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Article Archive: Management The quotations of chairman Ray 04/21/24   Management "Modern postindustrial capitalism can endow vast amounts of wealth upon individuals. When the financial media, desperate for advertising revenue, deifies successful businessmen this frequently divorces them from reality, an effect amplified by lack of feedback from employees and associates petrified by their boss’s power over them." Return-to-office mandates 01/28/24   Management "Results of our determinant analyses are consistent with managers using RTO mandates to reassert control over employees and blame employees as a scapegoat for bad firm performance. Also, our findings do not support the argument that managers impose mandate because they believe RTO increases firm values. Further, our difference in differences tests report significant declines in employees' job satisfactions mandates but no significant changes in financial performance or firm values after RTO mandates." Find the bottleneck first 05/14/23   Management "To understand monkeys and pedestals, imagine that you're trying to teach a monkey to juggle flaming torches while it stands on a pedestal in the town square. Two tasks are competing for your money, time, and attention: training the monkey and building the pedestal. One is a possibly intractable obstacle. And the other is building the pedestal." The value of projects 02/05/23   Management "We find that discounting based on expected returns (such as variants on the CAPM or multi-factor model), performs very poorly. Discounting with an Implied Cost of Capital (ICC), imputed from comparable firms, obtains much better results. ... Finally, we show that under standard assumptions about the production function, the value loss from using the CAPM can be sizable, of the order of 10%." No customer service 01/29/23   Management "When there's no option to pick up the phone, at some point it obviously creates all kinds of havoc in customers' lives" Job interview nightmare 01/15/23   Management "Companies are seemingly coming up with new, higher, and harder hoops to jump through at every turn. That translates to endless rounds of interviews, various arbitrary tests, and complex exercises and presentations that entail hours of work and prep. There can be good reasons for firms to do this - they really want to make sure they get the right person, and they're trying to reduce biases - but it's hard not to feel like it can just be too much." The Cheesecake Factory marvel 12/31/22   Management "Common sense for restaurant success is actually the opposite of everything the Cheesecake Factory does. Minimize labor, minimize ingredients, minimize everything. Restaurants are expensive to maintain and trimming excess helps survivability. The restaurant industry revolves around the thinnest of margins, and the common refrain (which should be familiar to anyone who's ever seen an episode of Kitchen Nightmares) is to simplify everything." CFO age and financial misreporting 11/27/22   Management "We find that the perverse effect of equity incentives on financial misreporting is weaker for older chief financial officers (CFOs) than for younger CFOs. We attribute this to differences in risk preferences associated with age." Toxic workers are bad for business 11/06/22   Management "We see that even if a company manages to hire a top 1% superstar employee the cost savings are still only about half of the cost savings of replacing a toxic employee with an average employee." Cash is the only thing 08/07/21   Management "The only thing that helps a company survive these extreme revenue shocks is access to cash. Companies that either had lots of liquidity at hand or could tap into existing credit lines to increase their cash at hand were more likely to survive and recovered more quickly." Who invented Flamin' Hot Cheetos? 05/30/21   Management "We have interviewed multiple personnel who were involved in the test market, and all of them indicate that Richard was not involved in any capacity in the test market." Rookie CEOs outperform 01/10/21   Management "In a study of 855 S&P 500 CEOs appointed over a 20-year period, the researchers found that those with experience in the role consistently underperformed their novice counterparts over the medium to long term. First-timers led their companies to higher market-adjusted total shareholder returns, with less volatility in the stock price. Among CEOs who headed two successive companies, 70% performed better the first time - and for more than 60%, their second companies failed to keep pace with the overall stock market." The path ahead 04/04/20   Management "Since then, things have slid further and faster economically than anyone could have imagined. As of today, we have been spared what was predicted in the more catastrophic medical forecasts, but what started as theoretical and distant feels dangerous and ever-present. I have two friends-of-friends in the ICU with it, the first COVID-19 death in Missouri was in Columbia last week, and you can't read about what's taking place in NYC and react with anything other than deep concern." The open-office trap 02/01/20   Management "He found that, though open offices often fostered a symbolic sense of organizational mission, making employees feel like part of a more laid-back, innovative enterprise, they were damaging to the workers. attention spans, productivity, creative thinking, and satisfaction. Compared with standard offices, employees experienced more uncontrolled interactions, higher levels of stress, and lower levels of concentration and motivation." Paid for luck 12/03/19   Management "This paper shows that the standard form of option compensation, with non-indexed at-the-money options, is very far from optimal, though, as its pay-for-luck component is in the ballpark of 90%, and its motivational power is rather low." Junkyard billionaire 11/22/19   Management "The business of selling damaged autos has never been better for Copart founder Willis Johnson, a gold-chain wearing Oklahoma native who's turned drivers' misfortunes into a $1.9 billion fortune" 4-day workweek 11/08/19   Management "Workers at Microsoft Japan enjoyed an enviable perk this summer: working four days a week, enjoying a three-day weekend - and getting their normal, five-day paycheck. The result, the company says, was a productivity boost of 40%." Trouble in the land of OZK 08/31/19   Management "Construction lending is a high-risk business; it tends to do well when the economy is doing well and tends to be painful during a recession" Don't open a restaurant 03/25/19   Management "there is a limit to what people will pay for a sandwich and what people feel comfortable paying for a sandwich. Despite the quality of the ingredients inside, despite the amount of labor that goes into all that, there's a certain amount you can charge for a sandwich and people will not pay any more." [audio] The MBA Myth and the Cult of the CEO 03/04/19   Management "MBA programs simply do not produce CEOs who are better at running companies, if performance is measured by stock price return." On the road with Jim Pattison 12/26/18   Management "Pattison is often dubbed Canada's Warren Buffett - a trope that underscores how relatively unknown he remains outside Canada despite a conglomerate that operates in 85 countries across a dizzying array of industries" The story of Gert Boyle 09/10/18   Management "In 1972, Gert Boyle's bankers came to see her. They told her the business was failing and she needed to find a buyer for it. She found an investor that was willing to buy the business for $1,400. She kicked the investor out of her office and yelled: 'I can run the shop into the ground myself for that money!'" What happened at GE? 05/28/18   Management "Few corporate meltdowns have been as swift and dramatic as General Electric's over the past 18 months - but the problems started long before that." Bezos went thermonuclear on Diapers.com 05/23/18   Management "First, in 2009, Amazon sent a senior vice president to have lunch with the founders of the startup behind Diapers.com, called Quidsi. He warned them that Amazon was thinking about getting into the diaper business and suggested they think about selling. As Stone tells it, this was not a friendly suggestion. It was more like the kind of offer you can't refuse." Pulling the thread with Tren Griffin 05/22/18   Management "Tren Griffin has been writing a weekly blog post that highlights things he has learned from various investors, businesspeople, musicians, comedians, and more. Lately, he has also been tackling individual businesses, and broad topics like scaling, competitive forces, and product market fit." [audio] CEOs don't make 350x more than employees 05/14/18   Management "Once we make a more statistically valid apples-to-apples comparison, the CEO-to-worker compensation ratio falls by 50 percent from the AFL-CIO.s expected 350-to-1 ratio to 177-to-1 once we consider total compensation for both CEOs and full-time (40 hours per week) rank-and-file workers employed by companies with 500 or more workers. If we assume a 60-hour work week for the average worker (to be comparable to the work week of an average CEO), the CEO-to-worker compensation ratio falls by two-thirds to only 118-to-1 for average CEO pay and 104-to-1 for median CEO pay. Further, even if we could confiscate 100 percent of the compensation of all S&P 500 CEOs, the typical rank-and-file worker would probably get about $1 per week in additional after-tax earnings." How to kill your economy 03/05/18   Management "80 percent of CEOs surveyed in one study said they'd pass up making an investment that would fuel a decade's worth of innovation if it meant they'd miss a quarter of earnings results" Lessons from Waffle House 02/12/18   Management "You go in there and everyone's drunk. You know everyone's drunk in Waffle House because they have pictures of the food on the menu. How drunk do you have to be to not remember what a waffle looks like?" Why competitive advantages die 02/12/18   Management "The only thing harder than gaining a competitive edge is not losing that advantage when you have one. That's as true for careers and investment strategies as it is for business. And since people are naturally optimistic, there's a tendency to put more thought into finding an edge than not losing it once you find one." Creative investing 01/22/18   Management "Ali views the world with a fresh set of eyes, and has already become an expert at identifying new investment opportunities where others have not. As the second prodigy 26 year old in as many weeks on the podcast, these young guns are making me feel like an ancient 32 year old." [audio] Rose Blumkin interview 01/22/18   Management "A little gem of a 1980s NBC News story about Rose Blumkin" [video] The gospel according to Michael Porter 11/11/17   Management "The old-school fundamental value investors who prize Porter's frameworks have come under fire from a familiar source: the Chicago school. Chicago's Fama has published studies showing that actively managed mutual funds underperform the market and that small value companies - not large market leaders, as Porter would have it - are the best-returning stocks. Fama's works suggests that Benjamin Graham's instincts were right: The real money is to be made betting on the Davids of the world, not the Goliaths." Morally bankrupt 06/11/17   Management "Most Americans have assumed their bank accounts are sacrosanct. But with the major scandal unfolding at Wells Fargo, angry former employees illuminate the alarming pressure that allegedly led local bankers to defraud perhaps more than a million customers." Cheap Chick-fil-A franchise 04/23/17   Management "The barrier to entry for being a franchisee is never going to be money" The uselessness of job interviews 04/16/17   Management "Research that my colleagues and I have conducted shows that the problem with interviews is worse than irrelevance: They can be harmful, undercutting the impact of other, more valuable information about interviewees." Selling pressure at TD 03/12/17   Management "A CBC report earlier this week about TD employees pressured to meet high sales revenue goals has touched off a firestorm of reaction from TD employees across the country - some of whom admit they have broken the law at their customers' expense in a desperate bid to meet sales targets and keep their jobs." Learn from James Sinegal 01/01/17   Management "It has a frantic desire to serve customers a little better every year. When other companies find ways to save money, they turn it into profit. Sinegal passes it on to customers. It's almost a religious duty. He's sacrificing short-term profits for long-term success." Learn from Ben Horowitz 12/24/16   Management "When I was a CEO, the books on management that I read weren't very much help after the first few months on the job. They were all designed to give you directions on how not to screw up your company. But it doesn't take long before you get beyond that and you're like OK I've screwed up my company; now what do I do? Most books on management are written by management consultants, and they study successful companies after they've succeeded, so they only hear winning stories." Lazy work, good work 12/17/16   Management "Rockefeller's job wasn't to drill wells, load trains, or move barrels. It was to make good decisions. And making decisions requires, more than anything, quiet time alone in your own head to think a problem through. Rockefeller's product - his deliverable - wasn't what he did with this hands, or even his words. It was what he figured out inside his head. So that's where he spent most of his time and energy." How to manage an overvalued stock 11/27/16   Management "It is an unusual situation, but the best strategy for a company with an overvalued stock is to try to grow their way out of it, usually through mergers and acquisitions. The twist I offer you at the end of my piece is this: thus, watch highly acquisitive firms. Not all of them are overvalued or fraudulent, but some will be. Avoid the shares of those firms." ILTB: Brent Beshore interview 11/13/16   Management "Brent has a very specific mission with this company, to cultivate a disaster resistant, compound interest machine. At just 33 years of age he has already built a portfolio of private companies that has produced impressive results. He's done all this out of the limelight and with no outside investors. Brent discusses his rewarding but difficult journey and what he has learned, including sourcing and evaluating businesses, how he and his team have improved profitability at his portfolio companies after acquisition and so much more." Mortgage guidelines 09/17/16   Management "Canadian banks allow foreign clients with no credit history, including students, to qualify for uninsured mortgages without proving the sources of their income - a practice that exempts non-Canadians who have money in the bank from the scrutiny domestic borrowers face when buying a home or an investment property." A culture problem at Wells 09/11/16   Management "Everyone hates paying bank fees. But imagine paying fees on a ghost account you didn't even sign up for. That's exactly what happened to Wells Fargo customers nationwide." Culture eats strategy 01/09/16   Management "Nucor probably didn't have any core attributes that were unavailable to its competitors. It simply made better choices and was more fanatical about sticking to them. The resulting success was deserved. This is why culture eats strategy." Chipping away at financial reporting quality 11/28/15   Management "Chief financial officers are responsible for managing the financial reporting process. We test whether the quality of a firm's financial reports is a function of the effort expended by the CFO. Using golfing records to measure leisure consumption, we first show that CFOs consume more leisure when they have lower economic incentives to work. We show further that higher levels of CFO leisure are negatively associated with a number of indicators of financial reporting quality. The use of firm fixed effects and an instrumental variable analysis suggest that the observed relations are causal. Further tests indicate that higher leisure consumption is associated with shorter conference calls with a more uncertain tone. Finally, the effects of lower quality reporting are demonstrated by results linking CFO leisure with analysts' forecast dispersion and weaker earnings response coefficients." Playing the long game 09/25/15   Management "The premise that you're going to run a business, and that if someone is in need, I'm going to charge them a ton of money, is completely wrong" The short-termism myth 08/24/15   Management "To the extent that companies are underinvesting in the future, the blame lies not with investors but with executives. The pay of many C.E.O.s is tied to factors like short-term earnings, rather than to longer-term metrics, which naturally fosters myopia." GM Recalls 06/20/14   Management "Yet in one indirect way, Oakley tried to rouse concern. In a draft of a service bulletin to dealers, he included the term 'stall,' a 'hot' word known to attract attention. Had it actually gone out to car sellers, federal regulators would have most likely seen it. But as they had with Kelley three years before, GM's product investigators tamped down the response, striking the language. It was one of the many occasions in which GM engineers failed to link the ignition switch position and disabled airbags, Valukas concluded." The case for banning tips 08/10/13   Management "For over eight years, I was the owner and operator of San Diego's farm-to-table restaurant The Linkery, until we closed it this summer to move to San Francisco. At first, we ran the Linkery like every other restaurant in America, letting tips provide compensation and motivation for our team. In our second year, however, we tired of the tip system, and we eliminated tipping from our restaurant. We instead applied a straight 18% service charge to all dining-in checks, and refused to accept any further payment. We became the first and, for years, the only table-service restaurant in America where you couldn't pay more money than the amount we charged you. You can guess what happened. Our service improved, our revenue went up, and both our business and our employees made more money." Business out of excuses 07/01/12   Management "As other economies stumble, the Canadian economy looks golden. But any gold is badly tarnished when it comes to productivity. Output per hour worked in the Canadian business sector has grown less than 1% per annum over the past decade. Productivity from labour and capital combined has not grown at all. This is one of the worst records in Canadian history and one of the worst among developed economies." How to make a fortune after 50 12/29/11   Management "At an age when others might ready for pre-retirement, some folks pass age 50 determined to start a new life in the business world - and succeed beyond their rosiest business plan projections." Why McDonald's wins 08/27/11   Management "Employees and analysts say he's guided by a zeal for satisfying customers, even if it comes at the expense of his own ideas and preferences. A few years ago the company did extensive testing on new coffee-cup lids and rolled out a version that consumers liked -- and that Skinner, who happens to drink a lot of coffee, really didn't. Rather than overrule the masses, Skinner came up with his own solution: He keeps a stash of the old lids on hand." Tales of when legends leave 08/26/11   Management "The founder of a successful corporation steps down. Then what? At Ford Motor Co. and Walt Disney Co., long periods of stagnation or decline, followed by renewal. At Wal-Mart Stores Inc., continued success for a time, then new challenges. Now it is Apple Inc.'s turn, following Steve Jobs's resignation as CEO on Wednesday." Is he economically rational? 07/22/11   Management "I think of it as training to understand managements - see if they act like owners maximizing long-term profits, or as workers aiming to maximize their pay packets. You will earn more with companies that think like owners." When two-thirds isn't enough 06/15/11   Management "It's one of the great anomalies of our ownership society: shareholders own companies, but executives can easily slap them down. The hired help, in other words, holds the cards. The owners of Cedar Fair L.P., a leisure and entertainment company in Sandusky, Ohio, have learned this the hard way." Can progressives fix the U.S. postal service? 06/01/11   Management "But a desire to maximize profits and an aversion to losing money leads to certain efficiencies that ought to be exploited in less fraught enterprises. At UPS and FedEx, management has a powerful incentive to hold down overall labor costs, and to preserve the flexibility and adaptability of the respective companies. When USPS negotiates with the any of the four unions that represent its employees, the dynamic is completely different: management has fewer incentives to hold down costs, even as labor exercises substantially more clout due to is political influence.The results are ludicrous" The golden age of drive-thru 06/01/11   Management "Operational innovations at restaurants like Taco Bell rival those at any factory in the world. A view from the drive-thru window at how they do it" Hedging Bankers Skirt Efforts to Overhaul Pay 02/07/11   Management "Intent on fixing a banking system that contributed heavily to the recent financial crisis, lawmakers and regulators pushed Wall Street to overhaul its pay practices. Big banks responded by shifting more compensation into stock, a move intended to align employees' interests more closely with those of investors and discourage excessive risk-taking. But it turns out that executives have a way to get around those best-laid plans. Using complex investment transactions, they can limit the downside on their holdings, or even profit, as other shareholders are suffering." The president as micromanager 01/26/11   Management "While watching the speech, I tweeted that 'Obama sounds remarkably similar to the CEOs I used to listen to on earnings calls: the ones with mediocre EPS and a failing business model.' This wasn't a crack at Obama, or Democrats it was a reaction to the content. And after watching the responses, the impression lingers--indeed, maybe it's strengthened. The nation is facing some really difficult problems, particularly on the fiscal front. There's no longer any way to put it off pretty soon, the government is going to have to start making some very hard choices about taxes and spending. No matter what it chooses, that probably means lower economic growth, angry voters, and some real loss on the part of whoever's ox is gored." The downfall 01/02/11   Management "Next time you go to an AGM, if you think there is cause for concern, ask the CEO during the QandA if management could leave the room for 15 minutes because you have a few questions to ask the independent directors concerning executive compensation, and point out that it would not be appropriate for management to be present for such a discussion. Don't be afraid. The meeting is for you, the shareholder. If the CEO gets defensive, that might be taken as a bad sign. If the independent directors get defensive, that could be taken as a really bad sign, because it would suggest that, in their hearts, they don't represent shareholders at all." The Perfect Stimulus: Bad Management 11/06/10   Management "One day, a position opened above me, and I was the most obvious candidate to fill it. My boss called me into her office and said she had some bad news. She explained that the media was giving our company a lot of heat because almost all of our managers and executives were white males. Promoting me, she explained, would only make things worse. I asked how long I might need to wait for all of this to blow over. My boss was vague, but she said the timeline involved smoothing out the effects of two centuries of corporate discrimination." Mott's strike 08/22/10   Management "After nearly 90 days of picketing in the broiling sun outside the sprawling Mott's apple juice plant here in upstate New York, Michelle Muoio recognizes that the lengthy strike is about far more than whether the 305 hourly workers at the plant get a fatter or slimmer paycheck." On business competition 07/10/10   Management "'A funny thing happens when you begin to capture competitive differences on paper', says Harvard Professor Youngme Moon in her book Different, 'there is a natural inclination for folks in the competitive set to focus on eliminating differences rather than accentuating them.'" Why Amish businesses don't fail 06/21/10   Management "Want to find America's most successful entrepreneurs? Skip Silicon Valley and Manhattan; head to the rural Amish enclaves. Amish businesses have an eye-popping 95% success rate at staying open at least five years, according to author Erik Wesner's new book, Success Made Simple: An Inside Look at Why Amish Businesses Thrive." What motivates us 06/01/10   Management "This lively RSA Animate, adapted from Dan Pink's talk at the RSA, illustrates the hidden truths behind what really motivates us at home and in the workplace." How much should we pay executives? 06/01/10   Management "Our results led us to conclude that financial rewards are often a two-edged sword. They motivate people to work well, but when these financial rewards get very large they can be- come counterproductive and actually hurt performance. If our tests mimic the real world, then higher bonuses may not only cost employers more, but also hinder executives in working to the best of their abilities." Silencing the whistleblowers 05/11/10   Management "Amid the frenzy of the nation's mortgage boom, the back-of-the-hand treatment that Parmer describes wasn't out of the ordinary. Parmer was one of a small band of in-house gumshoes at various financial institutions who uncovered evidence of corruption in the mortgage business - including made-up addresses, pyramid schemes, and organized criminal rings - and tried to warn their employers that this wave of fraud threatened consumers as well as the stability of the financial system. Instead of heeding their warnings, they say, company officials ignored them, harassed them, demoted them, or fired them." The story BCG offered me $16,000 not to tell 04/15/10   Management "I got the feeling that our clients were simply trying to mimic successful businesses, and that as consultants, our earnings came from having the luck of being included in an elaborate cargo-cult ritual." The sweetest usurious bastards 01/24/10   Management "But it was the nature of the people I met that most stuck in memory. This was a business where if Jesus was alive he would pull down the Temple over them. It was precisely the sort of business the bible rails against. It offended my decency. But the people were lovely. I met management and a store owner - and - frankly they seemed exactly the sort of people you would like to have Friday drinks with. I liked them. This alarmed me of course - because I expected them to be scum. And maybe they are - but I couldn't tell. They were the sweetest usurious bastards (notwithstanding allegations in consumer complaints about the company)." Food fighter 01/06/10   Management "The right-wing hippie is a rare bird, and it's fair to say that most of Whole Foods' shoppers have trouble conceiving of it. They tend to be of a different stripe, politically and philosophically, and they were either oblivious or dimly aware of Mackey's views, until the moment, this summer, when Mackey published an op-ed piece in the Wall Street Journal asserting that the government should not be in the business of providing health care. This was hardly a radical view, and yet in the gathering heat of the health-care debate the op-ed, virally distributed via the left-leaning blogs, raised a fury." Just glide to the next boardroom 12/29/09   Management "Directors who were supposedly minding the store as disaster struck at companies like Countrywide Financial, Washington Mutual or Fannie Mae have not all been banished from other boardrooms. In many cases, directors just seem to skate away from company woes that occurred on their watch." Golden pay for CEOs sinks stocks 12/27/09   Management "Finance professor Raghavendra Rau of Purdue University and two colleagues looked at CEO pay and stock returns for roughly 1,500 companies per year from 1994 through 2006. They found that the 10% of firms with the highest-paid CEOs produce stock returns that lag their industry peers by more than 12 percentage points, cumulatively, over the next five years. Companies at the top of the pay pile, Prof. Rau concluded, award their CEOs an annual average of $23 million - but leave their shareholders poorer (relative to other companies in the same industry) by an average of $2.4 billion per year. Each dollar that goes into the CEO's pocket takes $100 out of shareholders' pockets." Upper mismanagement 12/20/09   Management "One of the themes that came up while I was profiling White House manufacturing czar Ron Bloom earlier this fall was managerial talent. A lot of people talk about reviving the domestic manufacturing sector, which has shed almost one-third of its manpower over the last eight years. But some of the people I spoke to asked a slightly different question: Even if you could reclaim a chunk of those blue-collar jobs, would you have the managers you need to supervise them? It's not obvious that you would." From the 'do a little evil' file 12/20/09   Management "Thanks to an extremely fortuitously timed stock-option repricing (exchange), Googlers have made a killing in the past eight months at shareholder expense." Sardar Biglari's 2009 letter 12/15/09   Management "Because metrics are proxies for performance, managing by a single metric causes the tail to wag the dog. Using just one metric is akin to taking a picture of a two-ton elephant: No single angle can capture the 'big picture.' Analysts who evaluate same-store sales trends almost to the exclusion of other metrics, and the CEOs - who either primarily weigh that one piece of data or (shudder) listen to the pundits - do their best to deliver on that one statistic, but usually cost their shareholders dearly." Not so fast 10/09/09   Management "He is the 'Father of Scientific Management' (it says so on his tombstone), and, by any rational calculation, the grandfather of management consulting. Whether he was also a shameless fraud is a matter of some debate, but not, it must be said, much: it's difficult to stage a debate when the preponderance of evidence falls to one side." Ego and the CEO 08/27/09   Management "Which is the biggest red flag for a potential accounting fraud: Bad corporate governance, an overinflated share price or too many stock options? None of the above, according to a new study by researchers from three Canadian universities. They argue that the biggest risk factor for fraud is a CEO with a truly oversized ego." Are management consultants necessary? 08/24/09   Management "Most people in the business world know there's a lot of phony expertise floating around. Most of it you can explain on anthropological rather than technical grounds: we have a very complex economy that requires management, and management needs legitimacy. It does this through credentials and so-called expertise, and creates a whole class of people who are accountable only to themselves. For me the problem is the idea there's a general field of management that applies across all different kinds of businesses. That's what I think is all baloney." The origins of the corporate boards 06/30/09   Management "Prompted by the litany of complaints about corporate boards - as once again highlighted by recent corporate scandals - this paper seeks to add to the literature on why corporation laws in the United States (and, indeed, around the world) generally call for corporate governance by or under a board of directors. Moreover, this paper takes a very different approach in searching for an answer. Instead of theorizing, this paper examines historical sources in order to look at how and why an elected board of directors came to be the accepted mode of corporate governance. This will entail a reverse chronological tour all the way back to the antecedents of today's corporate board in fourteenth through sixteenth century companies of English merchants engaged in foreign trade. The central insight of this chronology is that the corporate board of directors did not develop as an institution to manage the business corporation. Rather, it is an institution the business corporation inherited when the business corporation evolved out of societies of independent merchants. This paper also shows how these merchant societies based their adoption of the antecedents of today's corporate board on widespread political theories and practices in medieval Europe that, although hardly democratic, often called for the use of collective governance by a body of representatives. The discovery of the historical and political origins of the corporate board, besides being interesting in its own right, suggests that the current frustration with corporate boards may arise from confusing an institution designed to achieve political legitimacy through consent of the governed, with the goal of assuring efficient management of a business on behalf of passive investors." [via prefblog.com] How self-made titans launched 06/18/09   Management "Yet for entrepreneurs who have truly creative ideas, unrelenting devotion and oodles of ability to execute--but who may not have fat trust funds to lean on--there's reason for hope. Scan the Forbes list of the world's wealthiest people and you'll find moguls from startlingly humble origins." The irrational pursuit of growth 06/16/09   Management "Why are so few companies opposed to sucking cash out of a business and returning it rather than reinvesting it at sub-par rates of return?" How David beats Goliath 05/04/09   Management "David's victory over Goliath, in the Biblical account, is held to be an anomaly. It was not. Davids win all the time. The political scientist Ivan Arreguin-Toft recently looked at every war fought in the past two hundred years between strong and weak combatants. The Goliaths, he found, won in 71.5 per cent of the cases. That is a remarkable fact. Arreguin-Toft was analyzing conflicts in which one side was at least ten times as powerful - in terms of armed might and population - as its opponent, and even in those lopsided contests the underdog won almost a third of the time." CEO leverage vs corporate leverage 05/04/09   Management "We find that firms behave remarkably similarly to how their CEOs behave personally when it comes to debt financing and leverage. We compile a comprehensive sample of home purchases and financings among S&P 1,500 CEOs. Debt financing in a CEO's recent home purchase is used as a revealed preference of the CEO's innate personal tolerance for leverage. We find a strong and robust positive relation between personal and corporate leverage. A one standard deviation (34 percentage points) increase in CEO personal leverage is found to be associated with 20 percent higher corporate leverage for the median large public U.S. firm. This relation is found to be significantly stronger for firms with weaker governance, suggesting that sorting and endogenous matching of CEOs and firms does not entirely explain our evidence. Our results have implications for our understanding of corporate capital structure decisions and suggest more generally that an analysis of CEOs' personalities and personal traits can convey important information about the financial policies of the firms they manage." The management myth 05/01/09   Management "The thing that makes modern management theory so painful to read isn't usually the dearth of reliable empirical data. It's that maddening papal infallibility. Oh sure, there are a few pearls of insight, and one or two stories about hero-CEOs that can hook you like bad popcorn. But the rest is just inane." Success on the side 04/24/09   Management "In the early days, Paul Buchheit, employee number 23 at Google, was focused on Web search like most other engineers. But like many other restless, smart workers, Buchheit also enjoyed hacking away at random stuff during his free time. What makes Buchheit different is that his Friday afternoon time was unusually productive: He conceived the initial prototypes for Gmail, the popular email program now used by millions of people, and AdSense, which is responsible for most of the company.s billions. AdSense is the technology that displays relevant ads on the right-hand side of the search results page." Hanging tough 04/13/09   Management "One way to read these studies is simply that recessions make the strong stronger and the weak weaker, since the strong can afford to keep investing while the weak have to devote all their energies to staying afloat. But although deep pockets help in a downturn, recessions nonetheless create more opportunity for challengers, not less. When everyone is advertising, for instance, it.s hard to separate yourself from the pack; when ads are scarcer, the returns on investment seem to rise. That may be why during the 1990-91 recession, according to a Bain & Company study, twice as many companies leaped from the bottom of their industries to the top as did so in the years before and after." Yes, you can raise prices 03/04/09   Management "The signs in the window of Jay Kos, an upscale men's wear boutique on Park Avenue in Manhattan, seemed at best cheeky, at worst clueless. Surrounded by glaring economic-crisis headlines cut out of newspapers, they said, "Cashmere sweater: $2,500. Recession price: $2,500." "Lamb's fleece jacket: $11,000. Recession price: $11,000." It was an in-your-face declaration that the business, whose clients include bankers and celebrities, wasn't going to cave in to any mere economic collapse. "Some people hated it," says the shop's eponymous owner. "But most people loved it. And some people even bought because of it." That story is worth pondering because one of the most important decisions businesses must make in this recession is what to do about prices." The start of 10 Fortune 500 firms 03/02/09   Management "The following examples are businesses which have grown so large to be included in the Fortune 500, or the world's largest 500 companies - but which have started from the humblest beginnings. They are 'Rags to Riches' stories of unique brands, started by unique individuals that only have accumulated wealth and vast market share, but have created their own niche and never looked back." Stumbling on entitlement 02/05/09   Management "For the American public, Daschle became the latest symbol of everything that is wrong with Washington -- the influence-peddling and corner-cutting and sacrifice of the public good to private interest. Now that this system has let them down, and left them poorer and anxious about the future, people are angry about it and no longer willing to accept the corruption of the public process and the whole notion of public service." Labor pains are not easily shared 01/02/09   Management "One way to accomplish such a "share economy," Weitzman argued, would be to change the structure of compensation so that a higher percentage of it was in the form of a bonus based on company revenues and profits, with a lower base pay. That would allow firms to reduce payroll costs during a recession without having to resort to big layoffs. It would also help ensure that workers shared in the boom times as well." Will work for praise 12/30/08   Management "Beyond brand-hungry strivers, masses of free laborers continue to toil without ever seeing a payday, or even angling for one. Many find compensation in currencies that predate the market economy. These include winning praise from peers, earning an exalted place within a community, scoring thrills from winning, and finding satisfaction in helping others." How sticky are wages? 12/19/08   Management "There's been a huge shift in power in recent years from labor to capital: corporate profits have been rising much faster than wages for some time now. It makes sense that capital would make use of its newfound power to reduce labor costs in a deflationary environment of rising unemployment. During the boom, companies laid off workers because those workers demanded, and cost, too much money. Now that workers have lost their negotiating leverage, we might start seeing more across-the-board pay cuts." The other half of "artists ship" 12/01/08   Management "As companies grow they invariably get more such checks, either in response to disasters they've suffered, or (probably more often) by hiring people from bigger companies who bring with them customs for protecting against new types of disasters. It's natural for organizations to learn from mistakes. The problem is, people who propose new checks almost never consider that the check itself has a cost." Fuld solicited Buffett offer 11/10/08   Management "Fuld's failure to save Lehman, after rescuing it three times before, is a story about how the most indomitable man on Wall Street became addicted to leverage and intoxicated with the power it brought. It is a tale about the inability to repair a financial model wrecked by a lack of limits and transparency, a story pieced together from interviews with former Lehman executives and outsiders familiar with the firm. Isolated, surrounded by acolytes and unaware of the rivalries tearing his firm apart, Fuld was too prideful to accept the fast-eroding value of the empire he had built, too slow to cut a deal." Retailers reprogram workers 09/10/08   Management "Retailers have a new tool to turn up the heat on their salespeople: computer programs that dictate which employees should work when, and for how long." From good to great ... to below average 07/31/08   Management "Nine of the eleven companies remain more or less intact. Of these, Nucor is the only one that has dramatically outperformed the stock market since the book came out. Abbott Labs and Wells Fargo have done okay. Overall, a portfolio of the 'good to great' companies looks like it would have underperformed the S&P 500." Superstar CEOs 07/03/08   Management "Compensation, status, and press coverage of managers in the U.S. follow a highly skewed distribution: a small number of .superstars. enjoy the bulk of the rewards. We evaluate the impact of CEOs achieving superstar status on the performance of their firms, using prestigious business awards to measure shocks to CEO status. We find that award-winning CEOs subsequently underperform, both relative to their prior performance and relative to a matched sample of non-winning CEOs. At the same time, they extract more compensation following the award, both in absolute amounts and relative to other top executives in their firms. They also spend more time on public and private activities outside their companies, such as assuming board seats or writing books. The incidence of earnings management increases after winning awards. The effects are strongest in firms with weak governance, even though the frequency of obtaining superstar status is independent of corporate governance. Our results suggest that the ex-post consequences of media-induced superstar status for shareholders are negative." Corporate democracy is a myth 06/20/08   Management "We are in this situation because there is no leadership in the executive suite. Why did we get here? Because in corporate America there are no true elections. It is tyranny parading as democracy. It.s a poison running through the blood of corporate America. Perhaps, with enough public support, the lawmakers and regulators will take note." Companies promise CEOs lavish posthumous paydays 06/10/08   Management "You still can't take it with you. But some executives have arranged for the next best thing: huge corporate payouts to their heirs if they die in office." All together now? 06/02/08   Management "In fact, corporate marriages only rarely end in bliss - many studies have found that most mergers and acquisitions do little for the acquiring company's bottom line. A KPMG study of seven hundred mergers found that only seventeen per cent created real value, and that more than half destroyed it. And a McKinsey study of mergers that took place in the nineteen-nineties found that less than a quarter generated excess returns on investment." Rewarding failure 05/05/08   Management "You might suppose that the stars are in near-perfect alignment for major reform of CEO pay. The mammoth pay and disastrous performance of Countrywide Financial's Angelo Mozilo, Citigroup's Chuck Prince, and Merrill Lynch's Stan O'Neal should be enough to make the public furious. Each CEO departed with $100-million-plus compensation after misadventures with subprime mortgages. Now add the economic slowdown to the mix; ordinary Americans are worried about making ends meet while failed pooh-bahs rake it in. Then throw in one more element - a presidential election. Put it all together, and how could change not be imminent?" Outdoing the Swiss Army knife 07/25/07   Management "Long before holstered cellphones appeared on handymen's belts, another gadget won their hearts and hips: the Leatherman Pocket Survival Tool. Within three months of its first listing in a mail-order catalog, the multifunctional gizmo became essential for thousands of hikers, hunters, and knife enthusiasts. Since then, Leatherman tools have blasted into space with NASA astronauts, severed umbilical cords on newborns, and extracted shrapnel from American troops in Iraq. As founder Tim Leatherman tells it, the idea behind his company grew out of a routine car breakdown. He and his wife spent most of 1975 touring Europe and Asia in a used Fiat. Its hoses leaked and the wiring failed constantly, and Leatherman's generic pocketknife lacked the means to fix them. Inspiration struck: Why not add pliers to a pocketknife? By the time the couple returned to the U.S., Leatherman had sketched out a design. A few weeks later he was using his brother-in-law's machining tools to construct the first prototype." A virtuous cycle 07/01/07   Management "In 18th- and early 19th-century Britain a sizable chunk of the nation's economy was run by members of the religious sect known as the Quakers. Quakers owned more than half of the country's ironworks. They were key players in banking (both Barclays and Lloyds were Quaker institutions). They dominated consumer businesses like chocolate and biscuits. And they were instrumental in facilitating the transatlantic trade between Britain and America. Initially their success was built around the benefits Quakers got from trading with one another. Because they dissented from the Church of England, members of the sect were barred from the professions and as a result gravitated toward business. When Quakers went looking for credit or for trade, then, they found it easy to partner with fellow believers. Their common faith facilitated trust, allowing a Quaker tradesman in London to ship goods across the ocean and be certain that he would be paid when they arrived in Philadelphia. Quaker prosperity did not go unnoticed by the outside world. They were well known already for their personal emphasis on absolute honesty, and as businessmen they were famously rigorous and careful in their recordkeeping. They also introduced innovations like fixed prices, which stressed transparency over sharp dealing. All of this clean living, as it were, paid off. Soon, people outside the sect began to seek out Quakers as trading partners, suppliers and sellers. And as Quaker prosperity grew, people drew a connection between that prosperity and the sect's reputation for reliability and trustworthiness. In the long run, observant businessmen came to see, being trustworthy was more lucrative than being Machiavellian. Honesty was the best policy." Smothered by six sigma? 06/04/07   Management "Now his successors face a challenging question: whether the relentless emphasis on efficiency had made 3M a less creative company. That's a vitally important issue for a company whose very identity is built on innovation. After all, 3M is the birthplace of masking tape, Thinsulate, and the Post-it note. It is the invention machine whose methods were consecrated in the influential 1994 best-seller Built to Last by Jim Collins and Jerry I. Porras. But those old hits have become distant memories. It has been a long time since the debut of 3M's last game-changing technology: the multilayered optical films that coat liquid-crystal display screens. At the company that has always prided itself on drawing at least one-third of sales from products released in the past five years, today that fraction has slipped to only one-quarter." Insurance legend still packs a punch 02/04/07   Management "Byrne, who returned in May as chairman of the board of the $19 billion White Mountains Insurance Group, doesn't get very upset when talking about a mere $100 million. His company just took an unanticipated loss of twice that amount, and he shrugged that off as well. "Two hundred million is not a killer. We are a company built to withstand stuff like that." Indeed, it's only after he reaches the $200 million mark that he even looks to outside investors, often his good friend, the multibillionaire investor and financial guru Warren Buffett, who once put together a $600 million dollar deal in a 40-second phone call. Now THAT impressed Byrne." Who's afraid of the big bad boss? 01/02/07   Management "Employees stuck in an abusive relationship experienced more exhaustion, job tension, nervousness, depressed mood and mistrust. They also were less likely to take on additional tasks, such as working longer or on weekends, and were generally less satisfied with their job. Also, employees were more likely to leave if involved in an abusive relationship than if dissatisfied with pay." Smashing the clock 12/14/06   Management "Ressler and Thompson saw their opening in these two vanguard managers. Would they be willing to partake in a private management experiment? The two outlined their vision. They explained how in the world of ROWE, there would be no mandatory meetings. No times when you had to physically be at work. Performance would be based on output, not hours. Managers would base assessments on data and evidence, not feelings and anecdotes. The executives liked what they heard and agreed. The experiment quickly gained social networking heat. Waiting in line at Best Buy's on-site Caribou Coffee (CBOU ), in e-mails, and during drive-by's at friends' desks, employees in other parts of the company started hearing about this seeming antidote to megahour agita. A curious culture of haves and have-nots emerged on the Best Buy campus, with those in ROWE sporting special stickers on their laptops as though they were part of some cabal. Hance, the hunter, started taking conference calls in tree stands and exchanging e-mails from his fishing boat. When Wells wasn't following around Dave Matthews, chances were he was biking around Minneapolis' network of urban lakes, and digging into work only after night had fallen. Hourly workers were still putting in a full 40, but began doing so wherever and whenever they wanted. At first, participants were loath to share anything about ROWE with higher-ups for fear the perk would be taken away or reversed." Insiders with a curious edge 12/07/06   Management "Executives appear to be using their flexibility to the max. People selling shares in 10b5-1 plans generate returns substantially better than would be expected if the trading were truly automatic. As reported in BusinessWeek on Nov. 6, Alan D. Jagolinzer, an assistant professor at Stanford University Graduate School of Business, recently completed a study of roughly 117,000 trades in 10b5-1 plans by 3,426 executives at 1,241 companies. He found that trades inside the plans beat the market by 6% over six months.Those numbers imply that the rules allow execs to benefit from inside knowledge. "The SEC's intent was to shelter people who didn't have any [material] inside knowledge from liability," says Jesse Fried, co-director of the Center for Law, Business & the Economy at the University of California at Berkeley School of Law, and an expert on executive compensation who has reviewed Jagolinzer's study. "But that outperformance suggests instead that it's the people using what information they have who are most often entering into trading plans." Says Walter Riccardi, deputy director of the SEC's Enforcement Div.: "Setting up a 10b5-1 plan while in possession of material information...could be Securities fraud."" Sleazy CEOs have even more options tricks 11/14/06   Management "To corporate America, the new rule was a minor hassle; to a first-year New York University finance professor named David Yermack, it was a new source of interesting data. Yermack began examining stock prices before and after options grants, and found the eerily consistent pattern displayed (in updated form) in the chart on this page: The average company's stock price dropped in the days before its CEO was given a bushel of options, and rose afterward. Executive options are usually granted "at the money" - i.e., if the stock is at $10, the CEO gets options to buy it for $10 a share - so getting options on a bad day for the stock is good news for the recipient. Yermack figured that this wasn't just luck, and theorized that companies were timing their grants to precede good-news announcements and follow negative ones. His findings began making the rounds in 1995, sparked a flurry of interest among finance and accounting scholars, and were published in The Journal of Finance in 1997." More sneaky options schemes 10/17/06   Management "Just when backdating options seemed like the state-of-the-art method for executives to line their pockets, along comes a crafty yet legal tactic that involves stashing stock grants in the furthest corners of the footnotes: Call them backdoor options." When shareholders aren't valued 08/28/06   Management "Anyone who says the American Midwest is dull and monochromatic obviously has not been to Omaha, Nebraska. The city of Warren Buffett, the investor who has generated huge gains for his shareholders over the years, is also home to Vinod Gupta, the colorful chief executive of infoUSA, who has destroyed enormous value for outside shareholders in recent years. Now that's diversity. Unfortunately for the shareholders of infoUSA, a database marketing company, much of its story is a throwback to the pre-Enron days of cozy boards and entitled executives." Who signed off on those options? 08/27/06   Management "In theory, directors are supposed to help keep wayward practices like options backdating in check at most companies, but at Mercury it was the directors themselves - who received a final seal of approval from the company.s compensation committee - who kept the backdating ball rolling." CEO bought a yacht? 08/15/06   Management "When someone who's supposed to be looking out for public shareholders is instead mulling over wallpaper samples for staterooms, it's time to sell. The yacht has long been the classic indicator of someone who has so much money that he doesn't need to make any more. Unlike a jet, which can speed busy executives to their offices efficiently, a yacht has no useful purpose. And who has time to play with such an over-the-top toy? Someone who doesn't work weekends figuring out how to make money for other people. A classic 1940 investment book, aimed at debunking the practices of Wall Street, was called Where Are the Customers' Yachts? Today, you should ask: Where are the shareholders' yachts? If you look at the recent record of CEOs who have become yachtsmen, it's clear that when they buy a boat, it's the shareholders who usually get soaked." Tech CEO pay doesn't match performance 07/19/06   Management "In the recent study, DolmatConnell & Partners, an executive compensation consulting firm based in Waltham, Mass., found there was an inverse correlation between tech CEO pay and shareholder returns over a one-year period. Companies analyzed in the study included Cisco Systems, Dell, EMC, Google, Hewlett-Packard, IBM, Microsoft and Oracle, as well as telecommunications providers, technology services companies and products distributors." Cheaper stock options 07/13/06   Management "That, of course, depends on your perspective. At companies where volatility numbers have been notched down too far, the cost of options doled out in 2005 has effectively been lowballed. An honest mistake, perhaps. It's still early in the options-expensing era. But if volatility continues to rise, warns Zion, that fact will have to be reflected in next year's estimates, driving up options costs and weighing on earnings in the future." More than 100 firms probably backdated options 07/12/06   Management "Some options-granting practices under fire could be considered ethically dodgy but not illegal, while others could prove to be illegal, despite what the companies issuing them at the time may have thought." Tearing up the Jack Welch playbook 07/11/06   Management "Just try to find an executive who hasn't been influenced by his teachings. What came to be known as Jack's Rules are by now the business equivalent of holy writ, bedrock wisdom that has been open to interpretation, perhaps, but not dispute. But the time has come: Corporate America needs a new playbook. The challenge facing U.S. business leaders is greater than ever before, yet they have less control than ever - and less job security. The volatility of the markets is so unpredictable, the pressure from hedge funds and private-equity investors so relentless, the competition from China and India so intense, that the edicts of the past are starting to feel out of date." Options gone wild! 07/01/06   Management "Options have long been used to attract and retain people from CEOs on down. Companies give employees the right to buy a set number of shares at a fixed price for several years. The price is generally where the stock trades when the options are granted. Simple, right? If only. As common as options have become, doling them out is something of a black art. Some companies have ultrastrict rules, and some give management wide latitude. Still others followed what they thought were acceptable practices, which now turn out to be potentially illegal." Apple's irregular options 06/29/06   Management "Apple Computer today joined the growing list of companies to announce problems with past stock options, saying that it had discovered "irregularities" with options granted employees including Chief Executive Steve Jobs between 1997 and 2001." CEO Paycheck: $42,000 a day 06/21/06   Management "Last year, the average CEO of a company with at least $1 billion in annual revenue made $10,982,000, or 262 times what the average worker made, according to an analysis by the Economic Policy Institute (EPI) released Wednesday. Put another way, the average worker -- who earned $41,861 in 2005 -- made about $400 less last year than what the average large-company CEO made in one day. That assumes 260 days of pay (52 weeks x 5 days a week)." A study in CEO greed 06/07/06   Management "The problem, in brief, is that executives at some companies were backdating their stock options to dates when the stock was at its low for the year or the quarter, tilting the odds of profiting on those options heavily in their favor. Backdating isn't necessarily illegal, but following the complicated rules would largely eliminate the advantages of doing it. As actually practiced, it was stealing, pure and simple. Executives looked back over several months and chose the date on which they wanted the right to buy shares of the company they were being paid to manage and - surprise! - they chose the date when the price was lowest. Wouldn't you like to decide in retrospect when to buy a stock?" The next big scandal 05/26/06   Management "At issue is whether those options grants were backdated. For example, if a company grants options on May 22, when its stock price is $20, but records the date of issue as April 22, when the stock price was only $15, it would have given those who were granted options a "sure thing," or at least a leg up, on a very lucrative "gift" of corporate assets. Already, CEOs of several companies have resigned, been discharged or been placed on administrative leave pending the outcome of internal and governmental reviews." Pay for failure should stick in investors' craws 05/10/06   Management "Funny how a bull market puts us all in such a forgiving, mellow mood. Paycheques for the country's top CEOs went up 39 per cent last year, according to a Globe and Mail study, and does anyone raise a peep?" Spinning CEO pay 04/21/06   Management "Strange, but true: One company actually receives positive press for its executive compensation. Media reports frequently tout Whole Foods' pay policy, which caps the chief executive's salary and bonus at 14 times the average worker's pay. The Wall Street Journal, Slate.com, Harvard Business Review and BusinessWeek have all mentioned the pay cap, generally in favorable terms. But they all omitted one thing: stock options." Do company founders make better CEOs? 04/11/06   Management "Of course, 27 companies is a small sample, and we might have written this off as a statistical fluke had we not come across the research of an Ohio State University finance professor named Radiger Fahlenbrach. Fahlenbrach analyzed the performance of the 2,300 largest U.S. companies from 1993 through 2002, and he discovered that those run by founder-CEOs (11 percent of the total sample) outperformed the broader stock market by eight percentage points a year." Ikea boss proud to be stingy 03/26/06   Management "Ikea founder Ingvar Kamprad, ranked 4th richest man in the world, drives a 15-year-old car and always flies economy class, in part to inspire his 90 000 employees worldwide to see the virtue of frugality." When the blind see better 02/27/06   Management "The combined compensation for the heads of America's 500 biggest companies increased by 54% in 2004. Harvard professor Lucian Bebchuk's calculations show that the top five executives now collect 10% of the average big firm's net income, double the percentage a decade ago. This is a problem that affects not just morale but competitiveness." A pink slip in your stocking? 12/19/05   Management "There was a time that layoffs took a holiday between Thanksgiving and New Year. Not any more." Advertising: on the mat 11/25/05   Management "One of the biggest users of direct mail is the financial services industry, which spent around $2.5 billion on mail shots in America last year. Unfortunately, people seemed less interested than ever in signing up for new credit cards or insurance policies. The response rate from some campaigns has fallen to just 1.4%, according to America's Direct Marketing Association (DMA). In previous years it was well above 2%. When it comes to responding to "direct-order" mail shots (signing up to an offer, as opposed to merely expressing an interest), the rate has fallen even more dramatically, to 0.7% from 3.5% in 2004." Too many turkeys 11/25/05   Management "Executive pay is on the rise again - and so are complaints that ordinary performance is attracting extraordinary rewards" Top 25 Boards In Canada 08/25/05   Management "Canadian directors have been cleaning up their act since the collapse of WorldCom and Enron nearly five years ago sparked a North American corporate governance revolution. While governance was once merely a footnote in a company's annual report, now many of Canada's largest corporations brag about their independent directors, the top-notch financial experts sitting on their audit committees and their beefed-up board oversight." The 5 most outrageously overpaid CEOs 08/24/05   Management "Here's the pantheon of execs whose paychecks soar while their companies suffer. Also: 5 who produce stellar results for a comparative pittance." Is your boss a psychopath? 08/19/05   Management "Odds are you've run across one of these characters in your career. They're glib, charming, manipulative, deceitful, ruthless -- and very, very destructive. And there may be lots of them in America's corner offices." Obliquity 04/13/05   Management "If you want to go in one direction, the best route may involve going in the other. Paradoxical as it sounds, goals are more likely to be achieved when pursued indirectly. So the most profitable companies are not the most profit-oriented, and the happiest people are not those who make happiness their main aim. The name of this idea? Obliquity" Test of good corporate citizenship 02/19/05   Management "Notice that, as the professors put it, "the lowest average stock price during the period of 180 days straddling the grant date occurs exactly on the grant date." If you think this pattern is attributable to mere chance, then I have a bridge I want to sell you." CEOs and their Indian rope trick 12/12/04   Management "The new rules should not, however, deter companies from trying harder to design compensation schemes that more closely align actual pay with actual performance. Huge pay packets for bosses would be much less controversial if there was evidence they had actually earned them." Corporate culture still self-serving 12/12/04   Management "It was three years ago that Enron Corp. filed for bankruptcy, ushering in the "post-Enron era" that optimists hoped would curb corporate sin. If only it had. Two recent news stories, following many others in the last 36 months, underscored how much improvement American corporate culture still needs." Passing the baton 10/16/04   Management "What is the best way to replace the boss? A recent study of large, non-diversified publicly traded American manufacturing firms in the Academy of Management Journal suggests that companies perform better under a new leader if that person has been groomed as the heir apparent" Corporate governance by the numbers doesn't work 09/08/04   Management " Warren Buffett is an undesirable board member. He's too old, serves on too many boards and has insider ties to too many of the companies on whose boards he sits. Sounds ridiculous, doesn't it? After all, Buffett has a reputation for being one of the most astute and ethical investors of the last 30 years. Plus, the billionaire stock-picker is a bit of a good-governance guru himself, pushing, among other things, for companies to expense employee stock options to show their true cost." Always on the job, employees pay with health 09/05/04   Management "The traditional career, progressing step by step through the corridors of one or two institutions, "is finished," said Dr. Richard Sennett, a sociologist at New York University. He has calculated that a young American today with at least two years of college can expect to change jobs at least 11 times before retirement." Voting 'No' on shareholder democracy 08/22/04   Management "Another company with dual classes of stock is Berkshire Hathaway Inc., run by the legendary Warren Buffett. The last thing in the world that even second-class shareholders of Berkshire want is shareholder democracy. They're buying into Buffett's benign dictatorship, not into pro-rata shares of the wisdom of any idiot who buys in too. They're delighted to have no say in the company, as long as they are assured that other shareholders have no say either. That is far from nuts." Governing in the goldfish bowl 08/12/04   Management "Many companies are reexamining the way they view investor relations and corporate communications. According to a number of directors, CEOs, and consultants interviewed for this story, some outfits need to do a far better job of understanding and addressing the concerns of institutional shareholders. They have no choice." From gluttony to class warfare 08/08/04   Management "For corporate chief executive officers and hedge fund managers, the good times never stop rolling. Twenty years ago, CEOs made an average of 40 times more than the factory floor worker. Last year it was 400 times more, and is now climbing to a multiple of 500." Sensible reforms resisted 07/05/04   Management "Chances are, you suffered a round of belt tightening at work last year. Well, don't think the boss was sharing the pain." Link found between candor, share prices 06/15/04   Management "Honesty is the best policy, if a company's leadership wants a better stock price. That's the conclusion of the Rittenhouse Rankings survey, which claims that there's a positive correlation between candid communication and superior share-price performance. Of the sample 100 Fortune 500 companies surveyed, the top-ranked ones boosted their share prices over a two-year period by 21.5 percent, while bottom-ranked companies saw only a 7.3 percent increase." AT&T Wireless self-destructs 04/17/04   Management "The story of a botched CRM upgrade that cost the telco thousands of new customers and an estimated $100 million in lost revenue. Hard lessons learned." CEO pay up again 04/07/04   Management "The rebound in U.S. corporate profits and return of the stock-market bull last year stoked a 16 percent raise in 2003 cash pay for America's top executives, most of the gain coming from a 20 percent rise in CEO bonuses." Altering of worker time cards 04/04/04   Management "Experts on compensation say that the illegal doctoring of hourly employees' time records is far more prevalent than most Americans believe. The practice, commonly called shaving time, is easily done and hard to detect a simple matter of computer keystrokes and has spurred a growing number of lawsuits and settlements against a wide range of businesses." Coalition of the greedy 04/03/04   Management "Three cheers for the Financial Accounting Standards Board, which recently released its proposal to require companies to expense stock options, and three jeers for the companies -- I call them the Coalition of the Greedy -- that continue to fight this common-sense change." Running out of options 03/18/04   Management "Some tech investors are starting to show that they're sick and tired of companies not having to include the expense of stock options programs on their income statements." Mis-Guided 02/12/04   Management "First, I know of no evidence - none - that shows that stocks of companies that give detailed guidance have higher valuations than stocks of companies that don't. Or are less volatile." Who's minding the store? 02/09/04   Management "Recent scandals in business ethics gnaw at the very roots of a capitalist system." Two-faced capitalism 01/25/04   Management "This is a switch. CSR was conjured up in the first place because government action was deemed inadequate: orthodox politics was a sham, so pressure had to be put directly on firms by organised protest. Ten years on, instead of declaring victory, as well they might, disenchanted NGOs like Christian Aid are coming to regard CSR as the greater sham, and are calling on governments to resume their duties. Might this be a sign, Mr Benioff notwithstanding, that CSR has finally peaked? If so, it might be no bad thing. If bosses are no longer to get credit for pandering to their critics, they may as well go back to doing their jobs." Is your boss a crook? 01/15/04   Management "Forget shady financial deals and legal shenanigans that grab headlines. It's moral lapses like hypocrisy, favoritism and disrespect for employees that pose the biggest ethical problems at the workplace." Pension peril looming 01/11/04   Management "Workers are angry as well. When the PBGC picks up a pension plan, be it from U.S. Airways or LTV Steel, they often get only a fraction of what they were originally promised. Critics say corporations have been irresponsible, and now are forcing healthy industries to pick up the tab and endangering the retirements of millions." German companies cutting pension plans 01/07/04   Management "Three major German companies this week have disclosed plans to cut back on their pension benefits for workers, with one, Commerzbank, even doing so without first consulting workers - a move that is highly unusual in Germany." Make more mistakes 12/27/03   Management "Would you like me to give you a formula for success? It's quite simple, really. Double your rate of failure. You are thinking of failure as the enemy of success. But it isn't as all. You can be discouraged by failure or you can learn from it. So go ahead and make mistakes. Make all you can. Because, remember that's where you will find success." Humbled 12/18/03   Management "Now chief executives are regarded by the public with the sort of disdain and distrust usually reserved for politicians, lawyers and journalists." The King Lear syndrome 12/15/03   Management "For the board, drawing up a succession plan is a good way to spot future problems. Mr Couchman describes one company that found to its dismay that it had only ten possible successors for 30 top jobs. But there are advantages for the boss, too. After all, one way to secure a sort of immortality is to pick one's own successor." I quit! 11/11/03   Management "Overworked employees are fed up: a survey finds 8 out of 10 Americans want a new job." Where's the stick? 10/09/03   Management "The highest-profile cases of excessive pay, unfortunately, are not isolated exceptions. Bosses' pay has moved inexorably upwards, especially in America. In 1980, the average pay for the CEOs of America's biggest companies was about 40 times that of the average production worker. In 1990, it was about 85 times. Now this ratio is thought to be about 400. Profits of big firms fell last year and shares are still well down on their record high, but the average remuneration of the heads of America's companies rose by over 6%." Health costs skyrocket 09/09/03   Management "Faced with the largest price hike since 1990, firms pass more insurance costs on to their employees." The hidden costs of offshore outsourcing 09/03/03   Management "Moving jobs overseas can be a much more expensive proposition than you may think." Is your boss an idiot? 08/31/03   Management "You can't live with 'em. And you can't shoot 'em. This, of course, is the dilemma when you work for an idiotic boss." Chasing the dream 08/11/03   Management "A second and more important reason why more money does not automatically make everybody happier is that people tend to compare their lot with that of others. In one striking example, students at Harvard University were asked whether they would prefer (a) $50,000 a year while others got half that or (b) $100,000 a year while others got twice as much. A majority chose (a). They were happy with less, as long as they were better off than others." Lehman cash woes 07/22/03   Management "Lehman Brothers' carefree use of restricted stock has come back to haunt the Wall Street giant, costing the company virtually all of its 2002 cash flow, a shocking report by a leading Wall Street analyst claims." We're (still) in the money 04/20/03   Management "Corporate scandals and falling share prices have forced companies to rethink their executive-compensation schemes. And yet, bosses are still being paid sums that many shareholders consider indefensible: in America, top-level compensation actually rose last year." Firms pay taxes on fraudulent earnings 04/05/03   Management "It is unclear what real or perceived benefits managers of these firms believed were generated by overstating earnings. Our estimates of taxes paid on overstated earnings suggest that at least some managers believe the value---to the firm or perhaps mainly to them personally---of overstating earnings is substantial." Good riddance to guidance? 01/29/03   Management "What do Coca-Cola, McDonald's, AT&T and Sun Microsystems have in common...besides being well-known brand names that have recently fallen on hard times? The four companies all recently told investors they are no longer going to provide earnings guidance. And that's created a maelstrom of controversy on Wall Street." Conseco collapse deals new blow to CEO cult 12/18/02   Management "Even now, nobody is connecting the dots when it comes to Gary Wendt's role in the demise of Conseco. Most reports about Tuesday's bankruptcy filing by the Carmel, Ind., insurance and lending behemoth have suggested that the former CEO's turnaround plan was more or less doomed from the start. The assumption appears to be that, given the large debt load taken on by previous management, Conseco was too sick to be cured even by Wendt -- who joined the company in June 2000 with one of the most impressive reputations in corporate America. " Year of the scandal 12/18/02   Management "2002: greed, accounting conflicts, book-cooking helped derail Wall Street. Will 2003 be any better?" The holiday bonus bait and switch 12/06/02   Management "Achille says her firm will continue to give bonuses "come hell or high water." Her reason? Achille is determined to retain talented staffers, whom she calls the company's "greatest assets." Every one of her 15 employees can count on getting a yearly check, based on corporate profitability and their own contributions to the cause." Where did everyone go? 11/15/02   Management "Firms are laying off workers even as business revives. That boosts profits - at the cost of morale." The case against professionalism 10/25/02   Management "It is easy to forget that professionalism is the enemy of the high-tech startup. If these companies were operated by professionals, they would never have been founded. Nor would a professional tolerate the conditions necessary for startup survival. Michael Eisner never emptied a wastebasket at work, but I'll bet Walt Disney did." Insider Loans 10/20/02   Management "It isn't just the Enrons and the Tycos of the world that will eat huge losses on insider loans. It turns out that the practice -- now banned -- was common at 75 percent of the country's biggest corporations." The mystery of the blood red ledger 09/13/02   Management "Even before he could tour all the restaurants and shake the hands of his managers, the California State Board of Equalization froze the company's bank accounts, seeking $225,000 -- about three months' worth of overdue sales tax. Unable to write checks to suppliers on the frozen accounts, Louise's filed for Chapter 11 bankruptcy protection. It was LeFranc's ninth day on the job." The talent myth 09/12/02   Management "The management of Enron, in other words, did exactly what the consultants at McKinsey said that companies ought to do in order to succeed in the modern economy. It hired and rewarded the very best and the very brightest-and it is now in bankruptcy. The reasons for its collapse are complex, needless to say. But what if Enron failed not in spite of its talent mind-set but because of it? What if smart people are overrated?" Corporate directors see risks climbing 08/11/02   Management "Sitting on a company's board of directors used to sound like a cushy job - - lavish pay for little time, rides on the corporate jet, rounds of golf at first-class resorts. But now it's getting as perilous as sweeping out a minefield." Fraud Inc 07/25/02   Management A CNN-Money special report on corporations, and CEOs, in trouble. Men, women don't manage differently 05/27/02   Management "Women and men don't manage any differently -- they just talk like they do, a new academic study says." Options' costs revealed 05/20/02   Management "It has taken an awfully long time - not to mention a crucial assist from the debacle known as Enron Corp. - but finally the investment world is inching toward truth in financial reporting where stock options are concerned." CEO's: fallen idols 05/05/02   Management "The vehemence of today's reaction against business leaders is partly a reflection of how far their companies' shares have fallen, and also of the extent of their personal greed." Companies whose boards need a scare 04/03/02   Management "Don't worry if you lose the actual vote. In the long run, letting management and directors know that shareholders are watching can be just as important as winning the actual count."	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