Read any American corporation’s annual report and you’ll see pictures of employees looking euphoric and a statement that the corporation really values its people (human capital, staff, team, etc.) and considers them to be its greatest asset. Read the newspaper or peruse the internet and you’ll see where these same corporations are losing money and having to downsize and “right size” by eliminating their most valuable assets – people.
Any business student is taught that a corporation’s purpose is to maximize shareholders’ wealth. Because this is the company’s focus, decisions are made to increase shareholders’ wealth by any means necessary – or at least by any means that the company can get away with. Typically the quickest way to increase wealth is to cut salaries and people.
The ability to earn income is more than a tool to meet the basic needs of food, shelter and clothing. That ability is also a means for many to have a sense of contributing, a purpose, a focus, a reason to be. When that is taken away and not easily replaced, the effects on the person and those in his or her sphere of influence and the broader community can be devastating.
Having spoken with investors and shareholders, I’ve learned that many do research on the companies in which they invest long before making a decision to invest. Animal lovers make sure no animal testing is done or that any animals associated with the product or service are treated in a humane way. Those conscientious about the environment research to determine whether the company is “green” and/or has a history of being friendly to the environment. People of great religious beliefs ensure the companies they support do not focus on things that cause others to behave in a manner contrary to the values the prospective shareholders consider important.
It appears that one thing we don’t do is to find out more what practices companies follow with regard to their most valuable asset, employees, in order to keep their stock value up. For instance, do the companies require the employees work long hours on a regular basis, thereby causing them to neglect their families? Does it mismanage spending or saving in one area and end up having to get rid of people when hard times come? Are we as shareholders just as responsible for the behavior of corporations with regard to its people? What amount of wealth (shareholder profit) is too much when other people’s lives are so severely affected?
Nobody wants to invest to lose money, but have we too, become too greedy that we encourage the act of people being displaced from their livelihood?
by Paula Magee, Human Resources Consultant. Paula has an MBA and experience working for major corporations in the US.
