atans1

Ministers’ salary benchmark is flawed

In Corporate governance, Political governance, Public Administration on 07/12/2015 at 1:53 pm

So what value the link?

Below is the Letter from Lex of two Saturday’s ago. It’s another nail in coffin of the argument that our ministers and senior civil servants deserve their multi-million salaries which are benchmarked against the private sector. The pay structure at the top of the private sector is flawed, badly flawed.

Letter from Lex: Let’s spin the wheel!
Readers,
It may indeed be better to be lucky than good; don’t assume you can tell the two apart. There is a good-sized pile of academic research devoted to determining what part of corporate success (measured by return on capital, margins, or what you will) is down to the skill of the boss. Social scientists and statisticians stagger towards consensus along a twisting path. Most of the studies do, however, seem to converge on a couple of points: (a) management skill is a wickedly slippery thing to measure and explain, yet (b) skill seems to make a small but significant difference to performance on the margin, although (c) luck plays much bigger role most of the time. Raising these points often elicits one of two responses. The first: “You damn pinko academics/journalists hate capitalism and will say anything to undermine it.” Alternately: “Anyone who has actually worked in a big company knows that a CEO is a dart-throwing chimp whose characteristic skills are climbing the greasy pole and looking good in a suit.”

Both responses may contain elements of truth. In any case, this week gave the Lex column various reasons to reflect on luck, skill and the grey abyss in between:

Emphasis mine.

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