Thestrategist.media, Canada – 10 April 2015 – According to research papers, reported by Huffington Post, Business – Canada, the salary of a C.E.O. should be raised by the peers. The said research study was carried out by the Ted Rogers School of Management in collaboration with Toronto’s Ryerson University wherein it reflects the fact that there are some board of corporate companies which are bound together by “exclusive networks of corporate acquaintances”. Therefore, in such scenario, keeping the pay of a C.E.O. in check may not be a trusted thing to do.
 
According to Ryerson’s Prof. Fei Song and the Rotman School of Management’s associate professor, Chen-Bo Zhong, the acquaintance network between corporate companies take place as many boards tend to take advices and expertise of C.O.E. from other firms. As per the researchers there is an incentive behind this kind of recommendation made by the C.E.Os. It is “to seek higher pay for the company CEO” as boosting the payment should come as a normal effect to advising other companies and proving their worth.  
 
The Huffington Post writes:

 
Moreover, the justification behind the increment of the senior executives’ salaries is that in order to retain skilled people, there has be some kind of incentive otherwise the market is waiting with open arms to welcome and absorb them in. Apart from the need “of retaining skilled people”, the raised C.E.O. pay could also be the result of “a recommendation from a board of directors”, who wish to congratulate the top executive for carrying out his duty skilfully and responsibly.
 
In Song’s words:

 
The research papers of Prof. Fei Song and Chen-Bo Zhong, based on their “behavioural study”, highlights the fact that the high pay of C.E.Os affects the economy of the respective company in its other sectors which may include employee pay, shareholder returns and investment amounts. Song says:

 
While studying closely the behaviour of people belonging to executive corporate networks, which are formed exclusively by several “boards of directors”, Song introduced her “research subjects into groups” and urged them “to divvy up a pot of money” in a way that would prove beneficial to all the people forming part of their network, in order to gauge the level of behavioural ethics present within the members of a network.
 
However, what she came up with in her research papers, “published in the Journal of Economic Behaviour and Organization”, as her observation is:

 
Talking about these “tight circles”, she describes their attitude as :

 
However, there seems to be no “obvious conflict” between them, though it would be difficult to track these networks and shareholders may also remain in the dark as how these network channels can influence the board’s decisions. Furthermore, it may turn out to be a closed looped chain as one companies C.E.O may be in the board of another company and vice versa. In Song’s words, it is like:

 
The recommendation made by Song is to allow more information flow to the shareholders regarding the ‘’ of board meetings, so that they can check the tendency of “CEOs elevated compensation” recommended by the peers. 

 

Strategist.com – 08 April 2015 – Jenny Che in “The Huffington Post” says that as per a recent study it has been observed that good character and a good business are reciprocal in nature.
 
The above mentioned study was conducted by KRW International, a firm that gives consultation in the field of leadership qualities, which enumerated in detail the relationship between “the integrity” of a company’s C.E.O. and its overall business performance. Many firms were subject to the case study of this research wherein it was noticed that the companies with top executives of high moral principal, rated by the correspondent employees, were performing better than the ones with a C.E.O. of “lower character rating”. 
 
In the “Harvard Business Review”, which launched the first publication of the said research papers, Mr. Fred Kiel, the founder of KRW International, said”

 
The report published in the “Harvard Business Review”, seems to highlight ten business figures who excel in their board performances. As per Kiel, the enlisted personalities are “virtuoso CEOs”, who stood up against the wrong issues though supported the subordinates for a right cause. They expressed their genuine concern to the employees, showed “empathy” and were able to move on forgiving past-mistakes.
 
The said list incorporates executive figures who were ranked high by their subordinates for “vision, strategy and accountability” like the president and C.E.O. of Larson Manufacturing Company, Mr. Dale Larson, one of the ex-C.E.O. of the outdoor retailer REI, Sally Jewell, and also the president and C.E.O. of Intermountain Healthcare, Charles Sorenson among others.
 
However, the KRW studies also produced a comparative list of C.E.Os who were at the bottom of the score line, and seemed to “be preoccupied with their personal financial gain”. They often seemed to “twist the truth for their advantage”.
 
The approach of the study was made by interrogating eighty four American companies along with non profitable organisations. The employees had to rate their managerial figures and C.E.Os based on four “moral principles” which comprised of “: integrity, responsibility, forgiveness and compassion”. The response data collected from various companies were then aligned with the financial status and performance of the respective company in order to investigate whether any relative pattern appeared impacting the profitability of the firms.
 
Interestingly, the firms whose helms were at the hand of the virtuoso CEOs, scored high by their subordinates for their positive characters, had “an average return on assets of 9.35 percent” within a span of two years; whereas, on the other hand the companies headed by the C.E.Os “who scored lower” managed “an average ROA of just 1.93 percent”.
 
Moreover, a reversal assessment pattern was noticed when the various C.E.O.s were requested to make a self assessment. The managing figures who were rated high by their staff gave themselves lower marks as compared to the ones making a highly rated self assessment whereas they were given lower scores by their employees.
 
Marillyn Hewson, the C.E.O of Lockheed Martin, writes:

References:
http://www.huffingtonpost.com/2015/03/24/the-upright-ceo-brigade_n_6931364.html?ir=India