Scandals at companies like AIG over bonuses and some inexplicable and indefensible extravagance by executives from a company receiving $85 billion in bailout money brought the subject of executive compensation and perks to the forefront. Again. Princeton University provides a wonderful definition of profligacy that is particularly appropriate here: dissolute indulgence.

Despite the lead-in, this is not really a piece on CEO salaries, separation pay or stupid spending. Enough forests have been laid bare and countless terabytes expended on these subjects. Instead, I would like to write about those pour souls being sucked down these ethics and financial holes, caught in the swirl of all this dirty bathwater.

They are the middle managers and senior managers who execute the corporate will: department heads, directors, even vice-presidents. (Note: Some people would remove VPs from this discussion. In many ways, though, VPs do the same work as those directly below them but with an added layer of corporate responsibilities. They also have more information to keep them awake at night and more meetings to attend.)

There are a few things you have to understand about middle management.

First, they are indeed in the middle. They are the spokes of the corporate wheel. They are the messengers, bringing the news, good and bad, to and from the field. They bear the brunt of both CEO wrath and employee frustration. They have to translate corporate strategy into action, overcome internal weaknesses and face down external threats. They take their work home with them, tethered to their laptops, always on call. And they, more than anyone, pick up the slack when front line workers are let go.

Arguably, for what they do, they are hardly overpaid. Those below them in the corporate hierarchy imagine large salaries, bonuses, perks and privileges that simply do not exist. When it comes to reward, in fact, these managers are far from the middle.

How far? William J. McDonough, Chairman of the Public Company Accounting Board (a creation of the Sorbanes-Oxley Act of 2002) attacked the excesses of large company CEOs in an article on corporate greed.

In 1980, the average large-company chief executive officer made 40 times more than the average employee in his or her firm. By 2000, the multiple of the average CEO’s pay over that of the average worker in the firm had risen, according to some studies, to 400 times. “There is”, said McDonough, “no economic theory, however farfetched, which can justify such an increase. In my view, it is also grotesquely immoral.” (Note: Remember, McDonough is talking about large companies. CEOs of small to medium sized companies have more modest ambitions.)

How much of that largesse trickles down? The answer is, simply, not much. And not far. In most companies, the salary gap starts becoming pronounced at the VP level. On the other hand, says Todd Milbourn, finance professor at the Olin Business School at Washington University, “there’s still a pretty significant gap between, say, a senior vice president and a CEO”. My experience is that, in most companies, especially small and medium sized companies, VPs make something in the order of two times middle managers who, in turn make only percentage points better than the senior members of their respective staffs.

Bonuses tend to be somewhat more skewed. Perks – in my opinion, at least – are generally small potatoes, usually taxable and, anyway, beside the point.

For the increment in pay, the middle manager is also every bit as vulnerable as his employees. More so, when new management appears, either in a changing of the guard or merger / acquisition.

In the recently published The Truth About Middle Managers (Harvard Business Press), Paul Osterman, professor of human resources and management at M.I.T.’s Sloan School of Management, points out that for the last 20 years, white-collar workers and managers have been vulnerable to layoff. “What’s happened in the last six months”, he says, “is just a little more intense than what’s been going on since the mid 1980s.”

The word ‘delayering’ has entered the vocabulary as a good thing. Taking out middle managers, say the human resource gurus (if not the HR managers), streamlines the organization, enhances communications and facilitates rapid decision making. I believe it does exactly the opposite. This pendulum, swinging way to the right, has a very sharp edge indeed.

So life is increasingly difficult and the times particularly rough for middle management. It is nigh impossible to move up these days and, arguably, unwise to do so anyway. They are truly, and incorrectly, between a rock and a very hard place.

A few weeks ago, in a Marketplace Mores column, Matthew Lynn of Bloomberg News published a piece that declared, “If you want to be wealthy, it helps to be rude to people”.

He cited research conducted by the University of California, Berkeley, on students from various socio-economic backgrounds. The wealthier students tended to be more disinterested in others and less likely to engage in conversation than their less-privileged brethren. The psychologists concluded that what they were seeing was a reflection of basic animal behaviour: the higher animals are in the food chain, the stronger and fitter they are, the less they need others. “It is the experience of wealth that leads individuals to become disengaged”, observed Professor Dacher Keltner.

With this as the backdrop, Lynn then talks about CEOs, who he has found to be, often enough, an unpleasant bunch. “They bully, cajole, threaten and fume. There are very few examples of (CEOs) flattering or charming their way to the top. The accumulation of wealth requires an ability to crush rivals, stamp on employees, and sweep aside all opposition. Charm doesn’t come into it.”

I disagree. It is true that some chief executives can be… how should I put it?… determined. It is also true that some can be downright aggressive when push comes to shove. But I would argue that the ability to lay on the charm when and as required is a fundamental skill that most decent CEOs have mastered.

Engaging with others, generous listening, sending “I’m interested” signals… all enable successful leaders to enroll employees in corporate programs, secure the loyalty of customers in negotiations, create alliances, finesse bank loans, enthuse analysts, etc.

Most customers and suppliers will push back when they feel they are being bullied. Rudeness would be rebuffed vigorously. Balance of power is often established behind the scenes, while the more visible road to good intentions is being paved thickly with charm. Sometimes it works the other way around. One player is allowed to make public points if he is willing to make private concessions. There’s winning and there’s winning.

Employees are more easily cowed by authority; the fundamentals of hierarchal behaviour are well ingrained in most of us. But the true enrollment of employees, instilling real excitement, involvement and commitment, is not possible without first creating a belief in the sincerity and caring of the CEO. A ‘charming’ CEO will always get the benefit of the doubt. At least the first time.

CEOs tend to talk to other CEOs. Alliances, in theory a coming together of equals, can not be consummated if one potential partner aggressively pushes a win-lose scenario on another equally ‘determined’ chief executive. I have seen many an alliance and numerous potential acquisitions founder, not on the basis of due diligence but because of ego-driven obstinacy and the inability to finesse, i.e., charm, one’s way past clearly surmountable stumbling blocks.

By the way, if you are going to be rude, you had better be the CEO. It is a trait less tolerated by superiors, peers and staff as you work your way down the org chart. And it is one I’ve seen used as an excuse when staffing sacrifices have to be made.

In most cases, charm is a first resort, bullying the last. Power, wrapped in a smile, is almost impossible to resist. It is the ultimate expression of walking softly but carrying a big stick.

As a starting point in leading my former company’s strategic plan exercise, I laid out a series of guiding principles, along with a process which we would follow almost to the letter. Included in the set of principles were 10 for product development and portfolio management. I offer these for your edification.

1. Good marketing works best in the service of good products, like Acquisio’s ppc management software (sorry for the plug - I’m a fan!).

2. Good products beat new products. Sustainable market leadership requires equal or better products than the competition.

3. Safety lies not in products but in portfolios of products.

4. Product lines must continually evolve as the market evolves.

5. The advantage goes to first movers.

6. Innovate rather than extend. In this way, you cannibalize someone else’s product instead of your own.

7. Seek technological leadership, but never be led by technology.

8. Competition always overtakes an innovation.

9. New products should not be developed, and current products should not be maintained, unless they are financially viable.

10. Product integrity and financial viability are the direct result of good execution.

At first glance, these principles appear straightforward, almost obvious, and your company may have applied many of them intuitively. My bet, though, is that there are products or groups of products in your company’s line-up that run counter to one or more of the guidelines and that their performance has been deleteriously affected as a result.

You may know of exceptions – successful products that break the rules – but invariably these exceptions will define and ultimately corroborate the rules.

Every company is different – to a point – and every market is different, again to a point. That said, I have found, over the years, that similarities outweigh differences and that one never goes too far wrong applying basic truths and process fundamentals. I would suggest, at the very least, you think about these guidelines not just abstractly but in reference to your own company’s product offering and those of your competitors. Better still, use them as a filter to see if your company is on the right track or if you are throwing fixed and working capital at losers.