Gambling CEO Style: Always All-In

Gambling is a popular metaphor among CEOs—"doubling down” and all that stuff. So let’s use it to consider the compensation of those CEOs who gamble with their bonuses.

First, CEOs gamble with other people’s money. This is nice work, if you can get it.

Second, CEO gamblers collect, not when they win, but when they appear to be winning. Since it takes time to know a winning hand, the CEO gamblers usually collect in the midst of the game. This is like taking the pot with a couple of aces on the table, while the rest of the hand remains closed. Poker players call this kind of thing a semi-bluff. No semi for these CEOs! Just make sure that the best cards shown.

Third, CEO gamblers also collect when they lose. This, I assure you, does not happen in real gambling, which has yet to adopt golden parachutes. If it did, the real gamblers would be all-in all the time—every single chip. Just like those CEOs who casually bet their companies.

Fourth, some CEO gamblers collect just for drawing cards. No need even to show those aces. CEOs who are not much good at managing the company can be brilliant at managing the compensation. For example, some get a bonus for signing a big acquisition, long before anyone can have any idea if it will work. (Most, by the way, don’t). Some risk-takers!

Fifth, CEO gamblers can also collect for staying at the table. This is the greatest boondoggle of them all. It’s called a “retention bonus.” Not only do these CEOs get paid for doing the job (so to speak); they also get paid for not leaving the job. Now that is really nice work, if you can get it.

Back at home, check the beds of these CEOs. You will find them rather crowded. Cozying up are the compensation consultants, who join the CEOs in screwing everyone else. And don’t forget the board directors—voyeurs in these beds—who explain that, after all, everyone else is doing the same kind of screwing. This kind of followership they call leadership.

I must add that, in one respect all of this is like real gambling: win or lose, the game is played now while the social consequences trickle in later. So, board directors,  how about this instead, no gambling involved, just a win-win for the society and the economy:

Dismiss out of hand all candidates for the CEO position who seek a compensation package that would set them apart from everyone else in the company. (You can say: “Didn’t you just give us a spiel about ‘teamwork’?”) Indeed, terminate the interview at the mere mention of the word “bonus”, definitive proof that the candidate has no concern for the company, indeed no business running a business of cooperating human beings. (“You just said that ‘Human resources are a company’s greatest asset.’”) Turn the tables upside down and strike a blow for responsible gamesmanship.

© Henry Mintzberg 2018, who gambles with a bit of his own money in www.CoachingOurselves.com. An earlier version of this appeared in the Globe & Mail (3 April 2009). Guess which one in the photo is the CEO.