In my Board of Directors and Corporate Governance class, taught by adjunct professor Jack Harsh, we have had a number of conversations about executive compensation and some of our guest speakers have even weighed in on the subject. Our most recent guest speaker, Bob Sledd (former CEO of Performance Food Groups), believes that most CEOs are fairly compensated and do not make anywhere near the amount of money that news outlets claim (well, those on Wall Street do). Executive compensation is clearly a hot topic given the government’s involvement with bailing out a number of large firms as well as the disparity we hear between Company X making huge layoffs this year yet still giving top executives hefty bonuses or other forms of compensation. Professor Harsh believes that this year will be a record year for compensation even if we (the general public) don’t agree with the reasons why. Professor Harsh encouraged us to not think about executive pay in an absolute value but rather focusing on that compensation is tied to the company’s strategic goals and timeframe for meeting such goals, not for (legally) manipulating their books so that their stock price goes up without actually accomplishing any exemplary results.
In light of the media focus on the subject, I found two interesting articles on CNN Money that I encourage you to check out - the 5 Most Overpaid CEOs and the Ten Highest Paid Executives. Do they really deserve what they’re getting?
Among the most widely circulated articles over the last couple of days has been a New York Times piece by Kelley Holland entitled, “Is It Time to Retrain B-Schools?” You can link to it here: http://tinyurl.com/ce5lnv.
Holland offers a thoughtful piece on the state of the MBA today, with a particular emphasis on ethics and values in the curriculum. She also includes quotes from several of the most vocal critics of MBA programs. I encourage you to read through it and offer your comments below.
On the same day it was published, Financial Times published a column by Stefan Stern called, “Why MBA Bashing is Unfair.” You can link to it here: http://tinyurl.com/dj29kb. I think his piece has a great deal of merit. Among other things, he touches on the topic of humility, which was the subject of a recent post here.
I am inclined to distribute these two readings to our incoming class as a means of starting a discussion during our Opening Residency. We certainly have work to do on the curriculum and in structuring our cocurricular activites, especially in the area of personal assessments and career guidance. We shouldn’t need major financial crises to prompt us to make changes.
I look forward to your feedback.
A recent study conducted by faculty at Audencia Nantes School of Management (France) examined the skills desired by firms in identifying the managers of tomorrow. In interviews with recruiters from 15 major international companies and in an e-mail questionnaire sent to alumni, several behavioral competencies were cited considerably more often than technical skills. (I read a summary of the study that was published in Global Focus, an outstanding periodical published by the European Foundation for Management Development.)
The most striking finding to me was this one: Three out of four recruiters spoke of the need for humility.
Over the last twelve years I have certainly received numerous phone calls from former students who, a year or two after graduation, were seeking advice about how to charge forward more rapidly in their organization. I should be clear that I am referring to undergraduates I have taught. Most had grown frustrated and were convinced that they were smarter, wiser and better than those around them. In every case, I counseled them to be patient and humble, and to be appreciative of life near the bottom of the hierarchy. (By the way, the origin of the word humility can be tied to the Latin word for “earth.”)
Those phone calls and my own conversations with recruiters have made me aware that humility is not something taught in the typical business school curriculum. To the contrary, many programs in business (undergraduate and MBA) enroll very proud students who leave business school with additional pride related to the completion of a rigorous course of study.
I believe the secret to instilling humility in our students might be found in courses related to decision-making. My own approach to teaching this topic includes a section on overconfidence, which tends to be an eye-opener for students. Through exercises, case studies and rich discussion about the reasons why we suffer from overconfidence and the consequences associated with a lack of humility, I hope to ground these students and encourage them to be more deliberate.
While I don’t anticipate us creating a semester-long course on humility, I do think that many former professionals in the banking and finance arena could provide powerful guest lectures on the dangers of pride to today’s MBA students.
A cross-country flight last week gave me an opportunity to finish a book that an MBA alumnus had given me a month ago. The Elephant and the Dragon discusses the history and future of the economies of India and China. It also discusses how these advancing economies will impact the United States and its workforce in years to come.
I recommend the book, which is rich with anecdotes, especially to our MBA students who will be traveling to China for their International Residency in June. It provides a rich perspective on the challenges and opportunities in and around China.
The November 10 issue of BusinessWeek has an intriguing cover story by Michael Porter about America’s need for an economic strategy. In a nutshell, this is a macro-level application of the material taught in strategy courses at the world’s best MBA programs. However, the complexities of applying this kind of long-term thinking when an almost infinite number of crucial but diverse stakeholders are involved will stretch today’s brightest business minds.
Economic and political forces have created short-term thinking that is now deeply embedded in organizations as diverse as public schools, regional economic development entities and, of course, major corporations. Porter makes a strong case that the nation’s competitiveness in world markets will be diminished if this kind of thinking continues much longer. As Porter notes, ”America has lost its focus and credibility in shaping the international trading system.”
When appropriately applied, long-term strategic thinking makes decision-making much more simple for those who are tasked with executing the strategy. Of course, this assumes that some superordinate goal can be identified and articulated in a way that motivates individuals and organizations to act in concert. It also suggests that decentralization is crucial so actors can proceed with solutions that can be tailored toward regional strengths and weaknesses.
The article ought to provide food for thought for today’s MBA students. If a few more of them make their way into leadership positions at organizations that are shaping America’s future strategy (from corporations to government agencies as well as economic development bodies and non-profits), I am optimistic that the conversation might bear greater fruit.
