Harmony with Shareholders – the ‘First Among the Equals’

Your shareholders are the ‘first among the equal’ stakeholders. Which means that (a) their needs and desires come first and (b) maximization of financial value created is ‘job #1’ for all corporate personnel – top to bottom, left to right.

SRM with corporate shareholders is essentially management of relationships between owners and corporate top management – managed by the latter. If these two are not one and the same, of course.

To maximize the aggregate value for corporate owners, top managers (in management theory often associated with ‘the company’) must (1) maximize shareholders’ value of the company in question – thus creating financial value; (2) make your company completely transparent to its owners - thus creating functional value and (3) make the owners emotionally comfortable - thus creating emotional value. The latter – in addition to the positive emotional impact of (1) and (2) – requires earning trust of the shareholders.

In return, company management (top management, to be more precise) wants to (a) obtain fair and just compensation (financial value); (b) make sure that the owners make the optimal decisions concerning company and its management (functional value) and (c) generally treat managers and employees well (emotional value).

To achieve these objectives, company management – in addition to (1), (2) and (3) have to creatively use the good old Dale Carnegie – style diplomacy.