The Price of Competency

There is always a price to pay, no matter what you do, what you eat or drink, what you buy, or even the distance that you walk. 

Yes. 

Even the distance that you walk could be computed into simple dollars and cents by the meter. Such as the deterioration or depreciation of the Nike sneakers that you wear, the water moisture and energy expended on such an endeavor, and the cost of replenishing it could all be calculated and be slapped with a price tag. Humans have became such economic creatures that we have started to calculate the intrinsic value and cost of whatever we do in order to place a proper price tag for the jobs we do, food we eat, time spent in the toilet and even the cost of making a pass at the babe across the street. All for the sake of efficiency and cost effectiveness, such is a phenomenon that we could not avoid. 

Even when I was a production planner back in my previous company, the process engineers that I work with, would tirelessly attempt to create ever more efficient production layouts, system designs, and even  new walkways just so to ever decrease the time spent by the operator to walk to the toilet and back from the production floor. Everything has a price to them, something which I have seen magnified by the most inane proportions by such companies. Even to me, the cost of hiring those process engineers for the sake of redesigning walkways, production floor layouts and making suggestions to acquire newer machines simply outweigh the small savings that the company could possibly make from such implementations.

Who implements them you might ask?

In any of such scenarios, the management would have the ultimate decision to implement any of the above said changes. Therefore, the capability of the management to know what is presented before them, to be able to recognize and properly access any of the proposals submitted to them are thus important in the implementation of any policies. Otherwise, it would result in flawed policies, and in turn result in increased costs, and therefore loss of revenue for the company. Depending on the impact of the implemented policy, it could result in perhaps nothing more than arrears of more than a few thousand dollars in the balance for the company, which the accountant would probably dismiss as calculation variables, or more drastically, resulting in the redlining of the company’s profits, resulting in major restructuring of the said company’s policies.

What is the price tag for these people in management positions to make such decisions then? 

Our tendency to put a value on every single activity in the bid to reduce cost and increase effectiveness (productivity you might call it), has to be balanced by capable leadership. And even such leadership comes at a definite price, the average CEO of a Standard & Poor’s 500 company, they received $14.78 million in total compensation for the year of 2006. Yet, question that begs us is, are they truly worth that amount of humongous payout year after year? Do all of them make ingenious strategies every year that allows their respective companies to make another record profit making year? Even as we look at Forbes ranking for most efficient of CEOs in comparison to their pay scales, for the fiscal year of 2006, the most efficient CEO John Bucksbaum of General Growth Prop earns a measly 0.23 million, 491st on the money list, while Lawrence Montgomery of Kohl’s earn 10.05 million, 141st on the money list, while languishing at the bottom of the efficiency charts. 

What does all this tell us?

A standard simply do not exist on the proper valuation of leadership competency. As we have seen in the example which I have listed above, even as we try to put a value on the ability of a person to head a company, one could still pay a humongous sum of money to attract top talents or supposed competent figures to do a job, yet, one could still find themselves ended up with monkeys. 

There are simply too many factors to relate to the computation and calculation of the proper remuneration for competency at management levels. It could base on the company’s directors valuation of their CEO, the company’s profit margin, share value, productivity, administrative efficiency, relationship to the board of directors, approval ratings, and so on. We could try to focus on a single aspect of job valuation based on the company’s valuation and shareholder returns for that company, to rate the leadership performance of the captain. Yet, while this might be applicable in a dedicated business on creating wealth, would this model be equally applicable to other organizations where leaders requiring a uniquely different set of qualities are needed to man the helm? 

Indeed, it is question that could continue to beguile us all for many years to come. Try as we might while we continue to solve the world’s mysteries and its many wonders. Sometimes, it is the very solutions that we created, that heap more problems on our common sensibilities. Till the next time.

Advertisements

~ by azmodeus on April 9, 2007.

3 Responses to “The Price of Competency”

  1. Hey azmodeus, one of your previous article – Of Compassion, Charities and Governance caught my attention, and i was wondering if u would allow me to use part of your 5th paragraph for part of my Junior college Project Work on how the media affects fund raising.

    I’m hoping that you will contact me to clarify some questions i have such as if your post is based upon harder facts/personal feelings or if u have any means of substantiating your comments (eg. Degree in sociology etc :P)

    PS. Sorry for posting here since i cant find any means of contacting you personally and thought posting in a more recent post would get your attention more quickly.

    PSS. Help out a desperate sg student please? >.<

  2. Jianyang,

    I do not have any issues with you using the paragraph for your project work, of course, as long as its meaning isn’t taken out of context to illustrate other subjects of non-relevance.

    You may contact me at ydnamil@hotmail.com

    Regards,
    Azmodeus

  3. Somehow i missed the point. Probably lost in translation 🙂 Anyway … nice blog to visit.

    cheers, Prominent!!!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: