Usted es me todos: Best of the May-June Issue: Shareholder Wealth vs. Corporate Health

April 24, 2017

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Shareholder Wealth vs. Corporate Health

From Amy Bernstein
Editor, Harvard Business Review

The gospel of shareholder primacy has taken a lot of heat recently—and rightfully so. The idea that the primary duty of CEOs and boards is to maximize shareholder value fails on two counts: It prioritizes shareholder wealth over the organization’s long-term health, and it is flawed as a matter of corporate law because it assumes, incorrectly, that shareholders “own” the corporation. In our latest issue, Harvard Business School professors Joseph Bower and Lynn Paine do a masterful job of dismantling the logic behind shareholder primacy. As the idea gained traction, it “elevated the claims of shareholders over those of other important constituencies—without establishing any corresponding responsibility or accountability on the part of shareholders,” they write. “As a result, managers are under increasing pressure to deliver ever faster and more predictable returns and to curtail riskier investments aimed at meeting future needs and finding creative solutions to the problems facing people around the world.” The feature is a dazzling piece of thinking and a great read, and no, it’s not lost on us that HBS is where generations of leaders first embraced shareholder primacy as an article of faith. Bower and Paine show us how much the mentality has changed.

For completely different reasons, this issue’s interview with Facebook COO Sheryl Sandberg and Wharton’s Adam Grant, really stuck with me. Sandberg, who lost her husband in 2015, describes with raw honesty how her grief paralyzed her and broke her self-confidence. “When you suffer a tragedy,” she tells editor in chief Adi Ignatius, “the secondary loss of having it bleed into other areas of your life is so real.” Reading the interview, I was inspired by how she rebuilt her resilience, but what I valued most was her guidance on how to be a real friend to a colleague in grief. “Above all, acknowledge the pain,” she says.

Another topic we don’t talk about at work as often as we should is neurodiversity—autism spectrum disorder and other neurological conditions. People whose brains work differently from most people’s often struggle just to get hired. Job interviews can be particularly trying if someone has trouble making eye contact, flinches at the slightest noise, or ties and reties their shoelaces. But what these behaviors often conceal is higher-than-average abilities in math, memory, and pattern recognition—skills that are in high demand, especially in tech fields. In “Neurodiversity as a Competitive Advantage,” Robert Austin, of Ivey Business School, and Gary Pisano, of HBS, say that this is why a growing number of progressive companies, like Microsoft and EY, are tweaking their HR practices to accommodate a more neurodiverse talent pool. They’re finding that by challenging assumptions of what constitutes “acceptable” behavior in the workplace, they’re doing better by all their employees.

Thanks for reading. Until the next issue,
Amy Bernstein

In the Issue:

The Error at the Heart of Corporate Leadership

by Joseph L. Bower and Lynn S. Paine

It’s commonly assumed that managers’ top priority is maximizing value for shareholders. But what if that thinking is wrong? What if it’s built on a debatable, perhaps even incorrect, interpretation of the law? Are we giving shareholders too much power? Is the deeply entrenched idea of shareholder primacy threatening companies’ health and financial performance?

“Above All, Acknowledge the Pain”

by Adi Ignatius

Sheryl Sandberg’s life seemed ideal—she had a great job, a best-selling book, a loving family. But in the spring of 2015, her husband unexpectedly passed away while the couple was vacationing in Mexico. Struggling to regain her footing after his death, she reached out to her friend Adam Grant, a Wharton professor and author, to explore what research tells us about resilience.

Neurodiversity as a Competitive Advantage

by Robert D. Austin and Gary P. Pisano

Many people with neurological conditions such as autism spectrum disorder and dyslexia have extraordinary skills, including in pattern recognition, memory, and mathematics. Yet they often struggle to fit the profiles sought by employers. A growing number of companies, such as SAP, Hewlett Packard Enterprise, and Microsoft, have changed their HR processes to better recruit this talent. This brings greater “neurodiversity” to their workforce, which has led to productivity gains, boosts in innovation, and improved employee engagement.