Corporate goal setting and organizational strategy

Business

Shareholder Value in Organizations: Critical Response

The primary goal of an organization should be to maximize stakeholder value, not simply shareholder value. Firms do have an obligation to shareholders, one that is high. However all members of an organization are equally important to an organizations bottom line. When a firm respects the needs of stakeholders equitably rather than holds one group of stakeholders expectations higher than another, that organization is more likely to realize long-term financial success than one that holds the interests of certain stakeholders over others.

Firm's have a responsibility to the organization itself, to all stakeholders and the environment. A firm's interest in maximizing shareholder value does not conflict with their responsibility to other stakeholders and the environment when all stakeholders in an organization are considered equitably. To advance the interests of only one stakeholder such as the shareholders would however conflict with an organizations core value.

Project managers in an organization must ensure that the needs of all stakeholders, not just shareholders expectations, are met. Project managers have a tremendous responsibility. Their jobs include meeting customer demands but also meeting stakeholder expectations. By understanding stakeholders needs, wants and desires prior to the execution stages of a project, a project manager is best suited to meet the needs of everyone in question (ELTC, 2005).

An organizations' success equates in part to dividends, price and profit. Organizations can operate as coalitions whose intent is to serve all parties including shareholders and the public at large (ELTC, 2005). An organizations success is made of many different parts. It includes the stakeholder's satisfaction, management and an organizations dedication to social responsibility. Society will be better served by those organizations that pursue profits but not at the expense of society at large. An organization should be more than an instrument that shareholders can use to realize a means. It should represent a coalition between resources and suppliers to increase the well being of all involved in an organizations success (ELTC, 2005). Strongly motivated employees and customers can work together to help an organization pursue interests that meet the needs of all rather than a select group of stakeholders. This will not only maximize an organization's profits but also benefit society at large.

The key to maximizing these relationships is managing the welfare of stakeholders in a general sense (ELTC, 2005). Shareholders are but one of many stakeholders in an organization. A firm should be interests in meeting the needs of shareholders, however other stakeholder relationships are just as valuable to a corporations profitability and success as relationships with shareholders.

Conclusions

All stakeholders in an organization have expectations. Meeting the needs of all stakeholders, not just shareholders, is essential for corporate success. Shared interests, common goals and a coalition of team members is vital to an organizations long-term corporate financial success regardless of the industry a company is involved in.