As a corporate manager of a publicly held company, one is responsible for the interests of many different stakeholders. In the past, it has been a very common assumption and practice that corporate managers of a company should strive to act solely for the benefit of shareholders, or owners of the company. Corporate managers were trained to take any actions necessary or use any means possible to improve the bottom line; or profits, without regard to other stakeholders. As a business student at San Diego State, I had adopted this same bottom line philosophy that had been preached to me since the day of my first business class.
I had bought into these teachings so wholeheartedly, that before this class I really felt the terms stakeholder and shareholder could be used interchangeably. However, I was very enlightened by your lecture on February 29th, in which, you taught us the true definition of a stakeholder. It simply boils down to two crucial yet basic points. A stakeholder is described as, anyone or anything that can affect the ability of the corporation to achieve its mission or which is affected by the corporations activities (Dunn, 2/29 Lecture). This simple statement encompasses so many more entities than I had ever thought of in the past. In this paper I will place myself in the position of a corporate manager of a publicly held, for profit, company and discuss which shareholders interests a corporate manager is obligated to represent in the order of their importance.
As a corporate manager, my primary obligation is to shareholders. As you will see later in this paper, these are not the only stakeholders whose interests should be represented but they are the most important. Without financing from shareholders, no corporation can efficiently accomplish their mission and goals. In a for-profit organization, the shareholders are the people that made the inception of the corporation possible.
They bare all of the risk and put their faith and funds into the corporation. Before there were customers and employees, there were shareholders with a vision of a viable and profitable corporation. Because of the risk they bare, the vision they had, and their ability to create an efficiently functioning corporation, their interests are number one. However, not to the extent that laws be broken and other stakeholders rights be violated.
A great of example of corporate managers doing just that lies within the Ford Pinto case we went over in class. Consumers rights to life were grossly violated by Ford, solely because they calculated the loss of life to be less expensive than a recall. This was clearly a case in which managers crossed the line in upholding their duties to shareholders and would not be condoned within the corporation I am part of. As long as nothing of that nature takes place, as a manager I have a deontological duty to my shareholders.
Deontology is a principle discussed in lecture and Rachels book I use to support this argument. As corporate manager, I have a deontological duty to make shareholders interests my primary concern. They have an intrinsic right to be my primary concern since, as I mentioned previously, without the formation and funding made possible by the shareholders, the corporation wouldnt even exist. Next in the pecking order of stakeholder interests I would represent would be the environment. In these days of the soaring NASDAQ, space shuttle missions, and the internet, it is easy to forget that the environment is even a stakeholder at all. I have to admit, before this course I had been guilty of doing just that.
After you taught us what constituted a stakeholder, I was quickly reminded how important the environment is. There are two primary reasons the environment receives such important representation. First, and most obvious, at this time as human beings it is all we have to survive off. The delicate balance and interrelationships of ecosystems must be respected.
Thinking short term, managers commonly forget about the environment because immediate destructive outcomes to the environment are not always easy to see. This way of doing business must change. Managers dont always realize how grand of a scale this is. We have already seen the harmful effects of .