“You don’t get paid for the hour. You get paid for the value you bring to the hour.” ~Jim Rohn
I have sat in on far more senior executive meetings than I would care to mention where the majority of time and attention was focused on shareholders. Topics ranging from EPS, profit margins, actual vs stated revenue growth, preparing answers for Wall Street analyst meetings, getting ready for the AGM, take up a lot of time and attention of senior management.
In contrast, leadership meetings focusing on employee engagement, building a high performance culture, and improving the customer experience are rarely seen on most senior executive meeting agendas.
For the past several decades, business leaders have focused much of their time and effort in attempts to appease Wall Street and satisfy shareholders. Why? Here’s the usual response: “Shareholders invest their hard-earned money in our company and we have a moral and fiduciary responsibility to give them a good return to improve the value of their shareholdings.” Sounds like the answer to a question on a MBA final exam!
Who Really Creates Value?
When executives pay more attention to Wall Street (CNBC financial analyst Jim Cramer) than their employees, the end is in sight.
It is important to remember that money coming into the company comes from two main sources, not just one. Sure, shareholders invest money in the company, but so do customers! Customers give the company money in return for goods and services. Two huge sources of investment in the company.
Yet there is only one group in the business equation that turns money into added value! Employees. Both shareholders and customers give the company money, but it is employees that turn money into added value that results in an attractive share price and goods and services that customers value.
With an understanding of who really creates value, where do you think senior leadership should focus their attention and time?
Seems to me that time should be spent where the value is really created, not just on where the money comes from. Wall Street and shareholders are important elements in the business equation, but they are not the only ones. I often advise senior teams to review their time spent and to really look at the ROI of that time. Wall Street and the stock market is notoriously fickle and trying to run your business in order to please the street and pundits is a design to fail. Sustainable businesses focus on long-term value creation, not quarterly returns or maximising share price. And real long-term value comes from employees and the company culture.
Here’s a suggestion for leadership focus. What do you think?
See the review of LEVERAGE in The Economist (January 9, 2014.
John also writes thriller novels: novels.johnrchildress.com