Senior Leaders Are Often Out Of Touch, Which Is Utterly Logical

This is a good new article in Harvard Business Review about CEOs and senior leaders being out of touch. There are so many flawed assumptions in this article that you could probably choke an entire farm of horses with them, but let me just give you two that really popped out →

Executives are usually up on the macro labor numbers like total wage spend and average wage growth but not on what their labor model means for individual workers. When we tell them that 50% of their workers work fewer than 15 hours each week or that the majority of their full-timers earn less than $30,000 per year or that less than one-third of their full-time workers earn a living wage (all real examples from our work), they’re shocked. Many companies also track metrics, such as employee engagement, that can give a misleading picture of job quality. While engagement surveys may be useful in assessing year-on-year trends, they don’t give a true picture of job quality. We worked with one company that was proud to be certified as a great place to work, but it also had about 60% employee turnover, mainly thanks to low wages and unstable schedules provided only 72 hours in advance. Employees understood that the company didn’t offer good jobs.

LOL on that one. And now →

Because executives are out of touch with how hard things are for their employees, it’s easy for them to figure that a “strong culture,” frequent “employee appreciation,” and cool but insufficient benefits such as wellness programs add up to job quality. The CEO of a health care company told one of us, “I just don’t understand. I care so much about our employees and we do so much to show our appreciation, but they still keep leaving.” He was proud that the company celebrated major employment milestones for all workers and offered some discount programs. Great, but many of his frontline employees still had to work two jobs to make ends meet and had to juggle that second job with the unpredictable weekly hours at his company. Some companies think that encouraging employees to “be themselves” — to display tattoos, wear whatever they want, and so on — is a way of offering good jobs. The ability to express individuality may be important to employees, but it won’t pay the bills.

Can’t stop laughing now. But … this is reality.

Why is it reality?

Executives are typically compensated on keeping costs down, proving growth, and some measure of profit or revenue. Those are the things they will care about. It’s that simple. They are not going to care about fluffy things like “employee engagement,” because they don’t believe in that. They constantly virtue-signal about how hard they work and assume everyone else should work just as hard.

At every level of jobs, people care about what they think they are supposed to care about and/or what can advance them if they care about it. For most people, that’s just task work. For executives, that’s “the financials.” Or, ya know, “the numbers.” That’s what these guys care about. Why would they care about “living wage?” Their house is nice and will have a solid resale value. They’re good. And if someone is bitching about living wage, well, I gotta keep my costs down. So go find a living wage from a competitor. I’m chasing my bonus, baby.

This is just the way things are at many organizations. “Cost-cutting” is somehow deemed strategic by a lot of these guys.

The world-class paradox

I used to work at this joint where the founder constantly said in all-hands meetings that the staff was “world-class” and “best in the business.” Actually, I’ve worked at two places like that, come to think of it.

At the first place, the average salary was about $47,000. This was DFW Metroplex area. You can live on 47K but not amazingly. Yet the main dude kept saying “world-class” talent. I had this one buddy there, big cigar smoker guy, who used to be like “How the hell are we world-class? Wouldn’t that imply we’d get paid more?”

Now, open/free market advocates are like “Well, if you are world-class, go build your own thing or find someone to pay you at that level.”

Valid argument, for sure, although not always easy in execution. Most places these days only want to pay for senior leaders deemed as “strategic,” sales guys, and engineers/coders. That’s about it. And sales guys usually have no base, or a very limited one. But you think some CEO gives a fuck about paying for a SEO manager? He doesn’t. Sorry, but them be the facts of our modern reality.

Can we fix it?

Not really at a broad level. Companies will always behave this way. More on some improvements in a second, though.

At an individual level, we can job-hop more. That’s about the only way to make more money in modernity.