💾 Archived View for gmi.noulin.net › mobileNews › 2302.gmi captured on 2022-06-11 at 23:50:10. Gemini links have been rewritten to link to archived content
⬅️ Previous capture (2021-12-03)
-=-=-=-=-=-=-
Schumpeter
Why some people have power over companies and others don t
Sep 9th 2010
HENRY KISSINGER was guilty of understatement when he said that power is the
ultimate aphrodisiac. In fact, power is the ultimate life-improver tout court.
Powerful people not only have more friends than the rest of us. They also enjoy
better health. Numerous studies demonstrate that low status is more strongly
associated with heart disease than physical hazards like obesity and high blood
pressure.
The benefits of power have grown dramatically in recent years. CEOs and other
C-suite types have seen their salaries surge at a time when the median wage has
either stagnated (in the United States) or grown slowly (in Europe).
Politicians have learned how to monetise their pull. The Clintons earned $109m
in the eight years after they left the White House. Tony Blair has turned
himself into a wealthy man in the three years since his retirement from
national politics.
But the greasy pole is getting harder to climb and, once you ve climbed it,
harder to cling on to. Companies have introduced more complicated structures
removing layers, replacing hierarchies with teams and dispersing functions
around the world. They have also made life harder for chief executives. In the
1990s it was not unusual to find CEOs who had been in the job for ten or 15
years. Over the past decade the average tenure of departing CEOs around the
world has dropped from 8.1 years to 6.3 years. In the 1990s it was the norm for
CEOs to double dip as chairmen (which allowed them to report to themselves). In
2009 less than 12% of incoming CEOs were also given the job of chairman.
So how do you get your hands on power? And how do you keep hold of it once you
ve got it? Management gurus are surprisingly disappointing on this subject
given its overwhelming importance to their clients. Academics and consultants
are happier focusing on subjects such as return on investment. Both have an
interest in presenting business as a rational enterprise that can be reduced to
rules. This leaves the analysis of power to retired businesspeople like Jack
Welch (who strive to present themselves as business geniuses rather than
Machiavellis) and practising snake-oil salesmen (who tell you that all you need
to do is unleash the power within and the CEO s job will be yours).
Jeffrey Pfeffer of Stanford Business School is an exception to this rule. He
has been teaching a popular course on paths to power for years. Now he has
condensed many of his findings into a book that is part academic analysis and
part how-to guide, Power: Why Some People Have It and Others Don t .
Mr Pfeffer starts by rubbishing the notion that the world is just that the best
way to win power is to be good at your job. The relationship between rewards
and competence is loose at best. Bob Nardelli was a disastrous CEO of Home
Depot. But he was paid nearly a quarter of a billion dollars to leave and
quickly moved to the top slot at Chrysler, which then went bankrupt. Mr Pfeffer
points out that CEOs who presided over three years of poor earnings and led
their firms into bankruptcy only faced a 50% chance of losing their jobs (and
perfectly successful senior managers are routinely cleaned out when new CEOs
take over). There are plenty of things that matter more than competence, such
as the ability to project drive and self-confidence.
The best way to increase your chances of reaching the top is to choose the
right department to join. The most powerful departments are the ones that have
produced the current big-wigs (R&D in Germany, finance in America), and the
ones that pay the most. But the trick is to find the department that is on the
rise. Robert McNamara and his fellow whizz kids flourished in post-war America
because they realised that power was shifting to finance. Zia Yusuf zoomed up
the ranks of SAP, a German software company, because he offered something that
the engineering-dominated company lacked: expertise in corporate strategy. Men
with pay-TV backgrounds have risen in media companies like News Corporation and
Time Warner rightly so, given the importance of cable and satellite TV to those
businesses.
Tips for the top
Once you have chosen the right department three things matter more than
anything else. The first is the ability to manage upwards . This means turning
yourself into a supplicant: Barack Obama asked about a third of his fellow
senators for help when he first arrived in the institution. It also means
mastering the art of flattery: Jennifer Chatman, of the University of
California, Berkeley, conducted experiments in which she tried to find a point
at which flattery became ineffective. It turned out there wasn t one. The
second is the ability to network. One of the quickest ways to the top is to
turn yourself into a node by starting an organisation or forging a link
between separate parts of a company. The third, more admirable, quality is
loyalty: Booz, a consultancy, calculates that four out of every five CEO
appointments go to insiders. Those insiders last almost two years longer in
their jobs than outsiders.
And what happens if all this loyalty and networking pays off? How do you keep
power once you win it? The old saw about power corrupting has been laboriously
confirmed by academic studies of everything from risk-taking to cookie-eating
(powerful people are more likely to eat with their mouths open and to scatter
crumbs over their faces). The key to keeping power is to understand its
corrupting effects. Powerful people need to cultivate a combination of paranoia
and humility paranoia about how much other people want them out and humility
about their own replaceability. They also need to know when to quit. People who
do not know when to leave an organisation frequently crash and burn. People who
jump before they are pushed have a good chance of leaping to yet another
aphrodisiacal throne.
Correction: an earlier version of this article referred to Booz by its old
name, Booz Allen. Sorry. This was corrected on September 13th.