There’s a Timely Lesson in Scrooge’s Tale

This is the season when we hear again the tale of Ebenezer Scrooge, businessman, the featured character in Charles Dickens’ “A Christmas Carol” and a cautionary figure for business people everywhere.

Although few in American business believe that they have anything in common with Dickens’ symbol of cold avarice--much less anything to learn from Scrooge’s example--they might think again.

Scrooge, after all, ran a company: a warehouse business in 1843 London, when that great city was bustling with commerce from the colonies and finance for Britain’s industry--which then led the world.

But Dickens did not paint a picture of success. Rather, he gave us a lasting portrait of a man rich in money but sadly wanting in vision.

Which could be instructive because today American business people are rich in money. U.S. top executives are the best paid in the world, says Towers Perrin, a management consulting firm that annually charts the pay and incentive bonuses of chief executives and financial officers of medium to large companies--$250 million or more in sales--in 20 countries.

This year U.S. executives again rank first, thanks especially to stock options and bonuses designed to encourage managers to think more of the future of the business than of current earnings and the stock price. U.S. chief executives averaged $543,000 this year--54% more than the $352,000 earned by a similar Japanese executive, 90% more than the $287,000 earned by a German or British executive and more than four times the $130,000 compensation of a Korean executive.

And you do not have to hold the highest office to make a good living in U.S. business. Lester Korn, co-founder and chairman of Korn/Ferry International, an executive search firm, says a survey of 1,300 executives--excluding the top officers--showed U.S. managers making an average of $250,000 a year. “And the top 150 CEOs make $1.5 million to $2 million apiece,” says Korn. “That’s a lot of money.”

But whether it is accompanied by vision, commercial daring and imagination is another question. And make no mistake, the answer means something to everyone, file clerk or foreman. Because successful ventures by U.S. companies create opportunities for all, the way leading business people do their jobs has a ripple effect on the standard of living.

Which makes it all the sadder that the incentive bonuses do not seem to be working. When Korn traveled the world recently as a U.S. envoy to the United Nations, what he saw worried him. He saw, for example, that the car market in India--which already buys more cars than France--is totally dominated by Japanese car makers.

Where were the American car makers? Korn asked himself. Where were the American products of any kind, from refrigerators to copiers? There are 125 million middle-class people in India--800 million total. The country is largely poor today but enormously promising tomorrow. Why did U.S. firms not risk building new markets in places like India?

Korn, 53, whose firm has recruited top executives for companies as varied as IBM, Nissan Motors and Walt Disney, blames money for making gutless wonders of U.S. business chiefs. “When you’re making $1.5 million to $2 million a year, where’s the incentive to take risks?” he asks. “I have concluded that the risk they fear is not of losing markets, but of losing their place in the sun.”

Strong words, but Korn is not alone in saying them. The uncompetitive U.S. company has become an object of ridicule in a world where others run rings around it. Scared of making a mistake, U.S. executives analyze why they should not venture forth. The financial maneuver and quick profit are preferred too often.

But why? Surprisingly, Brian Dunn, international compensation specialist for Towers Perrin, blames the incentive bonuses. “Most are stock-based,” he says, meaning that the person is rewarded, with stock, for increasing earnings and the stock price, as opposed to gaining market share or developing technology--which are criteria in Japan. “So the executives think about what will get the stock up and bring them money,” says Dunn.

In the 1980s--the “me” decade, the “greed is healthy” decade--business executives did well, as U.S. consumers and markets have been prosperous. (Executive compensation, in fact, has grown much faster than average wages for U.S. workers.)

But the world is changing. The U.S. market has attracted the whole world’s companies, and competition in the new decade will be “inordinate,” says Korn. All those foreign companies, whose managers do not make half a million a year, will be trying to take business from the rich Americans. “U.S. managers will have to think of ways to expand markets, here and abroad--in China, India, Latin America,” he says. “And their compensation should depend on how they do.”

So what is the message if you are a young Bob or Roberta Cratchit, hoping for advancement in the company? Learn geography, learn languages. Your opportunity will be international, whether it is exporting goods from these shores or developing markets overseas.

Because American companies will change in the 1990s--or die.

Which, in a way, is what the Ghosts of Christmas said to Scrooge. And their warnings opened his eyes and made him a better person--and a better businessman.