RSR Research: The CEO as Rock Star
Through a special arrangement, what follows is an summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
I’ve been thinking a lot about the role of the CEO in retail. We’ve seen the (shocking) debacle of Ron Johnson as CEO at JCP, the apparent impending turnaround (or, at least, slowing death spiral) of Best Buy in the hands of Hubert Joly, and Apple falling from the stratosphere in the post-Steve Jobs era. And so, I’m here to say today: "My position has evolved."
I’ve gone from thinking the average CEO is (mostly) grossly overpaid to thinking, "Hey, maybe they really are worth the big bucks when they get it right."
In fact, our survey respondents re-affirm this point of view in virtually every benchmark RSR runs. As frequent readers know, we use a framework called the "BOOT" to analyze most topics we write about. One of the O’s stands for "Organizational Inhibitors" and ways to overcome them. Seeing "Senior Management Championing Change" identified as a top-three way to overcome almost any organizational inhibitor has become completely routine.
Part of my "evolution" is that the "Rock Star CEO" is entitled to obscene compensation, but only if it is tied to results. I broached the idea to some of my partners at RSR:
Nikki Baird: "I don’t have a problem with that line of thinking. The only thing I’d throw out there is, what about the measure of risk for taking on the job? A lot of companies, when they take on a rock star CEO, are doing so because they need big changes. There’s always the risk that the organization (or the board) doesn’t listen. Sometimes it takes an eye-watering paycheck to get someone to sign up for a company headed downhill already, and sometimes it takes that size paycheck to get the board to take them seriously."
Brian Kilcourse: "I think the issue is ‘CEO as manager’ vs. ‘CEO as leader.’ CEOs should be leaders, in my opinion, and that implies that they must be good at two things. First, they have to have a vision that people can get behind. Then, they have to put a team in place that includes great managers."
As usual, we came to no real consensus. Still, we agreed that the CEO can make an enormous difference and should be rewarded handsomely when that difference goes to the good.
My goodness, I have a lot of friends who aren’t going to like this piece. I’ve moved far to the right of "Occupy Retail." But there are individuals with the rare vision and talent to infuse a company with greatness. If you’re lucky enough to work for one, don’t try to be one. Just enjoy him or her. And reap the rewards from success.
Are CEOs more or less important to retailing success today than in recent years? How justified is the high pay awarded to top-paid retail CEOs in light of the average worker’s compensation?