Stop talking to me about “creating shareholder value”

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Here’s a discussion with a journalist who has been covering corporate scandals since the late 1990s, and BOOM:

After years of writing about businesses gone awry, McLean has some ideas about what makes well-run companies. In those, she says, executives’ financial incentives are “aligned with the well-being of all stakeholders,” including employees and consumers, so that “you actually provide a safe and remunerative work environment for your employees and provide products or services that are really offering a value to the world.” A well-run business doesn’t drastically raise the price of an old drug or peddle loans to people who clearly will be unable to repay them, she says.

This should be a “no shit” moment for most people. Unfortunately, it’s not.

Another good quote from McLean

Would be this:

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Haha, yea. Enron ring a bell? Most Pharma companies? A lot of banks? Sad.

But often true.

Why does this happen?

Short-term focus and greed is the main intersection.

Another culprit is “We believe the goal of work is profits,” which is in fact NOT true. The organizational actions that underscore work should create profits — in a for-profit, they essentially must — but profits are not actually the goal. I’d bet maybe 3 in 10 executives at big companies realize that.

Another problem is standard hierarchy — you make the most money possible by being furthest from the customer, so what incentive do you have to prioritize the customer’s needs, or the employee’s needs? Replaceable peons to many execs.

Still a different problem is how companies reinvest their money.

It’s all pretty fraught in white-collar enterprise. Thank God that’s not where most people work — although I’m not service/hospitality is that much better, honestly. (Certainly doesn’t pay it.)

When your leadership team always says “creating shareholder value,” it means…

… “we care about the money and the investors and that is it.”

That’s what it means.

Really the only thing it can mean, honestly.

These are horrible places to work unless you’re close with the power core or the salary is so good you can tolerate the shit.

Get out if you can.

Whenever you go a trade show and see a startup talking about this, it means:

  • “We don’t really have a fully-formed business model or idea of what we’re doing.”

If a place like that pops and scales, it becomes a hellhole for Employee №32 — but Employees 1–10 are probably vacationing in Fiji, so fuck №32, right?

How do we fix this?

Short-term thinking and greed ARE at scale and won’t go anywhere, so it’s hard.

A few things we can try:

Those are just a few ideas off the top of my dome. But this isn’t getting solved tomorrow. And somewhere, today, in a hotel ballroom, some SVP will whisper into the wind that’s he focused on “creating shareholder value…” and BOOM, the cycle renews…

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Blogging, largely about work and how to improve it. How I make (some) money: http://thecontextofthings.com/hire-freelance-writer-ted-bauer/

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