CEO vs worker pay

In our Intro to Management "Drucker Day," we discussed articles about Peter Drucker heralding him as the "Father of Modern Management" (Byrne, 2009), imagining what Peter Drucker would say today (Kantor, 2009), and why we should still pay attention to his management lessons (Kantrow, 2009, 1980). One of the trends that particularly troubled Drucker was the increasing misalignment of CEO pay with the pay of regular workers, which he thought was morally wrong. We did an experiment in class today. I asked management students to (1) name a company they would like to work for, (2) how much they would want to be paid for being the CEO, and (3) how much they would want to be paid for simply working there. The results?
In a class of 44 management students, the average ratio of CEO pay to worker pay was 73, and the median ratio was 20. A typical student expects to make $1 million for being the CEO, but is perfectly happy to accept a salary of $55,000. When Drucker raised his concerns about pay disparities 20 years ago, the ratio was 40. Just prior to the meltdown of 2008, the ratio was 400, which also happens to be the maximum ratio reported by any student in our class. Do novice management students lack a sense of the magnitude of CEO salaries today, or are their estimates a more accurate reflection of what CEO salaries should be? The mode salary of $500,000 suggests the former is explanation.
Post Script: See Flowingmotion's comments below. They offer some compelling questions about how HR recruiters fail to justify this gap. We need empirical tests.

Managers in popular media

In CIMBA's spring semester session of Introduction to Management, we debated the need to "professionalize" the practice of management in ways similar to that of the practices of law and medicine. Anyone can be a manager, but you can't be a medical doctor or lawyer without a specific degree and credentials (with the exception of "My Cousin Vinny"). The focal article of our discussion was Khurana and Nohria's 2008 HBR article "It's time to make management a true profession." After our classroom discussion, I asked CIMBA students to send me images of managers from the popular media and got some interesting (and scary) results. Click here for CIMBAn submittals. Are doctors and lawyers similarly depicted in popular media? Is the "dark side" of management just as dark in law and medicine? What does a "professional manager" look like?

Drucker "still matters"? Yes.

When Peter Drucker passed away in 2005, he was heralded - as he was for decades prior - as the "father of modern management." Drucker's writings helped to develop management as both a profession and an academic discipline during the past half century. Despite these acknowledged contributions, Drucker's influence seems to be missing from current conversations we have in management as a practice, and even more so in management as a research subject. We began exploring Peter Drucker's teachings last semester in CIMBA's Introduction to Management class. Students reported that this class opened their eyes to view management in ways that they had never considered before; many said they would devote more of their future studies to the discipline of management. This semester we'll continue our emphasis on Drucker's lessons and hopefully create a process that leads to better managers for our future.

http://www.businessweek.com/magazine/content/05_48/b3961001.htm

CIMBAns decide: Dilbert or The Office?

As a consultant in my prior career, I could tell how good company morale was at my clients' offices by the number of Dilbert cartoons posted in cubicles. More Dilberts almost always meant poor morale. As a social phenomenon, Dilbert has gained a loyal following of readers who can personally relate to Scott Adams' insights. So I thought CIMBA management students would be interested in Dilbert's world. They weren't.

This semester CIMBA Intro to Management students showed an overwhelming interest in "The Office." The Office was the subject of (at least) five entertaining student choice presentations toward the end of the semester. Even though students made their presentations on the Wednesday afternoon before Thanksgiving travel weekend (along with final exams the next), CIMBAns put their best efforts forth. Interestingly, many of you asserted that Michael Scott is a brilliant manager (despite some foibles and follies). Did you learn that in class?

Origin and originality of ideas

"Make it a practice to keep on the lookout for novel and interesting ideas that others have used successfully. Your idea must be original only in its adaptation to the problem you are working on."

- Thomas Edison

This semester's class of CIMBA entrepreneurship students are developing business plans for food tours, social networks for studying abroad, RFID tracking of personal valuables, and kiosk-based auto rental. While each of these ideas has been implemented before in some shape or form, these students embraced Edison's advice and the challenge of original adaptation. Look for updates here!

Managerial decision making

Decision making is one of the most important functions of management. Despite its importance and exhaustive study on the topic, we still struggle to make decisions effectively. In two STVP videos posted here, Janice Fraser of Adaptive Path explains how efficient decision making can be supported by giving the decision maker responsibility, accountability, and authority, and Dominic Orr of Aruba Networks describes how to cultivate a fast decision making process focused on facts and intellectual honesty. Finally, MIT behavioral economist Dan Ariely discusses how we are all victims of the "illusion of control" in decision making (click on the image above). Clearly, there is more researchers can do to help managers become better decision makers.

When managers are more effective than markets

During the Intro to Management lecture on October 15 we discussed the need (or not) for the professionalization of management (Khurana & Nohria, 2008) and the reason why firms exist. With the recent scandals attributed to managers and their alma maters, these are useful questions to ask. In contrast to "professionalized" occupational roles like doctors and lawyers, however, managers must deal with planning, organizing, leading, and controlling (the four basic functions of management) - planning for an uncertain future, creating effective and efficient structures for organized activity, motivating and directing people, and trying to keep everything on track. It is the manager's skills that allow organizations (aka "hierarchies") to be superior in many cases to markets and contracts (the domain of lawyers). In recognition of these important differences and the importance of organizations in economics, Oliver Williamson is one of two economists who won the Nobel prize for economics this year. Professor Williamson's work explains conditions under which firms or markets would be the superior form of organization. For us, the challenge is to create managers who can master planning, organizing, leading, and controlling the functions of the firm. Professor Williamson knows we could never codify that! (Clicking on the image takes you to the October 17 story in The Economist)

Khurana, R., & Nohria, N. 2008. It's time to make management a true profession. Harvard Business Review, 86(10): 70-77