Why Failed Executives Always Get Another Job
Here's a pop quiz for you:
What makes these the same?
- Vikram Pandit receives a nearly $53m salary and bonus while Citibank fails its Federal Reserve Stress Test and its revenues fall.
- John Corzine is not indicted while MF Global's customers are still trying to find the $1.6 billion of their investment dollars that 'got lost.'
- Bob Nardelli maintains his relationship with Cerberus even after having failed as their appointed CEO to Chrysler.
If your answer was: "The CEO is a failure but there were no consequences," you're correct . If you added: "Even worse, they keep getting rewarded and being asked to take on new positions," you get extra credit - both for the "even worse" and for the answer, itself.
And that's the one of the biggest problems with big business today. There is no real scarcity of talent available at the senior level - but you would never know it based on the business pages. Because these failed and failing executives keep getting the jobs - even as their decisions negatively impact the employees of and investors in the companies they're 'leading.'
Worse yet, a lot of those investors are institutional pension funds - which means that you can have worked your whole life and expect a certain level of retirement remuneration, only to find out that the fund has been hit so badly the money just isn't there anymore.
So where does this problem come from? What creates the illusion of scarcity?
There are two aspects to this problem. The first is a "better the devil you know" scenario. The other is institutionalized, intentional and profit-driven.
In both cases, it's coming from the executive search firms. They're creating and perpetuating a perception of scarcity with their "recycled executives" policy.
For them it's a highly profitable, cheap and cheerful way of doing business. For industry, it's a killer. Here's how it works:
You get a call from a recruiter. You've either worked with their firm before or you've been recommended by someone who has. They have a job prospect that might be of interest. In fact, according to them, it's just perfect for you.Continued on the next page