Balancing shareholder and customer needs

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Business leaders often struggle to find a balance between protecting commercial interests and adhering to the principles of good business ethics.

Following the recent spate of alleged irregularities at major businesses including SAA, Eskom and Transnet, there were many emotions and opinions shared freely among South Africans.

Business leaders are often faced critical and very difficult decisions – and sometimes make decisions that in retrospect are perhaps not the most appropriate. Without dwelling on the past too much, one can also refer to the unfortunate events surrounding Volkswagen tampering with results and Ford’s Kuga saga.

So how can business leaders prevent such incidents so that neither they nor the company falls victim to these type of decisions? The answer lies in the use of principled leadership within the framework of a healthy business culture.

But that is easier said than done.

Admit

In commercial terms, there are two interactive, but also sometimes contradictory, themes that should be closely watched and managed at all times.

Shareholders are continuously looking for increased profitability and greater returns on assets and/or capital, while consumers want to associate with brands and the reputation of companies and be assured of good, healthy products at the right price.

Protecting the brand and the positive experience of the consumer with respect to the products of a business is critical in maintaining good financial performance.

A huge dilemma arises when the reputation of either the company or a product is suddenly questioned.

Once conflict between the interests of the shareholder and consumer arises, the natural tendency of most business leaders is to favour shareholders’ interests – it is simply the power of capitalism kicking in.

Focus

To process and normalise the great power of shareholder interests, it is essential to spend time and energy equipping business leaders with a new type of decision-making framework.

Such a framework provides practical guidelines for leaders that may contribute to the creation of a new type of business culture – one that is characterised by a combination of the following:

  • The willingness of leaders to equally admit to mistakes and to develop the courage to point out flaws to a receptive decision-maker – someone that will respond in a responsible and appropriate manner.
  • A more inclusive approach to the management of various stakeholders’ best interests.
  • Better quality information, and the transparent and timely communication thereof to all stakeholders.

Decisions

When business leaders start taking their higher-order responsibilities seriously and realise that their job goes much further than just ensuring profits and returns, it becomes easier to let profit and values ​​live together in harmony.

The tough decisions will always be there. But hopefully they will increasingly be taken by business leaders with greater confidence and willingness to work hard at maintaining a healthy balance between financial interests and a value and principle driven business culture.


Reinier Matthee | Co-Director and Management Consultant | Marathon Group | reinier@marathongroup.co.za | www.marathongroup.co.za |


 

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