CEOs

Thousands of CEOs admit that nothing is changing (yet). The productivity paradox of the 80s resurfaces with force

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AI will make us more productive, the studies said and AI advocates. It is a discourse that is already well known and seemed reasonable: models allow us to automate routine tasks and use that time on other productive things, right? Well, the truth is, (at the moment) no. And what is happening is curiously the same thing that happened 40 years ago. The productivity paradox. In 1987 the economist and Nobel Prize winner Robert Solow realized of a singular paradox in the so-called “information age”. The transistors, microprocessors, and integrated circuits discovered in the 1960s were supposed to revolutionize businesses and dramatically increase productivity. What happened was just the opposite. Productivity growth did not accelerate, but rather slowed down: between 1948 and 1973 it was 2.9%, but since 1973 that growth was only 1.1%. So much chip for nothing? It seemed that way, at least those first few years. History repeats itself: AI is of little use. As they point out in Fortunethat paradox has resurfaced just now that we are suffering exactly the same thing with AI. A new study published by the National Bureau of Economic Research (NBER) reveals a striking conclusion after surveying no less than 6,000 CEOs, CFOs and other managers from several countries: they see very little impact of AI on their real operations. AI is not changing anything. Although two-thirds of the managers surveyed indicated that they used AI in their processes, this use was very limited: about 1.5 hours per week. 25% of participants indicated that they did not use AI at all at work. Nearly 90% of the companies that participated highlighted that AI has not influenced their hiring or productivity in the last three years. But they are optimistic. The use of AI by these executives appears to be very limited at the moment, but those same companies are still waiting for a substantial impact. In fact, they expect productivity to increase by 1.4% in the next three years. Another paradox: these first years AI was supposed to cut hiring by 0.7%, but respondents revealed a 0.5% increase in those hiring. The data confirm that at the moment, little. The truth is that the vaunted AI revolution has still not become a reality, at least in terms of productivity and economic return. Economist Torsten Slok recently indicated that “AI is everywhere except in macroeconomic data: you don’t see it in employment, productivity or inflation data.” His thesis: the impact of AI is currently almost zero. In fact, except in the case of technology’s “Magnificent Seven,” there are no signs of profit margins or revenue expectations. But these revolutions take time. The revolution that semiconductors brought us took a while to crystallize, but it ended up doing so: in the 1990s and 2000s were produced productivity improvements such as an increase of 1.5% between 1995 and 2005. There are experts who they point because in fact this change in trend has already begun to occur: in the US, GDP in the fourth quarter grew by 3.7% despite the fact that there were job cuts. That points to an increase in productivity. Slok also pointed to this possibility, and theorized that the impact could end up having a “J” shape, first slowing down and then exploding. Let them tell the steam engine. Previous industrial revolutions, such as the one that produced the steam engine or, even more importantly, electricity, took their time. The initial delay disappeared over the course of subsequent decades because these technologies needed time to spread to the rest of the productive sectors. Excessive optimism does not help, of course, and at the moment what is reasonable seems to lie somewhere in between: neither “AI is useless” nor “AI will do everything for us.” Perhaps the only thing AI needs—in addition to improving—is for us to give time to time. It is not in vain that many describe it as “the new electricity.” Image | The Standing Desk In Xataka | Until now “software was eating the world.” Now AI is eating software

Broadcom CEO’s message to his employees before firing half

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Silicon Valley is immersed in a profound transformation in which it has happened to have offices full of slidesarcade machines and free food at all hours, to force their engineers to work 92 hour work week and fire them when the financial results are not what investors expected. In this transformation, an executive has emerged as an example of efficiency for the elite of Silicon Valley startup founders and CEOs: Hock Tan, CEO of Broadcom. Hock Tan and efficiency capitalism. As and how did he count The InformationBroadcom has radically changed its strategy under Hock Tan. According to Kenneth Hao, Silver Lake CEO and director of Broadcom, Tan’s management success comes from his “focus on basic principles that do not come from conventional wisdom. Not copying others.” His management has become synonymous with extreme efficiency and obsession with profitabilityto the point of eliminating any company welfare policy if it does not provide financial value to the company. The most notable example is what happened after the acquisition of VMware in late 2023. The first meeting already set the tone. Just as I collected The Information in his article, shortly after close the purchase of VMware for about $69 billion in December 2023, Tan organized a meeting with his new employees to explain his plans. When asked if they would maintain staff benefits offered by VMWare, such as daycare, couples therapy services, wellness bonuses of up to $1,000, or all-day coffee and meal service, Tan responded bluntly: “Why would I do something like that? I’m not your dad.” That response was not a simple comment, it was the first warning that the management philosophy was going to completely change under Broadcom. Layoffs and downsizing. Just like collected Business Insiderthe cuts began almost immediately. In the first days after the acquisition, about 1,300 workers were laid off in California alone, and over time VMware’s workforce went from about 38,000 initial people to about 16,000 employees. Broadcom has defined these layoffs as part of its strategy to eliminate duplication, reduce intermediate layers and focus on the areas of greatest financial impact. Furthermore, among their demands was also that of return to the offices. Only the turtles were saved from the campus. A similar fate befell the VMware campus in Palo Alto, a space famous for its gardens, open areas, ponds with turtles, outdoor amphitheaters and services designed for the daily well-being of employees. After the arrival of Broadcom, most of those spaces disappeared. Of the 18 buildings that made up it, all but five were sold, all garden surfaces, all additional services and even cafeterias were eliminated. Tan has skyrocketed profitability…and his bonus. After the purchase of VMWare, Broadcom’s revenues skyrocketed because the reorganization was not limited to personnel. Broadcom too modified the product catalog and VMware prices, which is reflected in an increase in 20% on company income. Since 2018, Broadcom’s share price has increased by 1,800%. This commitment to efficiency in its annual turnover has a very well-defined reason for Tan. Its good financial results have led it to achieve some of the biggest bonuses that have been paid to a CEO, receiving 161.74 million dollars in 2023. In September, the board of directors In addition, part of Tan’s salary is given in the form of shareswith which the manager already accumulates more than 1.2 million shares of Broadcom with a value of approximately 492 million dollars. In Xataka | We knew that the CEOs of large companies were very well paid. What we didn’t know was how much their salary had been raised. Image | VMware, Wikimedia Commons (Greg Bezat)

Professional CEOs are a species in extinction. Who tries it does not repeat

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“CEO is sought for a large company. Leadership capacity is valued and being able to work under pressure. Salary above the average.” If vacancies for the positions of the executive director of the large companies will be announced Like the rest of the positionsthey would probably be something similar to this. However, there are less and less “ceos to serir”, as they defined them In an article of The Wall Street Journal Two decades ago, referring to a lineage of executive directors capable of Change company Every four years, and even sector. The important thing is to direct. What does not matter so much. Ceos for everything. There was a time when the executive directors jumped from one company to another every four or five years. It was almost a mythical figure in the halls of global capitalism. These leaders, known as CEO in seriesthey were sought to lead deep transformations, implement aggressive cuts or save drifting companies. However, that figure is running out of generational relief. However, there are still some managers that fit into the classification of CEOs in series. Names like Luca de Meowho was head of Fiat and Alfa Romeo before becoming CEO of Renault, and is now emerging to lead the transformation of Kering, luxury fashion holding that markets marks such as Gucci, Balenciaga or Boucheron. Brian Niccolcurrent CEO of Starbucks, which had previously directed Chipotle and Taco Bell. Be CEO. Instead, such and as he points out he Financial Timesthe predominant model is the “One and Done”, in which many executive directors choose to occupy that position only once in their career, exhausted by pressure, extreme public exposure and wear that implies exercising the leadership of a large company today. The CEO of a British company quoted in the stock market reflected this feeling by declaring the Financial Times: “After this work, I will have finished. It is very rewarding, but it leaves you exhausted. I will never occupy the position of executive director ever again.” According to data From Russell Reynolds, in 2024 there were 220 changes in the dome of large companies in the main 13 global markets. Of these, in 187 cases (85%) were appointments of people who assumed the position of CEO for the first time. This phenomenon has accelerated since 2018 and highlights a substantial change in the criteria of choice of new CEO. As Laura Sanderson, director at Russell Reynolds, explains, “the decline of the CEO in series probably reflects the nature of the current position. It is high pressure, high risk and is very exposed. The path to a retirement with the intact reputation is complicated and, for many leaders, a single experience like CEO is sufficient.” Chiefs of the quarry. Given the shortage of profiles experienced in the direction of large companies, many companies have begun to invest in their internal talent quarries. He Ascent from other high positions of management as directors of operations, financial directors or area leaders has become a usual formula to ensure a less traumatic relief because Who ascends already knows the company. However, it is no longer enough to know the company and the sector in which it moves, but as it summarizes A study From Miltown Partners and The Chief of Staff Association, “today’s leaders have become executive directors who do everything, everywhere and at the same time.” The position now also requires other skills that the quarry managers cannot always offer: the advance of AI, the constant pressure of the shareholders, the political and cultural atmosphere. Any phrase out of place can become A reputational crisis for the company and even at a real risk for the manager, which can become target of attacks as was the case of the executive director of United Healthcare More difficult, more salary. The increase in the requirement of responsibility for executive directors has also been accompanied by A salary increase equivalent. He Average salary of the CEOs Of the large US companies reached 30.9 million dollars in 2024, which means “more than one fifth part of the average salary of 2023”, according to Indicates the study Made by Equila and Associated Press. However, neither money nor The extraordinary benefits have managed to stop the Trend to abandonment of the management positions. It is increasingly common for candidates to reject these positions if other companies have already directed before or if the conditions seem especially demanding. Power wears. Faced with this continuous stress situation suffered by the company’s first representative, a new form of early retirement is being imposed: that of the “portfolio race”. With this new modality, the Executive takes a step to the side as a visible face of the company, but remain linked to it taking advantage of its experience as an advisor or defending the interests of the company participating in the board of directors of third parties. An example would be Noel Quinn, who, after a prolific Race at the head of the Swiss Bank HSBChe decided to retire in 2024: “Now is the right time to achieve a better balance between my personal and business life,” explained after Assume the presidency of the Swiss bank Julius Baer. In Xataka | The best paid CEOs of the technology industry, gathered in a simple graphic Image | Wikimedia Commons (Alejandro Migl), Flickr (ACC District), Unspash (Pablo Varela)

A list of the best paid CEOs leaves us a figure of how the salary of managers has risen since 1978: 1,085%

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The Wall Street Journal publishedThe list of the best paid CEOs of 2024. The list itself already presented some curiosities. For example, the fact that, surprisingly, CEO of great technology that accumulate stock capitations Superior to the GDP of some countries, they are not found in the top positions of this list. However, its publication has put the table on the table Huge salary difference which exists between the figure of the company’s executive director and the average salary of its employees. A study of Economic Policy Institute He has investigated The evolution of this difference and has discovered that, since 1978, CEO wages have increased 1,085%. He Salary of its employeeson the other hand, it has only done so by a fraction of that percentage. The CEO who won the most in 2024. According to the list published by The Wall Street Journal Based on public remuneration data of the companies of the S&P 500, the best paid executive in 2024 was Rick Smith, CEO of Axon Enterprise that bases their business on the manufacture of electricity weapons of defense or taser. Smith received no less than 164.53 million dollars in 2023. Just behind, we find some old acquaintances of this type of listings. Lawrence Cup, as CEO of General Electric pocketed 88.95 million, or Stephen Schwarzman, CEO of Blackstone that received a bonus of 84 million dollars. To find What some of the technological CEOs chargedwe must go down to the fourth place that Tim Cook occupies after receiving a salary bonus of 74.61 million dollars. Rico worker, poor worker. Beyond the salary that each company wants assign its managers For the achievements, there is the background of the salary gap between the managers of those companies and their employees. In this case we are not talking about a senior manager should charge the same as its employees, but, proportionally, the remuneration of managers have increased to a greater extent among members of the board of directors than among their workers. In your report, The researchersof the Economic Policy Institute They point out that between 1978 and 2023, the executive directors of the main companies of the S&P500 have increased their remuneration by 1089%, while the average salary of their employees has done so in 24%. Exponential growth from 90s. The data reflects that the increase in these remuneration to managers has not been linear and progressive, but shot between 90 and 2000, remaining at those levels since then. Putting the focus between the salary of the CEO and the salary average of its employees, between 1964 and 1978 an executive director charged between 15.4 and 23 times the salary of its employees. On the other hand, between 1978 and 1990 that figure amounted up to 44.9 times and, from 1995, that figure is triggered until reaching levels of 398 times the salary of its employees reached in 2000. Since then, the successive economic and financial crises have made me make that That figure oscillates between 330.2 times and 190.6 times higher than the average salary of its employees. The elite inside the elite. This increase has not only occurred among the general labor mass of the workforce, but the CEOs have become a kind of elite among the elite. The study analyzes the evolution of CEO remuneration With respect to salaries of 0.1% that charges the most in companies, and here they have also marked differences following the same pattern as with the rest of the workforce. Between 1964 and 1990, the CEO charged between 2.6 and 3.1 times more than 0.1% of better paid employees of its workforce. However, from the 90s that difference is triggered until reaching 9.2 times in the 2000s, and reaching 9.4 times the salary of the best paid employees registered in 2021. What counts is your influence. The authors of the study suggest that the astronomical salary increase of the CEO is not due to their worth making business decisions, but responds to a consideration for the weight of the manager on the Board of Directors. How much greater is its influence And power at that board is its salary. “There should be meetings of the Board of Directors where people ask: ‘Can we afford to pay less to our executive director?’ assuredto The Washington PostDean Baker, co -founder of the Institute in charge of the report. An example: Elon Musk in Tesla and his enormous capacity to influence a board of directors formed by personal friends, former collaborators and even his brother Kimbal. Thanks to this ability to influence the Board of Directors, the CEO can negotiate more generous remuneration than when they submit to the scrutiny of people without direct linking. According to the authors of the study, this capacity for influence may have made the CEO establish salary increases for faster managers, “concentrating income in the highest and leaving less profits for common workers.” A salary detached from the results. At this point, it is easy to think that this increase is due to the fact that the CEO of those companies They have been geniuses that have taken companies to their best historical dimensions and that is why they are rewarded. However, the data They tell us something else And the researchers confirm “the salary increase of executive directors does not reflect an increase in the value of skills or in the contributions to the productivity of companies,” says the EPI report. In 2024, for example, the best paid manager was Hock Tan, CEO of Broadcom, with 161.74 million dollars. The Board of Directors justified its salary bonus because the company had managed to double its stock market value. However, Badrinarayanan Kothandaraman, executive director of Enfase Energy, received compensation of $ 19.52 million while his company left 50.1% of its value. Bag balls. To try to correct that dynamic, from the end of the 90s and 2000, many companies assigned company shares As part of the salary of its managers. The study data reveal that, in … Read more

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