Dilbert and mental models

An excellent post on the Dilbert blog. The post (here) is a message to all company Boards that they should look for a CEO every two years such that they might get someone equally qualified, but cheaper. Dont miss out some of the comments given in the link.

Some observations from a Board member's point of view -

1. Lower the cost, lower the quality
"This may not be true for lower or middle management but should be true for the top management. A person who comes cheap, shows a lower status in front of the Board."

2. CEO compensation follows the return-risk function.
"No, not the 'higher the risk, higher the return' model ... but the 'higher the return, lower the risk' paradigm (see my post here). Thus, a CEO who gets a higher compensation will ensure that business risks never exceed an acceptable range. (probably)"

3. The Board doesnt want to be the fall guy
"If an inexpensive CEO is recruited by the Board (over an expensive one) and this CEO falls to deliver .. the Board will face the music. The allegation will be that the board tried to penny-pinch, while a few more dollars wouldnt have much difference to the profits of the company."

4. The league
"The Board consists of presidents and CEOs of multi-million corporations. They would prefer candidates who earn close to their compensation irrespective of the quality."

Ah .. too much rambling .. I'm off to sleep now !