Shareholders versus Stakeholders

By Bill Waddell via Evolving Excellence   Article

“The horrible shootings in Connecticut have set off another round of debates over the fundamental goals of a business – pitting financial gain against social responsibility.  The core principles of lean … are very much built around the idea that the two are not mutually exclusive:  The idea that the best way to make money for the stockholders is to take very good care of all of the stakeholders. …

The alternative is the traditional economic view – that labor (the employees) and capital (the stockholders) are engaged in a zero sum battle with each other – that one’s gain is the other’s loss; that relationships with both suppliers and customers should be adversarial – again a sort of zero sum approach that a nickel negotiated away from a supplier or a customer is a nickel gained for the stockholder …

The difference in views is very much a function of the time frame.  The holistic, lean approach is a proven winner, but is a long term winner.  Optimizing long term shareholder value often means sub-optimizing short term shareholder value.  In publicly traded companies the long term view just isn’t in the cards.  The costs of dumping an investment in  one company and putting the money into another are just too low and the whole thing is structured to enable the trillions of dollars in the markets to lurch from one company to another in a continual quest for the best short term returns.”

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