LEADERSHIP | SHAREHOLDER VALUE including employees , customers , and the broader society .”
She says that the ‘ polycrisis ’ we continue to live through – pandemic , geopolitical tensions , global recession , technological disruptions – means that CEOs and boards are forced away from delivering just shareholder value but also stakeholder value .
“ CEOs and boards are redefining shareholder value to include social and environmental ; not as separate concerns because there is no long-term shareholder value without caring about employees , customers , communities , and other stakeholders expect and need ,” adds Spitzer .
Balanced approach Bouchard says companies are adopting a more balanced approach , seeking to create value for all stakeholders rather than prioritising shareholders . Societal expectations when it comes to DE & I , access to liquidity , and increased scrutiny of business practices have driven a change in perceived shareholder value . Some of these trends , he says , are not shareholder friendly .
The concept of shareholder value has certainly evolved significantly over the years , so does that mean it should still be the CEO ’ s main focus ?
“ If a CEO defines shareholder value in an entrepreneurial way , then yes ,” says Elena Murdock , CEO of Ascend Public Relations and Family Office advisory .
“ Capturing profit for profit ’ s sake does not benefit the shareholders in the long term . The world ’ s most successful companies have integrated programmes and ways to create value instead of solely capturing value .”
Improving shareholder value Murdock says CEOs can improve shareholder value by employing an entrepreneurial corporation model instead of imperialistic or crony capitalism .
An entrepreneurial corporation model drives value through creating value while serving others . “ Entrepreneurial capitalism or principled entrepreneurship is a good model and is not reserved only for startups or B-Corporations ,” says Murdock . “ Higher profits come as a result of seeking to serve instead of seeking to capture value for value ’ s sake .”
Bouchard agrees that shareholder value should absolutely still be the main focus for CEOs but he believes that most leaders are getting it wrong , and that there should be a greater focus on allocating capital correctly .
“ Even in the Fortune 500 , I give a grade of C to over half of the CEOs I ’ ve observed or studied ,” declares Bouchard .
Risks and returns As well as capital allocation , Bouchard says CEOs also need to understand the risks as well as potential returns of the business model – by correctly assigning an internal rate of return ( IRR ) to every customer account and every project proposal that requires capital . The third piece of the puzzle is recruiting and maintaining a talented , hardworking and loyal workforce – which is , of course , hard to achieve .
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