Measures of success must go beyond financial results
My column last week suggesting we search for alternatives to shareholder value led one reader to accuse me of inciting lawbreaking. Did I not know that, in the US at least, directors had a legal duty to put shareholder returns above all other claims?
The 1919 case of Dodge v Ford Motor Co, the reader said, put the matter clearly. Rejecting Henry Ford's desire to favour customers and employees over investors, the Michigan Supreme Court said companies existed to serve shareholders' interests. Directors could use their discretion over how to achieve that end but that “does not extend to a change in the end itself”.
But, as I wrote on Monday in our weekly FT Business School briefing, subsequent cases have softened Dodge's edges, allowing boards to give consideration to the rights of employees and even the community in certain circumstances.
As William Allen, then chancellor of the Delaware Court of Chancery, said in a brilliant lecture to the Cardozo School of Law in 1992, the argument about what companies are for has been around for more than a century.* Underlying the debate, he said, were “ two quite different and inconsistent ways to conceptualise the public corporation”. Prof Allen, who now teaches at New York University Stern School of Business, called these two ideas “the property conception” and the “social entity conception”. The first saw the company's aim as being to advance the financial interests of the owners. The second viewed the company as having “a duty of loyalty, in some sense, to all those interested in or affected by the corporation”.
For most of the century, these two ideas managed to rub along. Courts, managers and commentators reconciled them by arguing that looking after employees and the community was good for shareholders in the long run. Happy staff would provide better service, a contented community would furnish loyal customers and profits would rise, along with the share price and dividend payments. This is the argument underlying the current case for corporate social responsibility.
There are times, however, when the inherent conflict between these two concepts bursts into the open. Prof Allen noted that takeovers often pitted shareholders, who benefited by selling their shares at a premium, against employees who stood to lose their jobs.
Today, the availability of cheap labour in Asia, allied with consumer insistence on low prices, has brought the two concepts of the company into conflict once more. While good for shareholders, offshoring is disastrous for many existing employees.
Who should prevail shareholders or staff? Some argue that employee commitment is more important to companies than shareholder investment. Modern shareholders are vast institutional funds with no loyalty to the company. In an article published this month in Learning & Education journal (which I discussed last week), the late Sumantra Ghoshal of London Business School made the case for putting staff first.
“ Most shareholders can sell their stocks far more easily than most employees can find another job. In every substantive sense, employees of a company carry more risks than do the shareholders. Also, their contributions of knowledge, skills and entrepreneurship are typically more important than the contributions of capital by shareholders, a pure commodity that is perhaps in excess supply,” Ghoshal wrote.
There is much to this but there are three reasons why we should not dismiss shareholders that easily. First, many people's hopes for a comfortable retirement depend on those faceless institutional investors. The beneficiaries of the institutional shareholders are often employees too, either of that company or another one.
Second, with the collapse of trade unions, institutional investors are the only force able to stand up to over-powerful management. This is particularly true when shareholders act through representative associations. Witness the Association of British Insurers and the National Association of Pension Funds' success in limiting departing UK executives' pay-offs to one year's salary.
Third, share-price performance is a fair guide to corporate success eventually. Shareholders often follow the herd. They can go collectively mad, as during the dotcom silliness. But the market cannot fool itself forever. Judged over five or 10 or 50 years, a successful company's worth will be recognised by the stock markets.
The problem with shareholder value as currently understood is its obsession with the present: this quarter, this year, this Christmas's sales. It is the pressure for immediate results that pushes companies into unwise acquisitions and dubious accounting.
There is only one proper measure of corporate success: remaining competitive and profitable over many years, through recession, technological change and political upheaval. Few companies achieve it. Those that do are alert to every change in their environment and know how to get the best out of their people. This does not mean employees never lose their jobs; sometimes it has to happen. But it means companies manage the move to lower-cost countries carefully, ensure customer service is not compromised and maintain the morale of staff who see their colleagues leave.
Ghoshal said a new view of companies' role must begin in the business schools. It needs to begin with all of us. We must broaden what we measure and look beyond immediate financial results to whatever it is that will make companies succeed or fail some time from now.
Here is a snippet to start with. A survey carried out for Proudfoot Consulting and published last week found that while UK banks were making record profits, only 12 per cent of customers thought their banks understood their needs. That should tell us more about the banks' long-term prospects than any analyst's note. 再论股东价值的是非
在上周专栏中 ( 《股东价值真那么神圣？》 ) ，我建议找个能够替代股东价值理论的新理论，一位读者因此指责我说这样做是鼓励违法。其实我何尝不知：至少在美国，董事负有把股东回报置于其他任何考虑之上的法律责任。
那位读者说， 1919 年道奇诉福特汽车公司 (Dodge v Ford Motor Co) 一案很清楚地说明了这个道理。福特公司创始人亨利?福特 (Henry Ford) 要把顾客和雇员的利益放在投资者之上，这在密歇根州最高法院遭到驳斥，法院认为公司存在即是为股东牟利。董事可以利用自己的判断力达到赢利目的，但他们无权动摇目的本身。
但是，正如我周一在《金融时报》商学院 (FT Business School) 每周文章 ( 《收购曼联：球迷与股东孰重孰轻》 ) 中所写的，此后一些案件的判决结果缓和了道奇案的棱角，让董事会可以考虑雇员权利，甚至在某些情况下考虑公众利益。
时任特拉华州法院首席法官的威廉姆?艾伦 (William Allen) 教授， 1992 年在卡多佐法学院 (Cardozo School of Law) 进行的一次精彩演讲中说，公司到底为谁而设这一问题已经争论了一个多世纪 * 。艾伦教授认为，在这场争论背后，“存在着两种差别很大且相互矛盾的上市公司概念化方式”。目前在纽约大学斯特恩商学院 (Stern School of Business) 任教的艾伦教授称，这两种概念为“所有权概念”和“社会实体概念”。前者认为公司的目标是增进其所有者经济利益；后者认为对与公司利益相关或受到公司影响的所有人，公司都负有忠诚的义务。
上个世纪大多数时间内，这两种概念在矛盾中并存。法院、管理人士还有各类评论人士为了缓和矛盾，提出从长远角度来看，关心雇员和公众对股东有利。心情愉快的雇员会提供更好的服务，满意的公众群体会产生更多的忠诚顾客，从而提高利润，股票价格和股息也会随之攀升。这就是当今企业社会责任之说的根本论点。
然而，有时侯这两种概念之间的固有冲突还是会爆发。艾伦教授指出，公司收购经常会让股东和雇员产生对立，因为前者能够溢价出售股票获利，而雇员会失业。
目前，亚洲的大量低廉劳动力资源和消费者对低价格的要求，使这两个概念的矛盾再一次激化。离岸运作对股东来说是件好事，但对许多现有雇员却是灾难。
到底谁应占上风，股东还是雇员？有些人争论说雇员对公司的奉献比股东投资重要的多。现代股东只是进行大规模投资的机构，对公司没有忠诚可言。如我上周所讨论的，在近期《学习与教育》 (Learning Education) 杂志上发表的一篇文章中，已故伦敦商学院 (London Business School) 教授苏曼德拉?戈沙尔 (Sumantra Ghoshal) 说明为什么雇员应放在首位。
戈沙尔写道：“多数股东出售股票远比多数雇员再找到一份工作容易。在实质意义上讲，公司雇员承担比股东更大的风险。此外，雇员的知识、技能和企业家精神，通常也比股东的资本对企业贡献大，这种资本也许只是供过于求的商品。”
这种观点颇有道理。但有三条原因使我们不应轻易把股东抛开。第一，很多人所期望的舒适退休生活，还得寄托在那些冷漠的机构投资者身上。那些机构股东的受益人往往也是雇员。
第二点，工会瓦解后，机构投资者是能够对抗过于强大的管理层的唯一力量。这一点在股东通过代表他们的协会采取行动时尤为突出。比如在限制离职的英国管理人员只能获得 1 年的薪水方面，英国保险商协会 (Association of British Insurers) 和英国养老基金联合会 (National Association of Pension Funds) 取得了成功。
第三点，股价表现终究是公司成功的公平指标。股东们大多都随大流。他们有时可能陷入集体疯狂，比如在网络泡沫期间。但市场不会永远愚弄自己。经过 5 年、 10 年或者 50 年，一家成功公司的价值最终会得到股市认可。
就目前的理解而言，股东价值存在的问题是过于关注当前：当前季度、今年甚至这个圣诞节的销售业绩。正是这种要求即时结果的压力，促使公司进行不明智的收购，或者在账目上做文章。
衡量公司成功与否只有一种恰当方法：公司在很多年中一直保持竞争力和盈利，不管发生经济萧条，技术变化还是政治动荡。很少有公司可以做到这一点。而那些可以做到的公司对环境中的每个变化都会保持警觉，并知道如何让员工发挥最大才能。这并不意味着雇员拿的是“铁饭碗”，有时失业是难免的。但这意味着公司谨慎管理向低成本国家的生产转移，确保客户服务不受影响，维持目睹同事离职的员工的士气。
戈沙尔认为关于公司角色的新观点必须引入商学院中。这个新观点需要从我们所有人开始。我们要拓宽衡量对象，超越眼下的财务结果，展望将来可能会导致公司成功或失败的所有因素。
这里有一个例子可以作为起点。 Proudfoot 咨询公司上周发表的一项调查显示，在英国各银行实现有史以来最大利润的同时，只有 12% 顾客认为他们的银行了解其需求。这个结论比任何分析师的评论都更能说明银行的长期前景。
