CEOs are hugely expensive – why not automate them?
Over the next two weeks, the boards of BAE Systems, AstraZeneca, Glencore, Flutter Entertainment and the London Stock Exchange all face the possibility of shareholder revolts over executive pay at their forthcoming annual general meetings (AGMs). As the AGM season begins, there is a particular focus on pay. Executive pay is often the most contentious item at an AGM, but this year is clearly exceptional. The people running companies that have been severely impacted by Covid-19 can’t be blamed for the devastation of their revenues by the pandemic, but they also can’t take credit for the government stimulus that has kept them afloat. Last week, for example, nearly 40 per cent of shareholders in the estate agents Foxtons voted against its chief executive officer, Nicholas Budden, receiving a bonus of just under £1m; Foxtons has received about £7m in direct government assistance and is benefiting from the government’s continued inflation of the housing market. The person who has done most to ensure Foxtons’ ongoing good fortune is not Nicholas Budden but Rishi Sunak. [Sign up here to get the New Statesman's business column every Monday] Under the Enterprise and Regulatory Reform Act, executive pay is voted on at least every three years, and this process forces shareholders and the public to confront how much the people at the top take home. Tim Steiner, the highest-paid CEO in the FTSE 100, was paid £58.7m in 2019 for running Ocado, which is 2,605 times the median income of his employees for that year, while the average FTSE100 CEO makes more than £15,000 a day. As the High Pay Centre’s annual assessment of CEO pay points out, a top-heavy wage bill extends beyond the CEO, and could be unsustainable for any company this year. “When one considers high earners beyond the CEO”, says the report, ”there is actually quite significant potential for companies to safeguard jobs and incomes by asking higher-paid staff to make sacrifices”. In the longer term, as companies commit to greater automation of many roles, it's pertinent to ask whether a company needs a CEO at all. A few weeks ago Christine Carrillo, an American tech CEO, raised this question herself when she tweeted a spectacularly tone-deaf appreciation of her executive assistant, whose work allows Carrillo to “write [and] surf every day” as well as “cook dinner and read every night”. In Carrillo’s unusually frank description of the work her EA does – most of her emails, most of the work on fundraising, playbooks, operations, recruitment, research, updating investors, invoicing “and so much more” – she guessed that this unnamed worker “saves me 60% of time”. Predictably, a horde arrived to point out that if someone else is doing 60 per cent of Carrillo’s job, they should be paid 50 per cent more than her. But as Carrillo – with a frankly breathtaking lack of self-awareness – informed another commenter, her EA is based in the Philippines. The main (and often the only) reason to outsource a role is to pay less for it. If most of a CEO's job can be outsourced, this suggests it could also be automated. But while companies are racing to automate entry- and mid-level roles, senior executives and decision makers show much less interest in automating themselves. There's a good argument for automating from the top rather than from the bottom. As we know from the annotated copy of Thinking, Fast and Slow that sits (I assume) on every CEO’s Isamu Noguchi nightstand, human decision-making is the product of irrational biases and assumptions. This is one of the reasons strategy is so difficult, and roles that involve strategic decision-making are so well paid. But the difficulty of making genuinely rational strategic decisions, and the cost of the people who do so, are also good reasons to hand this work over to software. Automating jobs can be risky, especially in public-facing roles. After Microsoft sacked a large team of journalists last year in order to replace them with AI, it almost immediately had to contend with the PR disaster of the software’s failure to distinguish between two women of colour. Amazon had to abandon its AI recruitment tool after it learned to discriminate against women. And when GPT-3, one of the most advanced AI language models, was used as a medical chatbot last year, it responded to a (simulated) patient presenting with suicidal ideation by telling them to kill themselves. What links these examples is that they were all attempts to automate the kind of work that happens without being scrutinised by lots of other people in a company. Top-level strategic decisions are different. They are usually debated before they’re put into practice – unless, and this is just another reason to automate them, employees feel they can’t speak up for fear of incurring the CEO’s displeasure. Where automated management – or “decision intelligence”, as Google and IBM call it – has been deployed, it’s produced impressive results. Hong Kong’s mass transit system put software in charge of scheduling its maintenance in 2004, and enjoys a reputation as one of the world’s most punctual and best-run metros. Clearly, chief execs didn’t get where they are today by volunteering to clear out their corner offices and hand over their caviar spittoons to robots. But management is a very large variable cost that only seems to increase – Persimmon's bonus scheme paid out half a billion pounds to 150 execs in a single year – while technology moves in the other direction, becoming cheaper and more reliable over time. It is often asked whether CEO pay is fair or ethical. But company owners and investors should be asking if their top management could be done well by a machine – and if so, why is it so expensive? [Get This Week in Business in your inbox every Monday morning]
This week's long read comes to us from strategy+business. This is a great primer on what you can do to create culture change in your organization. Sure, as employer brand people, you may grapple with the business of when you need to accept an aspect of the culture and when you should try to change it (especially when you likely have no formal power to do so), but this article may help you see ways to nudge the change into occurring.
Better diversity programs can't happen until we all (speaking mostly to myself, here) get comfortable talking about diversity. How do you walk the line between being aware (and owning) one's privilege, and being one of those "more-woke-than-thou" types. The HBR, who might know a thing or two about privilege, have some thoughts on the subject of talking about diversity.
Is your employer brand charismatic? This article is really focused on how to build one's own charisma, but the notes sound like I'd want to see in a strong employer brand. Example: "use of metaphors to simplify messages, stir emotions, invoke symbolic meanings, and aid recall" and "The articulation of moral convictions and shared sentiments to demonstrate alignment with the followers." Sounds like a great brand to me.
Operations and Internal Communication Strategies For Effective CEOs | Pulse
Though it is written for a CEO, there's a lot of valuable advice in this article about internal comms. There's two ways to read it: get lots of advice on how to run your own employer brand internal comms. But also, you can read it to better understand how your leadership team has to see the world, which helps you can align to their needs and keep influencing them.
The Rise of the Chief Well-Being Officer | Hunt Scanlon Media
In an increasingly complex and stressful world with blurred lines between personal and work lives, workers at all levels need total well-being in all aspects of their lives. Expectations at work and home are no longer distinct or neatly separate – they are becoming one and the same. Savvy companies know that workers who are well
When brands treat job candidates poorly, it costs them money | PR Week
Want more evidence that ignoring your employer brand's impact on corporate sentiment is costing your business sales? I thought you might. It's good stuff to keep in your back pocket when someone forces you to justify your existence.
Authenticity is now more important than ever during the coronavirus
Did you see that celebrity "Imagine" video? Cringe! To quote Elvis Costello, "Was it a millionaire who said 'imagine no possessions?'" Anyway, authenticity is only going to matter more during this crisis, but that doesn't mean it's any easier to foster or communicate. So here's some good thinking on how to re-think your digital comms to avoid that kind of cringe.
A test for leaders: Creating certainty amid uncertainty
Prediction: we've reached "peak inspiration" with our brand messaging. We needed that sense of hope to get through the initial freak-out, and some companies did a great job with it. But leaning too much on inspiration can feel like eating too much of that chocolate bunny. Beyond peak-inspiration? Getting the work done. Where we get back to the pleasures of doing good work.
Brands in the Boardroom: The Business Side of Branding
This might make you feel good (or at least a slight twinge of schadenfreude) to see that marketing likes to complain about how it isn't take seriously in the board room, much like how many of us feel disrespected by marketing. Strangely, the solution to both problems is to stop relying on internal metrics and focus on real business metrics.
Strategy & Culture: How to Emerge Stronger after the COVID Crash - NOBL Academy
One of the reasons why I always dig Bud Caddell's stuff is that he's a "culture guy" who comes from business. There's not much "fuzzy-bunny" thinking with him. This article on strategy and culture post-Covid is a longer read, but there are layers to consider. One it can help you see how own business might respond. Two, it might give you ideas on how to embed your brand into your evolving culture. Three, how can you evolve your own employer branding function, treating it like an independent consulting service within your company.
Why HR chiefs must rethink talent management after Covid-19
Covid hasn't just flipped the table on recruiting and employer branding these last few months. It is really making talent management functions re-think things from a clean sheet of paper (which is very much a good thing). As TM starts thinking about what the nature of what a job is, how skills can be installed and developed in near-real-time, how most staff is probably only using 50-80% of their abilities at work, there's an opportunity for you to step up and partner, connecting the "why" of work with the shifting "what" and "how."
[PODCAST] If Talent is Top Priority for CEOs, Why is Recruitment Reactive and Not Proactive? > Sourcing and Recruiting News
I rather liked how Shally Steckerl (a sourcer!) connected what business leadership wants with what recruiting should be delivering. Lots of great points you should adopt when you talk to leadership, too.
HR from a Distance: Building Company Culture During & After Coronavirus
By now, you're as sick as I am of the glut of "how to manage a culture virtually" articles that have come out over the last two months. But this conversation with Jane Garza of NOBL was absolutely fascinating. Bursty work, bicameral work hours (6-10 and 2-6 instead of 9-5), and the reminder that we don't need to take all our calls on Zoom (set up more meetings on the phone so you can walk and talk).
I know you want to make BFFs with your marketing team, but a lot of you are having trouble making making it work. The culprit? It's that marketing doesn't understand you. They still see your team as a funnel-filler or Glassdoor review watcher. They treat your team as untested and untrained dilettantes "playing at marketing." Which is why I wrote this for you (to give to them): The CMO's Guide to Employer Branding. It's a long read, I'll grant you, but it should speak their language about your value.
Plenty of management books burn paper trying to build leadership structures that mitigate a lack of emotional commitment, throwing around works like "matrix" and "agile" because they haven't figured out that most companies still treat their people like cogs in a machine: easily replaceable and bought from the lowest cost vendor. As this turns into a mini-rant, Tom Peters says that if you care about what I care about, I'll care about what you care about. And it is only in light of the pandemic that we see which companies actually seem to care about their people (and which don't, suggesting where engagement scores might go to die). EB has a role to play, because if people really believe the EVP/pillars you turned into a poster, they are more likely to feel emotionally committed. And if they don't, that suggests you need to go back to the drawing board.
I've pointed out that employer brand is the new go-to crisis PR move, but how do you manage your employer brand in a crisis? This article really conflates employer branding with employee engagement a bit, but the notes are still useful.