Shareholder value? What does that mean?

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I cringe when someone asks me to help them create a mission/vision statement. The reason is the misconception that the mission we put on a poster will actually guide our organization. It might.

Often the language of these things looks like we think the mission/vision statement will be used as a contract that might be used by the person suing you in court. You know, “Our mission says we have integrity but my boss lied to me and our customers.”

It’s hard to argue against having a mission. My argument is more with the mission statement.

Consistency of action defines our mission. That’s what is most important.

As a leader what you talk with people about most is your focus. Is your focus complimentary with what actually happens in your organization?

Here’s what I mean. One term we hear often in mission statements and in leader discussions is shareholder value. It’s a nice short-cut phrase that says a lot in just two words.

We all learned what makes up shareholder value in business school.

Can what you’re saying be misinterpreted?

I remember the finance class many years ago about the shareholder value levers we as leaders can manipulate. One big one of course on the expense side is the cost of people.

What if you say shareholder value is our top priority? That might mean that we will lay off scores of employees if we need to move our stock price up. I know a bank that basically does people arbitrage each year.

If you talk shareholder value often are you saying you don’t care about your people and the stock price will dictate that you don’t care about customers either? Probably not.

Perhaps as a shortcut for yourself (because you know what shareholder value means to you) you can use that term. When communicating to others why not be more specific about your mission:

  • Hire and maintain the strongest work force as a contributor to shareholder value.
  • Make the lives of our customers better as a contributor to shareholder value.
  • Aggressively optimize costs while ensuring quality as a contributor to shareholder value.

I know…more words. But clarity is important.

To do this week: Examine your mission statement. Are there eye-roll words in there? Are your conversations specific enough?

Let me know how it’s going. Click the “comments” box below to participate in an on-going discussion via LinkedIn.

Jim Canterucci

I don't know everything. But I want to. The focus of our firm, Transition Management Advisors, is to develop leadership capabilities to create a championship culture, generate innovation, and successfully lead the resulting changes.

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On August 29, 2017
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