Greed is very bad for business

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Greedy chief executive officers (CEOs) tend to take certain risks only to advance their short-term interests without thinking about the company’s future, the studies noted.

New York: Top managers who cannot resist demanding hefty compensation even in a company’s times of stress end up harming the organisation, three new studies suggest.

Greedy chief executive officers (CEOs) tend to take certain risks only to advance their short-term interests without thinking about the company’s future, the studies noted.

Such risks may be especially prevalent among young entrepreneurs, who underestimate the resources needed to help a start-up succeed and fail to recognise that more than money is at stake.

“While financial capital is an important concern with these behaviours, the effects on human and social capital are often overlooked, despite the fact that they are highly critical for the success and ultimate survival of entrepreneurial ventures,” the researchers wrote.

They also found that some leaders are insatiable when it comes to compensation.

Why is it that in some companies there is a huge difference between the pay of the top executive and the average worker or the lowest-paid employee and in other companies the pay is a lot closer?” said one of the researchers Katalin Takacs Haynes from the University of Delaware in the US.

The recent recession left millions without jobs and many companies sinking into a sea of red. At the same time, though, stunning bonuses and other perks were landing in the laps of people at the helm.

The studies included interviews (with anonymity assured), publicly reported data, written surveys, essays, a review of published information and interviews with CEOs.

The three studies were published in the Journal of Management, the Journal of Management Studies and the Journal of Leadership.

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