n his recent book Corpocracy, Robert Monks discusses how companies today are too beholden to
making a profit—and as a result their workforces often suffer for it. He
denounces the levels of executive compensation today and calls on shareholders
to get more involved in these issues. Workforce Management New York bureau chief
Jessica Marquez recently sat down with Monks.
Workforce Management: Why should HR executives be concerned about the levels
of executive compensation?
Robert Monks: Peter Drucker used to get very impatient with me about my
talking about CEO pay. He would say, "Bob, you don’t understand the problem. The
problem is that this has destroyed the teamwork between the people coming up in
the company and the top people." HR is the place where rubber hits the road on
this.
WM: Do you think employees will start looking at executive compensation
issues when choosing where to work?
Monks: I do think companies that have employment practices that are
partnership-oriented are going to be much more attractive in terms of getting
people to work there. I think for people to go work at a place where they have
opportunity to be a partner in building something—well, that’s a very attractive
prospect. Whereas going to a place where someone clearly has an advantage over
you and he is going to be the boss over you is less attractive.
WM: Is there an opportunity for HR executives to work with shareholders?
Monks: I would hope that companies would come to a viewpoint that working
with shareholders is a very important corporate objective. For example,
Coca-Cola for years had very good HR people assigned to work with shareholders.
As a result, they have been able to get through some very difficult situations
with very little public adverse reaction to their reputation. Whereas when you
file a shareholder resolution at Exxon, you don’t get a call from someone
asking, "Can we talk about it?" You get a letter from a lawyer saying [what you
are doing] is illegal. The contrast is sharp. Having long-term informed
shareholders is in the company’s best interest.
WM: This year there have been a few shareholder proposals asking that
shareholders be more involved in companies’ succession planning. What are your
thoughts on this?
Monks: I think shareholders probably ought to have periodic access to
management to make suggestions and nominate people. But shareholders aren’t
competent to make the choice of who should be the principal executive of the
company.
WM: Public companies often complain that they can’t invest in workforce
management practices to the degree that they would like because shareholders are
pushing them for short-term results. How do you respond to that?
Monks: Forty percent of ownership of American companies is by index funds or
people who are constructively index managers but don’t want to admit it for fee
purposes. That means they are permanent shareholders. There is so much talk
about how much stock is bought and sold on a short-term basis. But for most
companies, 40 percent of their stock owners are going to be the same people in
and out, and they can very well count on that.
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