Companies exist for a primary reason. There is a need for a product or service and the company offers a solution to meet that need.
For a company to achieve their goal of being a solution to a problem, people are needed.
- Employees are required to help create that product or offer that service.
- Organizational leaders are required to ensure that the company runs effectively and efficiently.
- And shareholders are required to oversee the strategy through their board and provide financial investment into the business.
In my book, The Better Way to Win, I outline how I have helped organizations win, even amongst crises. Winning, however, is actually three fold. True organizational success means that employees win, organizations win, and shareholders win. Winning requires all three to be successful. Let’s take a moment and outline how and why it’s important for shareholders to win.
Don’t put price over earnings.
It may seem pretty self-explanatory that shareholders win when share price goes up. Of course, because it means that they are making a strong return on investment. This is common knowledge and is expressed through the price/earnings multiple. What isn’t always known, however, is the truth that an organization cannot control the share price; instead, what they control are the earnings.
To positively drive results for shareholders, organizations need highly engaged employees following the direction of connected leaders with a strong strategic alignment to the vision and mission of the organization. When employees are engaged, feel valued, and recognized, they win. When organizations have a focused direction and leaders create an effective ecosystem accordingly, they win. And when this combination delivers outstanding results, earnings increase and shareholders win, too. This is the Win-Win-Win formula.
Shareholders are obviously critical to an organization, but they aren’t the most important.
When leaders allow for shareholders to become the primary stakeholder and thus, driver, of the direction of the organization, a slew of problems emerge and usually end in some sort of massive culture crisis with things being over promised and under delivered. Seeds of failure are sown in times of success. There are many examples of companies that dug themselves into a hole by solely prioritizing metrics that were important to shareholders, even though it required lying and breaking the law to achieve them.
The ideal state is to create a culture that delivers for ALL stakeholders, namely customers, colleagues, communities, regulators and capital markets. An inordinate focus on profits, which are an outcome of a number of key activities, can cause things like customer service to become sacrificed as cost control measures dominate in order to achieve targets. This essentially reduces customers to being viewed as a means to the end, so that knowing your customer is replaced by knowing their data. And the same view is taken of employees where knowing your numbers replaces knowing your people. The risk is that the human touch is lost in working relationships, and I don’t want that for you.
There is a Better Way To Win for ALL stakeholders and it requires a step back to find and remove the barriers to performance in the organization that limit productivity and efficiency. Doing this holistic review creates a stronger proposition for customers, engages employees, attracts their discretionary energy, increases accountability and delivers aspirational results across all dimensions of a balanced scorecard. And I proved it.
Learn more about this topic and more in my book, The Better Way to Win. And, if I can be of any service to support you and your organization, please contact me.