American Business is Structured All Wrong

 We're doing it wrong. 

In our system, we have senior officers who too often don't deserve the multiples-higher compensation they're receiving. I've worked with my share of great senior officers, and it has been a real treat, but I've also seen many who aren't bright, aren't visionaries, aren't capable leaders, who made many avoidable mistakes, and yet were paid like they could walk on water. That is what's wrong with our system.

Meanwhile, the employees (spanning the ranks from lower level to middle management) are the lifeblood of any company. They do the real work, and like as not, the best visionary ideas come from them. But they are not compensated in line with their contributions to the company's success. 

I think changing the structure makes sense, perhaps to something like this:

1. After some "proving period" such as one year, an employee gets a significant fraction of the company's earnings each year. Shareholders and senior management should share about a third of the earnings, and the other employees should get the rest. 

2. To prevent gaming the system (goosing the earnings artificially, in order to get a bigger bonus), which is endemic in the US, maybe everyone would earn bonus compensation averaged over the past five years.

3.  Each employee's share would be a combination of their seniority (years with the company, and importance of their position) and the quality of their personal performance. 

4. No senior officer could earn total comp greater than, say, 10x the lowest employee's. (And if you argue that a company MUST pay 300x in order to attract the best CEO, I call BS on that. No CEO is worth that. Most companies would be better off just promoting within, and the right person would happily accept 10x the comp of the lowest employee.)

4. And each company should subscribe to a new code of ethics: Each company should have a fiduciary duty, first to its employees, and second to its customers, and then the shareholders come only third. This is also where we have got it all wrong. When you treat the shareholders as most-important, you necessarily mistreat your employees and customers, which is wrong any way you look at it. 

The game should not be to maximize profit while doing the minimum possible for employees and customers. The game should be providing maximum opportunities and benefits to employees and customers, thus ensuring the longevity of the business (in comparison, most businesses in the US don't last even twenty years, which is amazing given all the benefits we give to them).  If we do this, then employees would stay in their jobs and continue developing, to their and their employer's mutual benefit. There might be a few fewer yachts in the harbor, but overall society would become much more peaceful and self-sustaining.