A few years ago I was discussing insane CEO salaries with a colleague. I wondered why it could possibly be necessary to pay them so much. Does the CEO really make that much difference? If they paid me 10% of what they pay the CEO, wouldn't the company run about as well? I mean, the CEO doesn't do it him/her/itself — there's a whole organization going about its business, and I could just step in and say, “Yes, carry on as you have been, you're all doing a fine job,” and then collect my million or two while I handle the job mechanically.
My colleague said, “So what you're asking is whether leadership works. It does.” And, indeed, there's been a lot written about that, about effective (and ineffective) leadership. And I've been a manager, and I know that one's leadership style can affect things. But it's hard to get one's head around how much of a difference it can make, really. And then, two summers ago, I got a first-hand example.
Two summers ago, I enrolled in a one-day class at the Culinary Institute of America, what we locally call “The CIA” with a nudge and a wink. The class was about cooking with garlic. It started with a lecture about garlic (details about the plant, the different kinds of garlic, things to do and not to do when cooking with it), after which the instructor presented the menu — everything from appetizer to dessert made with garlic — and we split into groups and went into the kitchen to cook.
As the chef was going over the menu, two women sitting near me said they wanted to do the garlic sausage. So did I, so I suggested joining them, and we had our team — the guy sitting behind them joined us also, later. The chef started going around the room asking teams which dish they wanted to sign up for, and as he hit the first team I heard others talking about the sausage. So as soon as the first team had signed up for their stuff, I just piped up and said, “Jane and Sally and I will do the sausage.” That worked fine, and the other group in the back renegotiated amongst themselves.
After we got the “intro to the kitchen” briefing we were left with our pile of ingredients and our recipe, and we were set to make our sausage. And there we were, the four of us, standing there. Looking at the meat and the garlic and the casings, and so on. Standing. And looking.
And then I said, “OK, I'll chop the garlic. Jane, why don't you [do this], and Sally, you [do that]? And Bill, would you [do the other thing]?” As I picked up the knife to start my task, the others all instantly went about theirs, happy that someone had taken the initiative and gotten us started. It hadn't been a question of what to do — we all knew that, and we had ingredients and a recipe staring back at us. It had been a question of organization. Who would do what, what would get done first, how would we go about it? It had been a question of leadership.
A minor case, to be sure. No doubt, if no one had said anything, someone would have started a task soon enough, and we'd have gotten ourselves rolling anyway. But having someone in charge, even in such an informal way, did help the process. It got us going quickly. It kept us focused and gave us direction. It even provided a place to go for decisions: at one point, one of the women (I forget whether it was Jane or Sally, but those aren't their real names anyway) came to me and said, “Why don't we divide the meat in two, and spice them differently?” “That sounds like a great idea to me! What do the rest of you think?”, I said. The rest agreed too, and we actually wound up doing three flavours. But as the self-appointed “manager”, I was where she went with her suggestion.
How does that relate to the original question? In the class, we had no organization but in a company with a new CEO the rest of the organization is still in place and working. Nevertheless, there'll be a time when assignments have to be given, new direction needs to be set, decisions must be made, for which the existing organization isn't set up. Yes, it can run for a while on the status quo. Eventually, though, CEO Leiba would have to stop playing World of Warcraft and start earning his two million.
And that's when we'd find out why they're better off paying ten times as much to someone who knows what she's doing.
Oh, and everyone loved the sausage. Everyone loved pretty much everything, in fact, except that the garlic fudge was pretty odd and didn't set right.
 I meant for “insane”, here, to modify “salaries”, not “CEO”. Stop that!