BusinessBoardsAtlantic

Fast Start — How Shareholders are Ruining American Business

Toby Elwin Blog, Fast Start, Organization Behavior

The Atlantic, shareholders ruining, american business, fast startFast Start conversation:  During the 2007 and 2008 financial crisis giant banks deemed shareholder-friendly got into even more financial trouble pleasing shareholders.

An executive at a publicly traded corporation must serve both the long-term strategic health of the corporation and maximize short-term shareholder return, return that includes their compensation-tied stock.

Did shareholder return help cause the financial crises?

In How Shareholders are Ruining American Business, The Atlantic’s, Justin Fox, calls out shareholder value ideology.  In the quest to maximize returns to shareholders executive doctrine shifted from stakeholders to shareholders.

The prime concern of shareholders is a return on their investment.  If a shareholder does not see an appropriate return, they move on.  A fair return on an equity investment requires management look, firstly,  to please investors.

It seems maximize economic value for shareholders presents a challenge to corporate executives.

One value to rule them all?  Shareholder value is a common success measure for:

  • Pay,
  • Evaluation,
  • Governance reforms,
  • Media

Try to motivate employees with:  “we maximize shareholder value”.  My alternative:  maximize return on stakeholder involvement.

How does return on involvement challenge shareholder return?

Are shareholders stakeholders?

How do shareholders impact the strategic plan?

When did board of directors turn away from their corporate stakeholders to become beholden to shareholders?

Are shareholder and stakeholder self-interest mutually exclusive?