Fix America, One Termination At a Time

“What is the hallmark of exceptional CEO performance? Quite simply, it is the returns for the shareholders of that company over the long term.”

That question and answer are from the book flap of William Thorndike’s The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success.  Thorndike makes the data-driven case that any CEO worth one’s salt is constantly thinking of maximizing shareholder value; however, the book was published in 2012 and, since then, Thorndike’s thesis and the word “employer”—to name just one—have been perverted, diluted, or dismissed.  “Employer” implies that just one person is running the show or that there’s mission alignment among that person (the CEO), the entry-level employee, and everyone in between, but this is not the case for most companies; if it were, Thorndike’s eight CEOs wouldn’t be outsiders.

It’s no reach to claim that our country is often at odds with our government, despite the pervasive myth that our country is our government.  No, they are not the same.  Similarly, a company’s ‘government’—human resources—is often at odds with its company.  Again, the business of CEOs is business—maximizing shareholder value—but for the vast majority of companies, the business of HR has degenerated into activism, which degrades shareholder value.  This theory is bolstered by the following Bloomberg headline, the article of which centers on HR recruiters bragging about their racist hiring practices:

Is it in shareholders’ best interest to have their company susceptible to class-action lawsuits?  Is it in shareholders’ best interest to ensure that their companies are teeming with the most talented?  By way of a sports analogy, John Tamny recently answered the latter.  When National Football League recruiters visit colleges, what are they looking for?  Answer: the best. 

In the NFL, it doesn’t matter where you come from so long as you can play… A merit-based system means [scouts] don’t discriminate. Nor can they discriminate.

And why can’t they racially discriminate?  Because their continued employment—and their team’s success—requires the absence of such backward nonsense.  Regarding the Bloomberg article, it should be obvious that those interviewed for it have anything but “maximize shareholder value” top of mind.  Imagine if it were reworded to “Corporate America Promised to Hire a Lot Fewer White People.”  Where’s the outrage—not just from the ‘colorless’ but especially from the ‘colorful’ who’ve been implicitly told that not only are their talents subordinate to their skin color but that the only way to land a job is if it’s given to them?

Those who are more concerned with playing political games than maximizing shareholder value pat themselves on the back for their overt racism/value destruction.  It’s as if they’re telling their CEO, “I’m actively undermining you.”  The basketball scout who promises to recruit short white players will soon be scouting for a new job.  Talent just is, and it’s recruiters’ job to find it, regardless of one’s skin color.  “You’ve been the most valuable player for the past two years, but what are your thoughts on diversity?” asked no sports recruiter ever.  More talent leads to more success—in business and in sports—so it seems that HR and especially the U.S. military have much to learn from professional sports.

Back to the business world, what exactly is talent?  Elon Musk has made this clear, and as Jeffrey Tucker describes, “talent” is an employee who is excellent, necessary, and trustworthy (emphasis added):

When [Musk] first came to Twitter, he fired 3 out of 5 employees within a few weeks. Operating based on instinct, his goal was to toss out anyone whose work consists of overseeing others, scheduling meetings, and otherwise preening around as someone in charge. Whole teams were tossed out. His next level of fires consisted of those whose job was entirely made up and had nothing to do with the business goal… Excellent, Necessary, and Trustworthy. Those are the standards for every organization, corporate, nonprofit, and government. This is the way to fix the world, one termination at a time.

Do you excel at what you do?  Is your excellence necessary for the company’s flourishing?  Can you be trusted to not just do your job well but to treat the company as your own?  Talent answers “yes” without hesitation to all three questions.  Talent is on board with the business goal before being onboarded.  What a glorious job it would be to ‘Musk-ify’ companies and bureaucracies nationwide and around the world. Better yet, imagine if all CEOs purged their companies of those who obstruct the shareholder-first approach so that the glorious job wouldn’t be necessary.  Vapid squealing about diversity, equity, inclusion, or whatever doesn’t paper over the slow-burn demolition foisted on the economy/the people.  The sooner that CEOs reject the popular but racist trend, the sooner that everyone will benefit, as maximizing shareholder value leads to maximizing standards of living for all.