GET GRIP ON CORPORATE MANAGEMENT

This is a reflection on the remuneration, training and representative function of top-tier managers and whether this corresponds to the current world needs and debates.

Facts first

There is a deep ethical dilemma surfacing concerning the remuneration-contribution ratio of employees and superiors. It has been estimated that for every £1 they generate, advertising executives destroy £11 of value, bankers destroy £7 while hospital cleaning staff work the ten-fold (generate £10 of value per £1 earned) and childcare workers the seven-fold of it (New Economics Foundation, 2009).

CEO salaries have increased by 1460% since 1978, employee salaries only by 19% (EPI, 2021). Furthermore, the average remuneration package for a S&P 500 CEO in 2021 was $18.3 million and even witnessed an increase of 18% during the COVID pandemic (Bloomberg, 2021). The most common reasons for being promoted to managerial position are that candidates have reached a certain company tenure or they are specialists in a specific area of expertise (Arte, 2022; Forbes, 2018). None of these two make them suitable for managing people, nor legitimise this power status. The top two motivators for pursuing a management career are social prestige and money (Arte, 2022). Companies pay managers more for a job they are not necessarily qualified for which leads to a decline in productivity and happiness among employees, possibly also toxicity or envy (Akca, 2017; Arte, 2022; Bhandarker & Rai, 2019). Against the backdrop of these facts, it is not surprising then that 72% of the workforce feel absent at work and are just waiting until the day is over and 15% are even actively plotting against their employer (Gallup, 2023). The climax of this behaviour is the ongoing Great Resignation, in which 79% of employees quit mostly due to reasons attributable to bad people leadership while 89% of leaders think they leave for money reasons (FastCompany, 2022; Forbes, 2018). A sad consequence of this is employee burnout (Greater Good Magazine, 2021), which costs companies an estimated $1 trillion every year, according to the World Health Organization (Insightful, 2022). A commonly found answer to these problems are corporate formation programmes.

We train who we value

In 2021, corporate leadership training was a $37.86 billion-heavy industry that is expected to increment up to $65.62 billion by 2028 (Globe Newswire, 2022). There are 16.5 million project managers (GoRemotely, 2022) and, rounding off, roughly 1 million senior leadership and CEOs worldwide compared to 3.32 billion employees (Statista, 2022). The employee market size was valued at $345.56 billion in 2021 (Globe Newswire, 2022). Taking this data, employees received $104 on average per capita and managers $2294 for leadership skill training. There is a hick-up though: An overwhelming 58% of managers state that they have not received training on how to lead people (Forbes, 2018). That implies a few things. Firstly, training expenses for managers per capita are even higher. Secondly, although they are higher, they do not have the desired effect (burnout, disengagement etc.). Thirdly, management trainings do not train on what they should be training: people skills.

As a byproduct of this article, reconsider the definition of wealth and value. The way it is taught in management education jeopardises and erodes any sustainable and impactful development because it focuses on the monetary value one accumulates over time. A more innovation-driving definition would be that wealth means the sum of sustainable solutions or ideas that a company or individual produce and engender multiplied sustainable impact. Following this logic, the currency would be good ideas and competition would focus on coming up with novel ideas with a positive effect on our planet.

Representing who?

Another issue at stake is the homogeneity of senior managers and leaders. In the US alone, 68.5% are white, 70.5% are male and 90% identify as heterosexual (Zippia, 2022). This demographic landscape is no playground for innovation or development because people in power are not exposed to confronting opinions or other procedures, and are therefore trapped in a self-perpetuating spiral of mutual confirmation. There is little representation of minority groups in the ranks of those who steer a company although it is no secret that global problems are best tackled by groups of people with different backgrounds and from different disciplines (OECD, 2020). There is far-reaching intersectional inequality in this line of business which produces devastating headlines like 66% of black women do not feel emotionally safe at work (HBR, 2023), 54% of employees do not have a great deal of trust in their employer (HBR, 2016) or 6/10 men experience trauma in their lives which impacts the workplace (HBR, 2022).

Summary

It is evident that leadership and its benefits are a practice reserved for a handful of elitist people that are already enjoying benefits in society. Please note that this does not account for a good few, but surely for most career-driven high-rank managers in the private sector. We are looking at a system that is designed to disproportionately reward a very homogenous group of individuals which self-perpetuates its raison d’être through training with opaque effects. In the following edition, I will delve into the cognitive aspects of leader-employee relationships, intending to demask mechanisms of asserting power and influence over people.

© Luka Paul Vethake 2024