General Motors, the largest and once most respected and influential corporation on earth. We listened to Fritz Henderson, as you probably did, do the Big Mea Culpa in the radio-TV broadcast yesterday, then promise to create a brand-new, customer-responsive, high-quality auto manufacturing company in 90 days [or less].
We were, quite frankly, stunned. Completely change and restructure [while firing dealerships and closing plants] in three months? Come on, Fritz, give us a break! We're expecting a visit from the tooth fairy tonight, too.
He asked for trust and another chance. Giving GM another chance is right up there with "the check is in the mail" and all the less polite versions of same.
The New York Times reported Henderson walking past a portrait of Alfred P. Sloan, the legendary CEO who guided GM through whitewater on several occasions during his tenure [and for whom the MIT School of Management is named and indentured]. Fritz commented, "If [Sloan] were sitting here today, he would say, 'Just do your job.'"
Which brings up the questions we, the businesspeople of the 21st century, must continually ask ourselves: What's that guy at the top, the one who's making gazillions of dollars, doing to earn his pay? And should we be paying him all those bucks, especially those take-the-money-and-run guys, the ones who tank the corporation and slip a Madaoff on the customers and clients? And what are we, the taxpayers of this country who now "own" GM, getting for our money and what will we - what can we - do with this company?
We wonder what Peter Drucker would do, or recommend we do, with GM. Maybe it's time to pull out our copy of one of his seminal books, Concept of the Corporation, a study of General Motors which went resented, ignored, and unheeded by Sloan. Or perhaps we should re-read The Practice of Management, which is as fresh and illuminating today as it was when he wrote it in 1954.
Or, if you don't have time to review these brilliant insights and lessons of business history, simply consider Drucker's comment on CEOs, from a 2005 BusinessWeek article:
"Although he helped many corporate executives succeed, he was appalled when the level of Fortune 500 CEO pay in America ballooned to hundreds of times that of the average worker. He argued in a 1984 essay that CEO compensation should be no more than 20 times what the rank and file make—especially at companies where thousands of employees are being laid off.
"'This is morally and socially unforgivable,' Drucker wrote, 'and we will pay a heavy price for it.'"
How prophetic.
The Business Insider Editors
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Posted by: Goedkoop betonherstel | February 16, 2010 at 06:51 AM
I really don't think this is ethically wrong. Even the decisions CEOs take impact the company's future by millions. Workers don't take such calls. The higher the responsibility, the higher the pay - simple as that.
Posted by: Study in UK | March 09, 2010 at 11:48 PM
There should be something at stake. If a company does well, CEOs earn more, but if it "tanks", they should in some manner be held responsible.
Posted by: e-business suite | March 09, 2010 at 11:51 PM
I agree completely. Has this accountability been put into practice to your satisfaction?
Posted by: Tim Rosa | March 10, 2010 at 08:59 AM