WEDNESDAY, JANUARY 4, 2012
Is Management Getting Worse?
To some readers, the answer to the headline may seem obvious: Yes, American management is clearly worse than it was, say, thirty or fifty years ago, because short-termism is endemic among public companies, and short-termism leads to all sorts of bad outcomes, like underinvestment and accounting gaming.
But that analysis is simplistic. Short-termism simply shows that management has adopted good for them, bad for pretty much everyone else (save maybe their bankster allies) goals and are pursuing them aggressively.
A comment by John Kay of the Financial Times has the effect of raising much more fundamental questions about the caliber of top managers. Forgive me by starting with a personal anecdote. When I was at McKinsey in the early 1980s, one of my clients was then then Citibank. The partner on the account asked me to get the organization charts of the major investment banks (commercial banks in those days were desperate to become investment banks and not very good at most of the investment banking businesses they could participate in, like M&A and private placements).
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