LEADERSHIP | SHAREHOLDER VALUE shareholder value but also stakeholder value .
“ CEOs and boards are redefining shareholder value to include social and environmental ; not as separate concerns because there is no long-term shareholder value without caring about employees , customers , communities , and other stakeholders expect and need ,” adds Spitzer .
Bouchard says companies are adopting a more balanced approach , seeking to create value for all stakeholders rather than prioritising shareholders . Societal expectations when it comes to DEI , access to liquidity , and increased scrutiny of business practices have driven a change in perceived shareholder value . Some of these trends , he says , are not shareholder friendly .
The concept of shareholder value has certainly evolved significantly over the years , so does that mean it should still be the CEO ’ s main focus ?
Yes , and no , says Sankar Sharma , founder and CEO of RiskRewardReturn . com based in the UK .
“ Shareholders continue to be a top priority for CEOs , but this role now includes a broader set of responsibilities ,” says Sharma . “ These include environmental , social , and governance ( ESG ) factors , climate change mitigation , long-term growth , and sustainability , promoting equality , reducing the gender pay gap , ensuring employee safety and well-being , community engagement , and customer care .
“ Modern shareholders value these elements and expect CEOs to consider them . CEOs who embrace this broader focus are more likely to earn shareholder trust .”
Bouchard agrees that shareholder value should absolutely still be the main focus for CEOs but he believes that most leaders are getting it wrong , and that there should be a greater focus on allocating capital correctly .
“ Even in the Fortune 500 , I give a grade of C to over half of the CEOs I ’ ve observed or studied ,” declares Bouchard .
As well as capital allocation , Bouchard says CEOs need to understand the risks as well as potential returns of the business model – by correctly assigning an internal rate of return ( IRR ) to every customer account and every project proposal that requires capital . The third piece of the puzzle is recruiting and maintaining a talented , hardworking and loyal workforce – which is , of course , hard to achieve .
There are lots of financial , strategic , operational , governance and transformational levers CEOs can use . As a human capital strategist , Spitzer says CEO skills are crucial . She says the non-technical shareholder value capabilities CEOs require are :
+ 360-degree view of strategy that includes both the normal
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