I don't think anyone is worth 10 million/year no matter how "good" they are.
Viscerally, I agree. On the other hand, if we go back to 1995 or any time before it, no 25-year-old programmer was "worth" $100,000 per year. Now that's a typical salary for a strong engineer. I'm cautious about saying people "make too much" money because, ultimately, no one really knows what work is worth. That's why we have markets, and they aren't perfect but they do better for a lot of things (not all, and I'm actually pretty far left by US standards) than any kind of central command and analysis humans have ever devised for that sort of thing. Societies need infrastructure (environmental controls, welfare state) to correct imbalance but markets work. Usually. Executive pay in large companies is set by a parasitic social elite rather than a real market, so that's somewhat of a different story, but I'm not sure where I draw the line.
The difference between how a company operates when there's a good CEO vs. a bad one is easily $10 million, because CEOs have multiplier (or divider, when r < 1) effects and a billion-dollar company is in play. I don't like the message that is sent by having CEOs make 500 times what average workers do, but I wouldn't doubt for a second that the difference between a good CEO vs. a bad one, in a large company, is more than 500 times as impactful as hiring or firing an average worker. My issue with the high pay is that CEOs get it even if they turn out to be total wankbaskets.
It's ok to work 5h-7h a day, or even less some days if you're efficient. But 2H, is just not realistic, you can't even speak that fast.
Why not? Perhaps I'm being starry-eyed and idealistic, but I think there's easily a factor of 10 in variation in a person's productivity in an hour of work, and that properly motivated people can get a lot done in a short time period. Looking back over my career, I'd guess that 90% of the value that I've added occurred in 20% of the time. I think a lot can be accomplished with little time, and why not? If I were offered a $2-million job, the first thing I'd ask is if I could work 20 hours per week for half of that salary. It'd be a win-win bargain, because I'd be getting the time off, and they'd be getting 70-80% of my full-time productivity.
The purpose of the 8-hour day is to enhance the likelihood of capturing the 2 to 4 hours in which the person is actually highly productive. Companies fear (and justifiably so) that if the work expectation were a 3-hour day, people would give their best 3 hours to their personal side projects or interests and let the company have the leftovers. So they mandate a day that stretched from after breakfast to before dinner to maximize the chances of getting peoples' productive hours.
I don't think the solution of keeping people corralled in an office for what is, in winter, a full day is going to hold up much longer. I think the post-managerial vision of Valve is the future, and that once this is established, companies will be more comfortable trusting people to work 4 hours in an average day but get shit done. (Of course, there are times when it's appropriate to work 14 hours per day, but those conditions don't, or at least shouldn't, last for long.)
To make it clear, I'm not advocating laziness here. Working an effective 4-hour day is a lot harder and less lazy than working the sloppy 10-hour day that is typical in the professions.
You're making a simple mistake: valuing the worth of something by its impact. But that's not how worth is determined; you need both supply and demand. If providing something has high impact, but that something is very common, then it has low worth, irrespective of how high impact it is. People would die without oxygen and water, but neither of these things are expensive.
The market for CEO compensation is clearly not very efficient. It's a big risk to put someone into the job to see how they do, so there isn't a lot of experimentation; few people get to build up experience. So the supply is very restricted, and this will inflate the price of labour quite a bit. There's not a lot of hard science between how applicable experience in one company or type of company is transferable to another, so even CVs can't be relied upon. And performance and actual value created may take some time to show up; there's a lot of things that a CEO could do that seem to create short-term value at long-term expense.
The biggest reason CEO compensation is so high is because they are in a pyramid peak position where they can skim off a small percentage of a lot of people's productivity and claim it as their own. In effect, it doesn't "cost" a lot for a large corporation to pay its executives a lot of money, compared to all the other costs.
I wonder if we'll ever have virtual economies / simulators developed enough to be able to learn / train / evaluate prospective company leaders in the future.
> If providing something has high impact, but that something is very common, then it has low worth, irrespective of how high impact it is. People would die without oxygen and water, but neither of these things are expensive.
With employees the heuristic is (very roughly) market price + VORP (value over replacement player). If an average programmer typically adds $300k of value to your company, and market price for an average programmer is $70k, and you find one who is twice as effective-you can pay them a lot more than $140k.
> The biggest reason CEO compensation is so high is because they are in a pyramid peak position where they can skim off a small percentage of a lot of people's productivity and claim it as their own.
This isn't a bad thing. If the CEO can boost the average employee's productivity by 1%, that can be enormously impactful. The difference between a CEO who makes a 1% impact and a CEO who makes a .5% impact translates to huge sums in large corporations.
So assuming that we had the ability to distinguish between good and bad CEOs, and that good CEOs were rare, it would certainly make sense to pay good CEOs huge sums and average CEOs much less. Unfortunately as you said, no one has gotten good at evaluating CEOs yet.
theres an order of magnitudes between 100k and 10M. Plus; 17 years ago 100K was a lot yes. 17 YEARS ago :p
Maybe in 50 years 10M will be okay but the point is moot.
As for time, I know in many companies people "work" many hours which consist of non-work chatter, coffee, etc. I'm talking of actual real work time. You can work 2H and sit 8H, then I'd say 2H work is not enough as the actual work discussions take more than that. Of course some barely even work 1H per week. But they don't get anything done, so its not that they're efficient. It's that they don't work.
Viscerally, I agree. On the other hand, if we go back to 1995 or any time before it, no 25-year-old programmer was "worth" $100,000 per year. Now that's a typical salary for a strong engineer. I'm cautious about saying people "make too much" money because, ultimately, no one really knows what work is worth. That's why we have markets, and they aren't perfect but they do better for a lot of things (not all, and I'm actually pretty far left by US standards) than any kind of central command and analysis humans have ever devised for that sort of thing. Societies need infrastructure (environmental controls, welfare state) to correct imbalance but markets work. Usually. Executive pay in large companies is set by a parasitic social elite rather than a real market, so that's somewhat of a different story, but I'm not sure where I draw the line.
The difference between how a company operates when there's a good CEO vs. a bad one is easily $10 million, because CEOs have multiplier (or divider, when r < 1) effects and a billion-dollar company is in play. I don't like the message that is sent by having CEOs make 500 times what average workers do, but I wouldn't doubt for a second that the difference between a good CEO vs. a bad one, in a large company, is more than 500 times as impactful as hiring or firing an average worker. My issue with the high pay is that CEOs get it even if they turn out to be total wankbaskets.
It's ok to work 5h-7h a day, or even less some days if you're efficient. But 2H, is just not realistic, you can't even speak that fast.
Why not? Perhaps I'm being starry-eyed and idealistic, but I think there's easily a factor of 10 in variation in a person's productivity in an hour of work, and that properly motivated people can get a lot done in a short time period. Looking back over my career, I'd guess that 90% of the value that I've added occurred in 20% of the time. I think a lot can be accomplished with little time, and why not? If I were offered a $2-million job, the first thing I'd ask is if I could work 20 hours per week for half of that salary. It'd be a win-win bargain, because I'd be getting the time off, and they'd be getting 70-80% of my full-time productivity.
The purpose of the 8-hour day is to enhance the likelihood of capturing the 2 to 4 hours in which the person is actually highly productive. Companies fear (and justifiably so) that if the work expectation were a 3-hour day, people would give their best 3 hours to their personal side projects or interests and let the company have the leftovers. So they mandate a day that stretched from after breakfast to before dinner to maximize the chances of getting peoples' productive hours.
I don't think the solution of keeping people corralled in an office for what is, in winter, a full day is going to hold up much longer. I think the post-managerial vision of Valve is the future, and that once this is established, companies will be more comfortable trusting people to work 4 hours in an average day but get shit done. (Of course, there are times when it's appropriate to work 14 hours per day, but those conditions don't, or at least shouldn't, last for long.)
To make it clear, I'm not advocating laziness here. Working an effective 4-hour day is a lot harder and less lazy than working the sloppy 10-hour day that is typical in the professions.