Managing Leadership^®

We observed, yesterday, that the workplace is just one of many social settings in the lives of its workers. This, if nothing else, compels managers to pay close attention to both employees and the community. That is, it is prudent for managers to do so well beyond the requirements of the law, and even beyond the provisions of contracts they may otherwise be able to negotiate, in order to more effectively discharge their primary responsibilities to enhance shareholder value.

As uninspiringly calculating as this may sound, it does nothing to diminish the worth or importance to an organization of engaging, thoughtful managers of high moral character who genuinely care about their colleagues and staff, and who inherently build trust and confidence in the integrity of management and the corporation. It simply adds the vital acknowledgement that everyone there is an employee of the corporation’s owners. All of the former’s actions should address, directly or indirectly, the specific goals of the latter.

When we forget that, and assume that we have the right, or convince ourselves that we have the obligation, to use someone else’s resources to further any aim not specifically established by that person, we begin to head for real trouble. If you examine recent scandals or failures among publicly held corporations, you will find this failure at the heart of all too many of them.

Which, of course, brings us to the subject of owners. Why do you suppose it is that most of the controversy over how businesses interact with a wide range of “stakeholders” is about large publicly held corporations owned by anonymous shareholders?

When a company is owned by a member of the community, he or she, just as do the employees, ingests the multitude of its relationships with individuals, organizations, communities, and even interest groups.  Thus, the owner combines the comprehension of these issues with the right to use – or direct the use of – the company’s resources to do what he or she wishes regarding them.

But what about the owners of a publicly held company? They can be spread all over the globe – certainly diminishing their sense of personal connection with and interest in parties the company interacts with, or whose fortunes its practices effect.

And yet, they are still the owners. As distant as that ownership is, and as cumbersome as is its expression, it is theirs – not management’s. Moreover, the body charged with representing them, the board of directors, via one device or another, is dominated by the very party, management, that it is supposed to direct in the pursuit of owners’ interests.

In such circumstances, owners are unlikely to develop positions about how to view and address various groups demanding stakeholder status, much less to effectively direct their application by management. Do you believe that this situation is sufficient to permit management to adopt such positions in the name of its employers – or to be importuned to do so by stakeholder groups?

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This post is a part of a series. You can learn about and link to the other articles here: Conceptualizing capitalism

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Today’s tip: Speaking of establishing connections between owners and interest groups, how about a direct one? Please see this piece about for-profit activism, from The Economist.

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