You’ve no doubt heard the argument – and its one which raises its head every now and again. Should you, as a business owner, be chasing revenues and profits, always with an eye to shareholder value? Or is it more worthwhile to focus instead on being the best you can be for your employees and custodians of the environment?
But why do you have to choose?
It’s perfectly feasible in the 21st century to want to aim to be both a better business for your customers and your employees. In fact, success will probably rest on you attaining both.
The Californian-based multinational, Google, is a great example of this – it was recently rated as one of the top companies to work for and it’s also riding high on the stock market. But is Google an inspiring employer to work for because it operates a hands-down leader approach? Or is the opposite true – it’s only reaping the financial rewards because its employees are engaged and committed.
Yahoo is trying to replicate this model now that former Google employee Marissa Mayer is at the helm. Yahoo doesn’t have a stellar reputation for employee satisfaction levels and its staff turnover has been notoriously high.
But to encourage business growth, Yahoo, along with other companies in a similar position, need to increase shareholder value and generate enough profits to keep both shareholders and employees happy – a dance that all CEOs need to be able to learn.
Getting the balance right
Instead of looking at this dilemma as a chicken and egg problem - by having to choose whether shareholder satisfaction or employee satisfaction are your top priority - you can do both at the same time.
A stagnant company has flatlining growth, which is a sign for any stakeholder (customer, employee, shareholder) to look elsewhere. If a company isn’t growing then their products lose their differentiation and become commodities – profit margins are eroded, and the decline sets in. Examples of companies that lose their edge are plentiful: Kodak, Nokia, HMV, Blockbuster, we could go on…
Employees who find themselves in a company with declining profits will notice that there’s less security, fewer perks, with nothing interesting to get your teeth into. For customers buying from such a company, it’s a double-edged sword – there may well be discounted deals to benefit from but the old adage of you ‘getting what you pay for’ holds true here. Will they be around to provide support if anything goes wrong? Investors, too, tend to abandon failing businesses like rats leaving a sinking ship.
Tips for making it happen
If there was ever a time when executives and business leaders could afford to just focus on one thing, one metric, those days are now over. As a business owner, you need great products to attract customers. Companies should be looking to grow revenues and gain market share to thrive, with profits fuelling growth. Your employees want and need to be engaged and empowered to develop great products that attract customers. And the wheel goes round and round - that's how it really works.