Rules of the game

Life's tough at the top of the ladder

The passion and the glory of the beautiful game may be an alluring combination, but the truth is that soccer managers are lasting less and less in the hot seat. Why? The pressure for success. Just like investors in the stock markets, the patience of football club chairmen, not to mention the volatile supporters, wears thin more rapidly than ever. OK, in football you are not responsible for thousands of employees and a multi-billion dollar turnover, and there's no annual shareholder meeting to worry about. Instead your performance is laid open to public scrutiny every week on the pitch. Some team managers, especially those at the top European clubs, now have stock market investors who need to be kept happy. And the parallels between football managers and CEOs don't end there.

Life's tough at the top of the corporate ladder. No, really. Forget the six-figure salary, the chauffeur-driven cars, the beautiful offices and the golden parachute. Just as with the stars of soccer management, the stars of the corporate arena are lasting less and less in the top job. 

Is this a good thing, showing how mature capital markets are now unwilling to tolerate poor management? Or does it signal a market gone mad, as many companies fit a revolving door to the chief executive's office?

This month's cover story examines the forces at work that are leading to the term of many CEOs being measured in months, not years. But the recent spate of CEOs clearing their desks only mirrors the trend developing in other high-pressure jobs, such as football management. In short, the rules of the game, be it soccer or be it managing a multi-billion dollar conglomerate, are essentially the same.

But for many the pay-off for this increased job insecurity more than offsets the downside. Business leaders, as in professional sports, are paid better than ever and increasingly now have tasty stock option plans built into their hefty remuneration packages. The US may still be home to the exorbitant executive pay deal, but the rest of the world has been doing its damndest to catch up recently. Though European CEOs are still often poorly remunerated when compared to their American cousins, the actual level of executive pay outside the US continues to race ahead, much to the consternation of governments and the media.

Perversely, a lack of long-term stability in the corner office can be viewed as a good thing for investor relations. Now that CEOs are increasingly forced to cede to the forces of shareholder democracy, they need to keep the investors sweet. Though the best way of doing this is for the company to post impressive growth and shareholder returns, IR still has a role to play. Investors like to feel they are valued, wanted and cared for by a company. Yet PricewaterhouseCoopers finds that two-thirds of CEOs believe the investment community has little or no influence over corporate strategy. No wonder they're being axed more and more - ignoring investors does no good to a CEO's career expectancy. 

Do you feel your IR office is understaffed? Are you feeling undervalued? Then you could remind your CEO that his or her job may depend on a well funded and well supported IR department, with open communication to and from the investment community.


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