1958
n
A rock or a soft place?
quite ready for it. However, all the CEOs of public companies that
I have talked to, in private, will admit that they spend about 30
percent of their time dealing with “the stock market” (i.e., fund
managers, analysts, institutional investors, and the wider public).
They wouldn’t have to do this if they weren’t listed.
Think about it: that’s quite a cost. If you have a good company
and you decide to oat it (start to sell equity on the stock market),
all of a sudden, you lose 30 percent of your top management
capacity!
Are you sure that’s worth it? That’s 30 percent which you
could have spent on cultivating your organization, motivating
employees, thinking through opportunities for future growth,
integrating acquisitions, etc.
Moreover, many CEOs end up not particularly enjoying the 30
percent . . . It is a lot of hassle, pressure and a bit of a pain, having
to tell (and defend) your “story” over and over again, to people
who really don’t have much in-depth knowledge about the
company and its business, often haven’t received any training in
developing or even understanding strategy, and occasionally may
not have much talent for or afnity with it anyway!
How do you quantify this cost of being
listed? I don’t know; it is difcult to put a
number on such a thing (which is probably
why we don’t pay much attention to it in
the rst place!). But I will assure you that
many CEOs will privately tell you – albeit
while whispering behind their hand – that being listed isn’t so
sexy and exciting after all. And, if they still had a choice, they
would do without it.
“Shareholder value orientation” – now, where did
that come from?
If you become listed, nowadays, the words “shareholder value”
will likely become the most prevalent words in your vocabulary.
‘‘
being listed isn’t
so sexy and exciting
after all
’’
Business Exposed196
Because that is the prime, ultimate thing that you are supposed
to be aiming for. But where did this thing – “shareholder value
orientation” – come from in the rst place? Well, there is an easy
answer to that: it came from the US. And, partly from the UK.
For the (blissfully) ignorant among us, what is it? It is the view
that the purpose of a public corporation is to maximize the value
of the company for shareholders. Traditionally, we nd this
orientation in Anglo-American societies. The view that the public
corporation is more a social institution which has to consider
the interests of various stakeholders, including shareholders
but also employees, customers, the local community, etc. is the
traditional soft stuff found in other parts of Europe and Asia
(although, over the past decade or two “shareholder value orien-
tation” has been spreading like a forest re – pardon the analogy
– gaining geographic terrain even in previously unlikely homes
such as Germany and France).
Whenever I ask a group of executives or MBA students in
my classroom, “To whom is the primary responsibility of a
company?”, nine out of ten people will wholeheartedly shout
“shareholders!”, with usually a minority contingent on the back-
burner – with a suspected long-term marketing indoctrination
– arguing that “the company should adopt a customer focus” and
always place customers rst (because that’s the best thing to do
in order to gain shareholder value . . .).
But why is that? Why do we immediately assume that the
primary beneciaries of organizations should be shareholders? I
even nd that quite a few people become annoyed, if not angry,
by even the question being raised – like it is some God-given
truth, which can’t be opened up for debate and is embarrassing
to think (let alone talk) about.
Don’t get me wrong, I am not saying that companies shouldn’t
do it but surely it is not a “law of nature” that a company is
ultimately (only) responsible to its shareholders. It’s a choice.
And as with many choices in business, that means that it is
something worth thinking about every now and then: whether
it is really the choice you want to make.
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