Shareholders Versus Employees ?
This article is the second in a planned series of articles covering the Shareholders Versus Employee Conflict.
The first article was titled Humpty-Dumpty.
The third article was titled Jack-N-Jill.
EPS in short.
EPS surely is a serious serious issue. Always.
In Every Country. Wherever.
No Doubt about it. Never. Ever.
What has caused EPS ?
Every Business Organization serves to seek the interests of it's owners who are primarily interested in maximizing profits for every share that they hold.
Namely, Earnings Per Share or EPS.
Profits (or Losses) are the Difference between Incomes and Expenses.
Incomes are primarily dependent on the markets, outside the organization, viciously attacked by (Offshore ??) competitors.
Possibly, viewed as External and Uncontrollable.
Expenses are viewed as Internal and maybe Controllable.
People Costs are Major Items of Expenses, perhaps, Increasing Year After Year. (Assuming All Other Things Being Equal).
People Productivity May or May Not Increase. It May or May not reflect Immediately in Revenues. (Competitor Productivity surely does.)
Why take a chance ? Given an option, why not Eliminate Expenses ?
Immediately, the Profits shoot up. Or, maybe The Losses Go Down.
Making the Shareholders Smile. But, is life that simple ?
What is the answer ?
Maybe, a simple suggestion.
Perhaps, instead of Shareholders getting rewarded with High EPS (Earnings Per Share ), maybe we reverse the Measurement Metric.
SPE instead of EPS.
Rewarding the Shareholders with a High SPE Figure.
SPE Meaning Skills Per Employee.
Measured every year. Accurately. Independently. UnBiasedly.
Higher the SPE, Shareholders (should) Clap.
Lower the SPE, Shareholders Scream.
Higher the SPE, Employees Clap.
Lower the SPE, Employees Scream.
Higher the SPE, Both Shareholders / Employees Clap.
Lower the SPE, Both Shareholders / Employees Scream.
Hence, SPE also means Simple Performance Enhancers.
Both for Employees and Shareholders.
Why not simply morph both Shareholders and Employees into one ?
Calling them Employees Possessing Shares. Or EPS.
Sigh ! Back to Square One.
The more things change, the more they remain the same.
Postscript : What happens to the Original EPS or Earnings Per Share when SPE ie Skills Per Employee go up ?
As per this Harvard Business Review - HBR Research Article, EPS - Earnings Per Share increases with Increased SPE - Skills Per Employee.
As per estimates, since more than 50 % of all US Company Equities are owned by US Employees Pension Funds, perhaps it further reinforces the indirect links between Shareholders and Employees.
and may not reflect the views of the entire organization.