FOCUS ON SHAREHOLDER RETURNS IS NOT THE ONLY WAY
Recently as high street names fall the short term focus on profitability has been brought sharply into the fore ground. How do stores like Jessops and HMV survive in the modern world when price is king and overheads are seen as an albatross to retail survival? However how often does cheap last?
Commercial history tells us that the most successful organisations, over the long term, consistently focus on “enabling” people things (leadership, purpose, employee motivation) whose immediate benefits aren’t always clear in the short term. These robust organisations are internally aligned around a clear and cohesive vision and strategy; can execute to a high quality thanks to strong capabilities, management processes, and employee motivation; and renew themselves in an ever more demanding environment more effectively than their rivals do. In short, healthy processes today drive improved performance tomorrow.
The issue in the majority of the larger organisations is the short term requirements placed upon them by their shareholders. Many Chief Executives and Senior Vice Presidents instinctively understand the paradox of performance and health, though few have expressed or acted upon it better than John Mackey, founder and CEO of Whole Foods.
“We have not achieved our tremendous increase in shareholder value,” he once observed, “by making shareholder value the only purpose of our business.” No most certainly not and yet the increase in value has been long term it has been as a result of healthy strategic processes and disciplines. Outstanding strategy, effective communication and the evolution of people processes to free up mangers and leaders to focus on the future rather than immerse themselves in the problems of today.
Don’t forget that people run businesses and people are the interface between a business and its customer base if they feel empowered, understand what they have to do and the route they have to take to get there, then they can create extraordinary value and longevity!
By Phil Sampson, Sampson Hall
To find out more go to www.sampsonhall.co.uk