CEO Pay and Ugly Leadership

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“Beautiful Leadership is a choice, so is Ugly Leadership”

I wrote these words recently in: “Be careful of toxic language

Two days  in “Our Clarion Call to Beautiful Leaders and Makers“, I shared Alan Moore’s thoughts on Beauty in Leadership and Business, including:

“Beautiful Businesses Leaders respond to a higher order calling of service to a greater good. Their leadership is framed by values and informed by purpose.”

Yesterday someone asked me if Alan and I were reaching too high to frame up our focus as high as Beautiful Leadership. My answer was simple. “No, we can all be aspiring to be more. Lead more beautifully, build businesses that are more beautiful”.

We know beauty when we see it. We know Beautiful Leadership when we experience it.

Today an example, CEO pay levels, where current models (and they are a choice) are ugly rather than beautiful. For CEOs and other leaders reading this, I ask you to consider your choices and whether you could choose to lead more beautifully.

“A society that values its teachers, care workers and nurses at less than 1% of a FTSE CEO is beyond broken. Countries with high levels of inequality, such as the UK, have higher levels of mental and physical ill health, obesity, drug and alcohol addiction and lower levels of trust and educational attainment. To create a society where all flourish, we must tackle inequality urgently.” 

These are the words of Wanda Wyporska of the Equality Trust from their press release on “Fat Cat Friday”, Friday 4th January, 2018.

According to the Equality Trust, the gap between average worker pay and CEO pay has continued to grow and is now at 133 times average earning, hence by “Fat Cat Friday”, the third working day of the year, the average FTSE100 CEO had already earned more than the average worker.

To me, whilst I absolutely believe in business as a force for good, it feels indefensible to argue, as the Adam Smith Institute did in the BBC piece on the same day, that “Limits on executive pay would drive top British talent and companies offshore, ultimately leading to fewer jobs and lower pay for workers”

Such an argument by an institute bearing his name leans heavily on a focus of Adam Smith’s writing in “The Wealth of Nations” as a core foundation of the science of economics, that people will always act out of self-interest.

However, I argue (and this is the briefest such argument in a relatively short post) that this overriding focus in 20th and now 21st century capitalism utterly ignores his vital work in the companion piece “The Theory of Moral Sentiments”. As the Adam Smith Institute themselves state:

“Smith ends The Theory Of Moral Sentiments by defining the character of a truly virtuous person. Such a person, he suggests, would embody the qualities of prudence, justice, beneficence and self-command.

Prudence moderates the individual’s excesses and as such is important for society. It is respectable, if not endearing.

Justice limits the harm we do to others. It is essential for the continuation of social life.

Beneficence improves social life by prompting us to promote the happiness of others. It cannot be demanded from anyone, but it is always appreciated.

And self-command moderates our passions and reins in our destructive actions.”

These characteristics of a virtuous person still very much ring true for Beautiful Leadership to me.

Leadership where CEO pay keeps climbing to ever higher heights while average workers real pay has been dropping in the modern world for some time. Not beautiful. Ugly in fact.

Now, to close on a positive note, I remind you of a post I wrote around a month ago: “Beautiful Leadership – Sacha Romanovitch” and highlight from this post some words from an FT article around her departure from Grant Thornton :

“After taking the top job, she restructured the firm as a shared enterprise — a new model that meant profits are shared with all staff, not just with partners — and attempted to move it away from seeking profits at all costs in favour of “profits with purpose”.

A move that raised eyebrows among her competitors, as well as accusations of worthiness, was her capping of her own salary at 20 times that of the average worker at Grant Thornton — a precedent that was not followed elsewhere in the industry. These were profound cultural changes for an organisation that traces its roots back to the early 1900s.”

The average FTSE CEO is now paid 133 times average worker salaries.

Sacha capped her pay at 20 times that of the average worker in her firm and made many other changes to value her people financially

We know beauty when we see it, just as we know ugly when we see it.

Yes, I truly believe Beautiful Leadership is the way forward for business as a force for good.

Also published on Medium.