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Wednesday, April 15, 2015

Different Stakeholders Different Priorities

It should not be a coincidence to know that different stakeholders play different roles in a business organization and each stakeholder hold different objectives and priorities.

Many of us who are financial bloggers are mostly undertaking two different stakeholders role at the same time. We are either mostly employees in an organization or shareholders/business owners of an organization. We probably already pre-divulge the answer to ourselves unknowingly by having different expectations as an employee or shareholder. But let's go to that.


As an Employee

Employees are a very important part of a business organization that are much underrated by the key stakeholders of the company. We will see about this later.

Aligning employees with the organization's strategic goals has become increasingly important (and difficult) as organizations struggle to promote retention, ensure productivity and gain competitive advantage. This is probably why you see companies hiring on human resources to do all of these. They are not just there to do the administrative stuff you think they are doing.




The first thing we would not want to see ourselves fall short as an employee is in terms of our compensation and benefit. Before we commence our employment, we would usually consider thoroughly and compare the payscale throughout the different choices we may have to ensure that we are kept as competitive as we could in terms of pay.

As an employee, we'd also like to see that the management is competent enough to drive the company forward. This is more than just because we are able to receive higher bonus but more because our efforts have paid off to yield results over time. Most employees also feel proud working for an uprising organization than a sinking ship anyway.

Many companies have implemented a cost controlling activities in terms of hiring and increasing productivity. As an employee, it's usually difficult to understand the consequences underlying the actions taken by the management even if there are headcount crunch to churn out the work required to be done. This usually quickly backfired and resulted in resentment and unhappiness and retention becomes even more difficult to do so.


As a Shareholder

A shareholder can be considered as similar to a business owner, and we can see how quickly the perception difference in the priorities changes from the previous.

Similar to an employee mindset, I'd like to see a competent management driving the company forward by increasing shareholder's value over time.




However, as a shareholder, the difference now lies in the bottom-line profits of the company. I don't know about you but when I analyze financial statements of the company I am vested in, I'd like to see overhead costs, in particular salaries and administrative costs down due to increasing productivity. Take a friend of mine who is working for ST Engineering for example, a company I am vested in. I often get to hear him complaining about the bonus or increment the employees are getting but as a vested shareholder, I am actually smiling behind my back. Okay, I am not a pervert and I was joking about the last part but you get the idea. 


Final Thoughts

I never thought of financial independence to being in two different selections of stakeholders.

Some people like to work being an employee for as long as they would like while some wished they could be a business owner or shareholders.

I'd preferred to be in the quadrant of a shareholder or business owner one day when I finally achieve financial independence but I'll leave it to that when it comes to that stage.

For now, I'll just have to know that different stakeholders different priorities. 


9 comments:

  1. Hi B,

    I read that in Amazon's meeting, Jeff Bozos will pull up an empty chair in the meeting room. When someone asked him why he did that, he said that the empty chair is for the customers which is also our stakeholders and had to be 'present' in the meeting. So whenever they have a meeting, they will remember to look at the empty chair and think of the customers who also held a stake in whatever decision they had made and remember to think in their point of view.

    You find that both the employee and the business owners are just one gang on the same side together. It's important to remember the people whom you're serving and earning the revenues from. Do the right thing. Do what is right for you when the tables are flipped around, when you're standing on the side of the customers now.

    Remember that missing chair.

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    Replies
    1. Hi LP

      That's an impressive thing to do for the Amazon management.

      Many times we embedded the importance of customers in our mind but hardly anyone can visualize what the customer wants from their point of view. It goes more than just the price factor these days, it comes in all packages with service and innovation and the competitive advantage that the company has over others.

      Thanks for the reminder, I will keep in mind the empty chair the next time I hold my own dreamland meeting :)

      Delete
  2. I don't own a single share as an employee in my company. No such different priority. :-)

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    Replies
    1. Hi Uncle CW

      It's all one-sided objective then.

      Makes the bottomline looks good :)

      Delete
  3. Any idea what price you going to sell your CMP or wait for cum bonus?

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    Replies
    1. Hi Anonymous

      I haven't thought of selling them unless the management is no longer creating sufficient value for shareholders or if the valuation has ran up higher than its peers which at the moment has not yet proven to be so.

      Delete
  4. It's great post! Thanks for sharing!

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    Replies
    1. Thanks for your kind compliments.

      Delete
  5. Hi B,

    As a shareholder and employee, I've a different view. A happy employee will contribute to a company's productivity. This is especially so if the company is selling a service and people are their most important assets. Imagine a company somehow managed to grow despite having disgruntled employees, imagine how much more it can grow if they have satisfied employees. Therefore I believe if both the company and employee can be 'aligned', it will create a win win win situation and the shareholders benefit too.

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