Editor’s Letter Image and ability

The gap between the content of the chief executive’s remuneration package and that of other employees is widening. The tensions this state of affairs is causing are hardening. That at least is conclusion that can be drawn from the steadily growing body of research and other anecdotal evidence collected and distributed by global recruitment companies, academics and commentators who gather and analyse management trend data and attitudinal studies. The problem in the United States was so severe year or two ago that former Intel chairman and chief executive Andy Groves was moved to say of the scandals surrounding Enron and others that; “these days I’m ashamed I’m part of corporate America”. He may have been responding to particularly obscene chapter in the history book of corporate management and leadership, but the shock waves linger on and the root cause, over compensation of top shelf executives, remains.
Associate editor Vicki Jayne was assigned to investigate the New Zealand position. Her findings are contained in this month’s cover story and some of them are disconcerting. For instance she says: “The [remuneration] split between those at the bottom end of the corporate pay scale and those feeding at the top has grown at fairly rapid rate over the past decade. The trend has been driven partly by an economic boom and partly by ideology but not, it seems, by outcome. There doesn’t appear to be any research to show an increase in the size of CEO’s salary produces concomitant surge in company productivity. Indeed, some recent high profile corporate collapses suggest the opposite may be true.” This, and other findings aren’t doing much for the image of management.
And managers’ and leaders’ perceptions of themselves and their capabilities are now under another microscope. The New Zealand Institute of Management has created its Management Capability Index, benchmark that could become universally accepted, to provide performance scorecard on which to build future programme to, as the British have called it, “raise management’s game”. NZIM’s argument for building management capability is based on the premise that better management performance leads to better national economic performance and that, on the surface of it, seems like reasonable conclusion to draw. But effective management and leadership can only happen if the whole team plays along. And if, increasingly, the team doesn’t feel it is getting the fair end of the stick, all the individual skill and competency in the world might not deliver the result everyone is looking for.
And turn to the back of this issue of Management to read the second edition of The Director, our dedicated coverage of the increasingly important business of corporate governance.

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