A Failure of Leadership

Excessive Salaries Have Separated Executives From Their People…The Consequences Will Be Long-Lasting

No matter what the definition, corporate leadership is all about translating bold visions into sustainable realities. In essence, business leaders are recruited–and judged–by their ability to dream big dreams and make them come true.

But contrary to what a leader’s resume’ espouses, they do not possess divine powers. As a result, all but the most self-absorbed leaders realize that it’s their job to find a way to captivate and legitimately engage others to commit their lives and spirits in hopes of reaching a new and better destination. And the bigger the leader’s dream, the more people required to get it done.

Of course, the underlying premise in of all this is, if success is achieved, all will prosper.

In essence, the corporate leadership equation is really pretty simple: vision + engagement = collective prosperity.

Theoretically speaking, of course.

The sad fact of the matter is that while much has been accomplished in corporate America in the last 30 years, the tens of millions of people who have offered up their backs and brains to make these big dreams come true have not prospered.

Consider the following:

• Since the early 1970’s, the per-capita gross domestic product has risen by some 75 percent. During the same period, the median wage of working men and women, adjusted by inflation, rose by only two cents an hour, from $15.24 to $15.26 in 2004.
• Despite the fact that worker productivity grew 65% from the mid 1970’s to 2004, one in four American workers in 2004 were earning less than $18,800 per year.
• In 1970, the average total compensation (in 1998 dollars) for the CEO of a Fortune 500 company was $1.3 million. This was 39 times that of the typical worker’s compensation at the time. In 2000, the average CEO was pocketing $10.8 million per year, more than 400 times what the front-line worker was earning.
• During the 1990’s, CEO pay increased by 571 percent while the average worker’s pay grew by 37 percent.
• A typical Fortune 500 CEO makes more in one day than what a rank and file worker makes in a year.

And this reality is not going unnoticed.

• A recent survey revealed that only 59% of human resource professionals were somewhat or very confident that their senior managers made decisions in the best interest of their employees; when asked if senior management made decisions in the best interest of shareholders or owners, 84% were somewhat or very confident in that score.

Today, we have more talented CEO’s in leadership than perhaps any other time in human history. These talented apex predators are dreaming big dreams and getting things done. In fact, the accomplishments that have been achieved in the last decade alone are absolutely breathtaking. There’s little question that today’s business Barons get high marks in the vision and outcomes categories.

But when it comes to effectively engaging and rewarding the millions of rank and file workers who are helping to make these big dreams come true, there is a major disconnect.

History is replete with tales of the disastrous consequences that occur when leaders can no longer identify with their people. If you look at the compensation gap that presently exists in much of corporate America, one has to wonder whether we are experiencing a failure of leadership.

We can–and must–do better.

Yours in good health,

Dr. David Hunnicutt

**The statistics in this article came from an important book which should be required reading for every corporate exec–The New American Workplace by James O’Toole and Edward E. Lawler III.

Copyright 2006, David Hunnicutt.com

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The views and perspectives presented by Dr. Hunnicutt do not necessarily represent those of WELCOA.