The blame-shifting of these tech companies and their CEOs is not unprecedented, or even that uncommon. Corporate America has pledged fealty to the almighty executive, applying a totally different evaluation matrix to CEOs than to other employees. Because of this noxious adulation for the most powerful person in the company, companies will contort themselves to try to save money in any way other than cutting the pay of or firing their most responsible and most expensive employee: the chief executive officer. CEO pay skyrocketed by 1,460% from 1978 to 2021, and the ratio of average-worker pay to CEO pay ballooned from 20-to-1 in 1965 to 399-to-1 in 2021. And it's not as if this staggering rise in pay has made CEOs any better at their jobs. Top executives abandon companies when they anticipate a recession and always treat workers as disposable, even during a hot economy. Analyses have argued that these staggering pay packages are far from justified.
When high-ranking executives make a serious blunder, they almost always get the benefit of the doubt. The modern executive lacks any actual responsibility or oversight, only occasionally reporting to typically pliant boards. They're largely insulated from the consequences of their actions, even if they're performing poorly. If any other kind of worker made a series of decisions that led to a double-digit drop in profitability, they'd be threatened with termination or terminated. Instead, tech CEOs have passed the pain off to people who in many cases were performing well in their roles. And while many employees in tech and elsewhere have received generous severance packages, they pale in comparison to the payouts that failed executives have gotten on their way out the door. Take, for example, the car-rental company Hertz, which let go of 10,000 people in 2020 as it stumbled into bankruptcy, all while paying its executives $16 million in bonuses.
If CEOs are expected and paid to be some visionary demigod at the top of an organization, they should be expected to bear that weight and pay a commiserate price when they mess up. At some point, the chief executive has to be held as accountable as the people they employ. There is no reason that the best-treated and highest-paid member of an organization should experience less scrutiny, unless the company does not truly care about operating efficiently.
If companies are wary of firing top executives, then fine, refashion the job of the modern CEO. Instead of trying to be swashbuckling saviors with gobsmacking salaries allowed to operate the company with relative impunity, these top executives should focus on actual management and execution to sustainably grow their companies. Instead of focusing on short-term investor relations and public accolades, CEOs should put in the time to manage their companies and help improve the products they create.
The fundamental problem with corporate America is that it no longer makes any sense. The CEO, the most powerful and influential person at the company, is now a figurehead who receives all the benefits of a company's success without being endangered by any of its failures.
The fundamental problem with corporate America is that it no longer makes any sense. The CEO, the most powerful and influential person at the company, is now a figurehead who receives all the benefits of a company's success without being endangered by any of its failures.