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Articles in Brief
A quick synopsis of what other publications are
saying about topics related to leadership, employee
involvement, quality, and organizational
performance
Across the Board
www.conference-board.org
November/December 2002
How Much Should a CEO Make?
Dissatisfaction with excessive CEO pay has grown
steadily in recent years, and the calls for pay cuts
in the corner offices have never been louder than in
the wake of recent corporate scandals. Although
everyone from the man on the street to the man in the
Oval Office has an opinion on how much is too much,
no one seems to be able to say how much is just
right. So The Conference Board went to the experts:
CEOs and former CEOs, compensation consultants,
attorneys, economists, and frequent commentators on
the issue, as well as a few unexpected sources, such
as the leaders of activist groups and researchers for
labor organizations.
The Conference Board knew, however, that simply
asking how much CEOs should make would not provide a
simple answer like, $50 million, and leave it at
that. In fact, The Conference Board was fairly sure
that no one would be willing to be pinned down to any
specific number at all. So a different approach was
taken. Rather than asking how much CEOs should be
paid, the participants were asked how they should be
paid. Questions included: “What are the factors
to look at when deciding what figure to put on a
CEO’s paycheck? Who should have input in the
decision? What’s the best way to handle stock
options? Has CEO compensation really gotten out of
control?”
Of course, the point is that CEO compensation
should be based on more than just financial results.
Trying to steer a company based solely on financial
results is like trying to steer a car looking out the
rear window. Financial results are a lagging
indicator of the health of the firm, but CEO
compensation should be based on leading indicators,
such as customer satisfaction and employee-values
survey results (which assess the extent to which
leaders are behaving in accordance with the
organization’s espoused values).
A well-designed CEO-compensation plan has four
elements to it. One is base salary; another is a
short-term bonus that is focused on annual results
related to customer satisfaction and the
employee-values survey, as well as financial
performance. Then there should be a longer-term cash
bonus, based on the same results during a three- to
five-year period.
Finally, stock options are an appropriate part of
executive compensation—when held to a
reasonable level, but they ought to reflect true
economic value creation over time. One way to do that
is to avoid vesting stock options until at least five
years pass. The message would be clear: “If you
didn’t create any value over a five- to 10-year
period, then shame on you. You don’t deserve
anything anyway!”
 Business
2.0
www.business2.com
December 2002
The Face of Your Business: If you want to
manage customer relationships, invest in your people,
not in software.
Does anyone find it odd
that customer service is deteriorating even as
companies are investing heavily in
customer-relationship management (CRM) software, the
technology that tracks customer activity and tailors
marketing efforts accordingly? AMR Research reports
that some 34% of technology managers plan to invest
in CRM software this year. ARC Advisory Group
estimates companies will spend nearly $38 billion on
the stuff between 2001 and 2005.
Maybe companies are spending on the wrong thing.
Before you can manage a relationship, you first need
to build it. Relationships are built less on fancy
data mining than by what happens to customers when
they actually make contact with your
organization.
Fast Company
www.fastcompany.com
December 2002
Innovation Now!
Conventional wisdom says to get back to basics.
Conventional wisdom says to cut costs. Conventional
wisdom is doomed. The winners are the innovators who
are making bold thinking an everyday part of doing
business.
How to Make Love in the Office
The holiday season brings office parties and spiked
punch bowls and a little carrying on and…Bill
Clinton and Monica Lewinsky, Jack Welch and Suzy
Wetlaufer. Before you know it, there you are: the
dreaded—and yet all too frequently
visited—land of the office romance, the
territory that strikes fear in the hearts of
executives. Go there and you risk your reputation,
your job, and your career. All the red lights are
flashing: Warning!
But is this place really so dangerous? Southwest
Airlines thinks it’s not. The airline has about
1,000 married couples on its rolls and gives an
annual “Love Award” recognizing the
contribution that one special couple makes to the
company. Even the erudite offices of National Public
Radio (NPR) are a love nest. Over the years, NPR has
produced 60 marriages between staffers.
If you find yourself headed down the love
path—or you’re supervising others who
might be so inclined—there are new rules for
combining work and love.
Fortune Magazine
www.fortune.com
November 11, 2002
Don’t Picture the Audience
Naked
Don’t breathe deeply. Don’t be a
comedian. And don’t try to picture your
audience in the buff. That’s what
public-speaking coach, author, and four-time Emmy
winner Steve Adubato tells clients, ranging from
Merrill Lynch executives to U.N. diplomats who are
increasingly called on to speak in high-pressure
situations. With a rash of poor communicators facing
angry mobs (paging Harvey Pitt!) and the rest of us
perennially stage-frightened, Fortune caught up with
Adubato for a public-speaking refresher and to talk
about fainting, data dumps, and board boredom.
HR Magazine
www.shrm.org
December 2002
Stolen Identity
When employees suffer
from identity theft, employers also pay a
price—especially if their treatment of employee
records was part of the problem. The trouble started
when a laboratory employee at Ligand Pharmaceuticals
Inc. in San Diego came across a box in a storage
closet; inside she found the personnel records of 38
former employees of Glycomed Inc., a company that
Ligand had acquired in 1995. Using the information
from those files including names, addresses, Social
Security numbers, birth dates, and other data, the
lab worker and her acquaintances fraudulently rented
three apartments, opened 20 cellular telephone
accounts, and set up more than 25 credit card
accounts, which they used to purchase $100,000 in
goods.
The worker was eventually caught, convicted, and
sentenced, but not soon enough for 14 of the 38
victims, who sued Ligand for negligence, claiming the
crime would never have taken place if the company had
taken better care of its personnel records.
Inc. Magazine
www.inc.com
December 2002
Profile: Find Trail. Hike. Repeat
Another day, another trailhead. As he has done many
times in recent years, Eric Kampmann shoulders a
backpack and heads out on the Appalachian Trail. The
59-year-old co-founder and president of Midpoint
Trade Books has hiked every step of this fabled
American pathway that crosses New Hampshire (161
miles), Vermont (149 miles), Massachusetts (90
miles), and his home state of Connecticut (52 miles).
Today, an overcast Friday in late August, Kampmann is
starting out in a new state, New Jersey, home to 73
miles of the famous hiking route. The questions:
What’s brought him here again? What does he
mean when he says, “backpacking has done more
than just improve his health, sense of perspective,
and psychic balance? Over and above that, it’s
helped him design his business.”
Street Smarts: The Employee Mentality
There’s an important lesson you have to learn
when you own and operate your own business: your
employees don’t think like you. No matter how
closely you work with them, no matter how well you
treat them, no matter how hard you try to develop
team spirit, your relationship to the business is
fundamentally different from theirs and so is the way
you approach your work. Employees have one mentality,
and owners have another—and that’s all
right.
T+D Magazine
www.astd.org
December 2002
The Successful Minority
Do you prefer
change or stability? This is a trick question.
Accepting even the premise of a choice places you in
peril. If your preference is change, then all
you’ll know is unrest. If your preference is
stability, then you’ll be liked but not
respected.
Individuals, groups, and organizations that
comprise the “successful minority”
recognize that the issue isn’t change or
stability, but change and stability. They risk
changing things and people to usher in something
worth stabilizing. The winner’s choice
stipulates getting to the top of a mountain, moving
on, and finding and creating new mountains. The
“successful minority” takes several
actions to achieve change success, including
articulating the benefits and risks, modeling best
practices, ensuring that the support chain is
consistent, and building in early warning systems to
monitor progress.
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