Monday, November 17, 2008
Peter's at the doorstep of many of America's largest corporations. Peter you ask, Peter Principle. Citicorp, General Motors, Ford, Fannie Mae, Freddie Mac are among a very long list of companies reeling in losses. What do these companies all have in common? Size, size and more size, a direct result of the blinded pursuit of economies of scale without regard to their ability to effectively manage that scale of operation. Like "one hit wonders" in the music industry, these CEO's have armed themselves with a single trick in their repertoire; that being to scale down their workforce. Plan B, panhandle Congress claiming they are "too big to let fail" and will cause irreparable harm to the economy. This is a self-serving argument benefiting the criminal, incompetent, or at least misguided actions of these CEO's.
Why do Boards of Directors buy into their CEO's wishes to simply get larger for larger sake? The argument often made to explain their compliant behavior is the "incestuous makeup" of corporate boards in America. A relatively small band of "directors" gypsy around from company to company. I'll give you a seat on my board if you seat me on your board. is the mindset of this bunch. Is it any wonder the same mistakes are echoed throughout corporate America time and again?
Why do Boards of Directors buy into their CEO's wishes to simply get larger for larger sake? The argument often made to explain their compliant behavior is the "incestuous makeup" of corporate boards in America. A relatively small band of "directors" gypsy around from company to company. I'll give you a seat on my board if you seat me on your board. is the mindset of this bunch. Is it any wonder the same mistakes are echoed throughout corporate America time and again?
Labels: CEO's, Citicorp, Corporate Bailouts, Economies of scale, Fannie Mae, Ford, Freddie Mac, General Motors, Trouble in corporate America
