I was reading an article in Business Week about the pressure private equity funds put now a days on CEOs (Of companies they manage). Those CEOs are under tremendous pressure to perform, financially.
This article is cover up of Citi Financial CEO quitting last week due to bad performance during recent couple of quarters, where Citi had to write off heavy funds because of American mortgage slowdown.
It might be true, perhaps. USA business is now days heavily loaded with equity fund managed companies. In India, situation is bit different, however scene is changing fast and many equity funds are coming up.
Question I have is, is it fare to pressurize to deliver more? Or it is all fare? One view point is, equity funds are also under pressure to perform and they need quick bucks as well.
Or CEOs should have free hand?
I know question is not simple, but I am still searching for answer.
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5 comments:
as far as the pressure is considered, it is more or less omnipresent these days. everybody has accepted the 'perform or perish' rule. if we consider the intensity of pressure on such a CEO , it is 'proportional' to the salary & perks given.
I might be bit apathetic to the case, but if someone opts for such a high income job, the pressure can't be avoided. after all like any other employee, a CEO should perform up to a certain minimum level in order to justify the expenses incurred by company.
Few points:
1.Performance and pressure should not be mixed up.
2.Pressure arises due to several factors like competitive rates, return on investment to the customer, profit to the own organization etc.
3.Improper planning and lack of good forecasting techniques OR bad forecasting techniques essentially start building the pressure, this eventually starts reducing your confidence since the forecasting has went wrong.
4.This pressure then converts into some on the spot decisions, hasty work, firing of people, etc, while the root cause of the problem does not get fixed.
5.The "fat salary" CEO cannot justify his perks, because the team working with him has never performed, I would suggest in such a case all the team members should receive some part of the punishment, but eventually the CEO gets fired for being "responsible",
I have read your blogs, it seems that you are a good writer. Do you write articles in business magazines? Seems that you might be working as an author/corporate communications officer. Good posts, keep it up.
There seems to be some confusion in this post, I am not trying to corelated the compensation of CEO and the pressure from job. It is there.
But PE firms are putting alltogether different kind of pressure, to make some quick bucks. I mean this pressure. A true example would be Burger King's IPO in US, it has put a lot of pressure on the CEO
(Santosh on Blogs)
I am not working as author, neither as corporate communicator, I work in a Software firm and because of my business education, I do have interest on business value of life!
Yes, I do write to business magazines.
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