The shackled boss

24. January 2012

Date: 24-01-2012
Source: The Economist: Schumpeter

Corporate bosses are much less powerful than they used to be

EXHAUSTED after a shipwreck, the hero of “Gulliver’s Travels” wakes up on the island of Lilliput to find that he has been tied down by lots of “slender ligatures”. Gulliver is far stronger than his tiny captors; but by working together the Lilliputians subdue the giant.

The bosses who will gather in Davos on January 25th-29th are more like Gulliver than they care to imagine. They may feel big, as they hobnob with politicians and stride from one soirée to another (in sensible shoes, to avoid slipping on the Swiss resort’s icy pavements). And pundits will fret, as they always do, that Davos Men are carving up the world. But when those bosses return to work they will discover that the tiny ligatures that non-Davosites have attached to them bind ever more tightly.

Two decades ago bosses were relatively unbound. American chief executives struck heroic poses on the covers of Forbes and Fortune and appointed pliable cronies to their boards. Europeans such as Percy Barnevik, the boss of ASEA Brown Boveri, a Swedish-Swiss conglomerate, imported the American cult of the CEO to the old continent. But since then a succession of catastrophes—most notably the implosion of Enron in 2001 and the financial crisis in 2007-08—have empowered the critics of over-mighty bosses. In 2010 two legal academics, Marcel Kahan and Edward Rock, published a seminal article on “Embattled CEOs”. Since then they have become ever more embattled. Read the rest of this entry »