Successful businesses and corporations rely on investors for their success in the revenue aspect. The success therefore solely relies on the contributions and participation of the shareholders. Likewise, it is the responsibility of the established corporations to impress active investors. The measurement of the satisfaction of shareholders is known as the shareholder value. The shareholder value is normally reflected in the total amounts of dividends received by the shareholders. Furthermore, it is essential for the board of management of each company to lay down strategies and policies that counter the capital cost to ensure good results. The shareholder value is said to be maximum when the amount contributed by the investors generates more profit than it would have if the investors used it by themselves with equal amounts of risk.
Companies have policies and measures put in place to push its assets into achieving maximum shareholder value. One of the primary functions of the strategies is to safeguard the shareholders’ investments and also ensure that the results of their investments are proportional to the amount contributed. Daft, Murphy and Wilmott, (2015) state that such policies are for the better of the company and are termed as corporate strategies. Essentially, corporate strategies are measures laid down with the aim of achieving company goals and in this sense maximum shareholder value.
One of the corporate strategies companies adopt in their basic operations is the division of labour. This strategy is quite significant in achieving maximum shareholder value. Division of labour is the segregation of work processes into independent and distinguished tasks. These separated tasks are to be worked upon by skilled groups of people or professional individuals. Division of labour increases the efficiency of a company’s processes and its productivity as well. In most instances, this strategy is applied by manufacturing industries and companies involved in the mass production of products.
The organisation of labour exhibits different angles and impacts. Deskilling of labour is one of the results of the division of labour. In the job industry today, employers and companies prefer the use of technology than an excess number of employees to complete tasks in small durations. The process of incorporating machines to replace skilled individuals is known as deskilling. Additionally, introduced technologies are in most cases operated by unskilled individuals. Hence, skilled members are likely to lose their jobs to machines and non-professional operators. Understanding the relationship between corporate strategies, their aims in achieving shareholder value, and the division of labour is significant. The analysis helps in identifying the best methods of achieving maximum shareholder value safely.
Every functional company requires policies, laws, processes, and practices that govern how the company is directed and managed. The board of directors of a company are charged with the formulation and monitoring of the set strategies. Additionally, shareholders and other stakeholders play an indirect role in the formulation of these strategies. The corporate governance entails the factoring of different stakeholders’ interests in the company. Shareholders are a major group of stakeholders and their interests have to be upheld. Shareholders main interest is on the revenue and dividends earned from the invested money. Consequently, there are corporate governance strategies that uphold the shareholder value but also have an impact in the division of labour.
One major corporate strategy is the retain-and-invest approach. In this approach, the involved company focuses on improving the ability and capability of the labour force. The corporation recognises that the labour is the group of employees that play the biggest role. Furthermore, their performance determines the results at the end of a fiscal year. Therefore, the company settles at not spending the earnings on employing new workers but decides to reinvest the earnings on the existing employees. The process of reinvestment could be through training and activities that will help the workforce improve their skills. This strategy reinforces the labour force by ensuring every department is up to date in both the mental and technical skill. No worker is lost but the existing ones are given more resources and new skills (Rosenberg, 1965). The approach helps maximize shareholder value by ensuring no money is spent on employing more people but instead, the money is used to make the workers more efficient. The strategy focuses on long-term shareholder value goals.
Downsize and distribute is another corporate governance strategy. This approach has often been compared with the retain-and-invest approach. There are scholars who prefer one to another. According to Lazonick (2014), the downsize-and-distribute approach seeks to do away with the experienced workers and those who earn large amounts of money. As a result, the collected cash from the process of laying off workers is shared with the existing company shareholders. This strategy goes hand in hand with the “buyback corporation” approach that many companies have embraced. The buyback corporation procedure occurs when shareholders receive the shares by buying them and investing the money again to the company. This approach regards skilled professionals as liabilities and not assets to the company. In the long run, the shareholders receive their dividends however growth rate of the company slowly diminishes.
The process of downsizing and distribution leads to another condition known as deskilling. When companies no longer see the need of professionals in the workplace in comparison with the current financial state they are laid off. However, Lazonick (2014) does not recognise the need of replacing human skills with machines. Machines are expenditure hence eliminating professionals in order to cut costs is a terrible idea. The only advantage is that even though semiskilled, the numbers of employees increase and hence division of labour becomes quite easy (Rosenberg, 1965). Deskilling is aimed at maximising the shareholder value by reducing the amount paid as salary to skilled workers.
Division of labour is one aspect of corporate governance that is often neglected by many companies and corporations. Corporations pay more attention to the amount of revenue earned at the end of the year but disregard and forget workers and how they can be managed properly (Hill, 2007). Even though the division of labour is important for the growth and success of a company, the organisation of workers needs capital. According to Hill (2007), when companies misplace their priorities it is only certain that the process of dividing labour will fail. The capital needed will be responsible for training workers and purchasing resources that will assist the separated employees to work effectively.
The relationship between corporate strategies and the division of labour certainly affects the shareholder value. Apart from that, the relationship has effects on society and the employees in general. Firstly, society is one group that is always affected by the economical occurrences of the world. There is a significant relationship between the retain-and-reinvest approach and capitalism (Braverman, 1974). Capitalism is a system that products and services are exchanged in a free market with the aim of earning a profit. In a capitalist system, the economy is controlled by a few privately owned businesses. Workers are at the centre of the production and distribution of products in this case. According to Braverman (1974), this coincides with deskilling and the downsize-and-distribution approaches where the workers are less professional and lowers the cost. Therefore, capitalism becomes the long-term effect of the discussed relationship and the economy controlled by a few individuals.
The other impact of the relationship between the mentioned strategies and division of labour is on the employees. The division of labour with the aim of achieving maximum shareholder value negatively affects the workers. The corporate bodies now recognise employees as objects and no longer as human beings. They are not treated as vital parts of the production process. Deskilling replaces professionals who earn and support their families with machines. Secondly, the downsize-and-distribution strategy replaces one person with the other with the aim of making more money and forgot the employees’ wellbeing. Whereas the economy grows with the division of labour, morals are lost as individuals lose jobs and earn peanuts as wages (Rosenberg, 1965). Additionally, deskilling and division of labour reduces the level of creativity in the workforce. Division of labour requires minimal qualifications from workers for there is no professional requirement. The work also becomes boring since the employees are stuck in routine and simple jobs that do not require any skills.
Shareholders play a big role in a company’s growth as their money is what drives a company’s operations. Businesses, therefore, have to struggle to make sure they retain their investors. One of the corporate strategies businesses use is the division of labour with the aim of spreading labour costs and thus increasing the total revenue earned. The downsize and distribution approach is one of the elements of the strategy that lays off skilled employees to reduce the huge amount of salaries paid. This strategy is somewhat effective as companies spend less on wages in order to increase the dividends given to shareholders. However, the same strategy has negative impacts as senior employees lose their jobs and the workplace is slowly turning into a boring field. There should be a balance in the division of labour, in which too much will not only harm the society and employee but will also affect the creativity of companies.
Successful businesses and corporations rely on investors for their success in the revenue aspect. The success therefore solely relies on the contributions and participation of the shareholders. Likewise, it is the responsibility of the established corporations to impress active investors. The measurement of the satisfaction of shareholders is known as the shareholder value. The shareholder value is normally reflected in the total amounts of dividends received by the shareholders. Furthermore, it is essential for the board of management of each company to lay down strategies and policies that counter the capital cost to ensure good results. The shareholder value is said to be maximum when the amount contributed by the investors generates more profit than it would have if the investors used it by themselves with equal amounts of risk.
Companies have policies and measures put in place to push its assets into achieving maximum shareholder value. One of the primary functions of the strategies is to safeguard the shareholders’ investments and also ensure that the results of their investments are proportional to the amount contributed. Daft, Murphy and Wilmott, (2015) state that such policies are for the better of the company and are termed as corporate strategies. Essentially, corporate strategies are measures laid down with the aim of achieving company goals and in this sense maximum shareholder value.
One of the corporate strategies companies adopt in their basic operations is the division of labour. This strategy is quite significant in achieving maximum shareholder value. Division of labour is the segregation of work processes into independent and distinguished tasks. These separated tasks are to be worked upon by skilled groups of people or professional individuals. Division of labour increases the efficiency of a company’s processes and its productivity as well. In most instances, this strategy is applied by manufacturing industries and companies involved in the mass production of products.
The organisation of labour exhibits different angles and impacts. Deskilling of labour is one of the results of the division of labour. In the job industry today, employers and companies prefer the use of technology than an excess number of employees to complete tasks in small durations. The process of incorporating machines to replace skilled individuals is known as deskilling. Additionally, introduced technologies are in most cases operated by unskilled individuals. Hence, skilled members are likely to lose their jobs to machines and non-professional operators. Understanding the relationship between corporate strategies, their aims in achieving shareholder value, and the division of labour is significant. The analysis helps in identifying the best methods of achieving maximum shareholder value safely.
Every functional company requires policies, laws, processes, and practices that govern how the company is directed and managed. The board of directors of a company are charged with the formulation and monitoring of the set strategies. Additionally, shareholders and other stakeholders play an indirect role in the formulation of these strategies. The corporate governance entails the factoring of different stakeholders’ interests in the company. Shareholders are a major group of stakeholders and their interests have to be upheld. Shareholders main interest is on the revenue and dividends earned from the invested money. Consequently, there are corporate governance strategies that uphold the shareholder value but also have an impact in the division of labour.
One major corporate strategy is the retain-and-invest approach. In this approach, the involved company focuses on improving the ability and capability of the labour force. The corporation recognises that the labour is the group of employees that play the biggest role. Furthermore, their performance determines the results at the end of a fiscal year. Therefore, the company settles at not spending the earnings on employing new workers but decides to reinvest the earnings on the existing employees. The process of reinvestment could be through training and activities that will help the workforce improve their skills. This strategy reinforces the labour force by ensuring every department is up to date in both the mental and technical skill. No worker is lost but the existing ones are given more resources and new skills (Rosenberg, 1965). The approach helps maximize shareholder value by ensuring no money is spent on employing more people but instead, the money is used to make the workers more efficient. The strategy focuses on long-term shareholder value goals.
Downsize and distribute is another corporate governance strategy. This approach has often been compared with the retain-and-invest approach. There are scholars who prefer one to another. According to Lazonick (2014), the downsize-and-distribute approach seeks to do away with the experienced workers and those who earn large amounts of money. As a result, the collected cash from the process of laying off workers is shared with the existing company shareholders. This strategy goes hand in hand with the “buyback corporation” approach that many companies have embraced. The buyback corporation procedure occurs when shareholders receive the shares by buying them and investing the money again to the company. This approach regards skilled professionals as liabilities and not assets to the company. In the long run, the shareholders receive their dividends however growth rate of the company slowly diminishes.
The process of downsizing and distribution leads to another condition known as deskilling. When companies no longer see the need of professionals in the workplace in comparison with the current financial state they are laid off. However, Lazonick (2014) does not recognise the need of replacing human skills with machines. Machines are expenditure hence eliminating professionals in order to cut costs is a terrible idea. The only advantage is that even though semiskilled, the numbers of employees increase and hence division of labour becomes quite easy (Rosenberg, 1965). Deskilling is aimed at maximising the shareholder value by reducing the amount paid as salary to skilled workers.
Division of labour is one aspect of corporate governance that is often neglected by many companies and corporations. Corporations pay more attention to the amount of revenue earned at the end of the year but disregard and forget workers and how they can be managed properly (Hill, 2007). Even though the division of labour is important for the growth and success of a company, the organisation of workers needs capital. According to Hill (2007), when companies misplace their priorities it is only certain that the process of dividing labour will fail. The capital needed will be responsible for training workers and purchasing resources that will assist the separated employees to work effectively.
The relationship between corporate strategies and the division of labour certainly affects the shareholder value. Apart from that, the relationship has effects on society and the employees in general. Firstly, society is one group that is always affected by the economical occurrences of the world. There is a significant relationship between the retain-and-reinvest approach and capitalism (Braverman, 1974). Capitalism is a system that products and services are exchanged in a free market with the aim of earning a profit. In a capitalist system, the economy is controlled by a few privately owned businesses. Workers are at the centre of the production and distribution of products in this case. According to Braverman (1974), this coincides with deskilling and the downsize-and-distribution approaches where the workers are less professional and lowers the cost. Therefore, capitalism becomes the long-term effect of the discussed relationship and the economy controlled by a few individuals.
The other impact of the relationship between the mentioned strategies and division of labour is on the employees. The division of labour with the aim of achieving maximum shareholder value negatively affects the workers. The corporate bodies now recognise employees as objects and no longer as human beings. They are not treated as vital parts of the production process. Deskilling replaces professionals who earn and support their families with machines. Secondly, the downsize-and-distribution strategy replaces one person with the other with the aim of making more money and forgot the employees’ wellbeing. Whereas the economy grows with the division of labour, morals are lost as individuals lose jobs and earn peanuts as wages (Rosenberg, 1965). Additionally, deskilling and division of labour reduces the level of creativity in the workforce. Division of labour requires minimal qualifications from workers for there is no professional requirement. The work also becomes boring since the employees are stuck in routine and simple jobs that do not require any skills.
Shareholders play a big role in a company’s growth as their money is what drives a company’s operations. Businesses, therefore, have to struggle to make sure they retain their investors. One of the corporate strategies businesses use is the division of labour with the aim of spreading labour costs and thus increasing the total revenue earned. The downsize and distribution approach is one of the elements of the strategy that lays off skilled employees to reduce the huge amount of salaries paid. This strategy is somewhat effective as companies spend less on wages in order to increase the dividends given to shareholders. However, the same strategy has negative impacts as senior employees lose their jobs and the workplace is slowly turning into a boring field. There should be a balance in the division of labour, in which too much will not only harm the society and employee but will also affect the creativity of companies.
References
Braverman, H. (1974). Labor and Monopoly Capital. New York: Monthly Review Press.
Daft, R., Murphy, J. and Wilmott, H. (2015). Organization theory & design.
Hill, L. (2007). Adam Smith, Adam Ferguson and Karl Marx on the Division of Labour. Journal of Classical Sociology, 7(3), pp.339-366.
Lazonick, W. (2014). Profits Without Prosperity: How Stock Buybacks Manipulate the Market, and Leave Most Americans Worse Off. [ebook] Massachusetts: University of Massachusetts Lowell. Available at: https://www.ineteconomics.org/uploads/papers/LAZONICK_William_Profits-without-Prosperity-20140406.pdf [Accessed 30 Oct. 2018].
Rosenberg, N. (1965). Division of Labor. Journal of Political Economy, 84(2, Part 1), pp.851-858.
References
Braverman, H. (1974). Labor and Monopoly Capital. New York: Monthly Review Press.
Daft, R., Murphy, J. and Wilmott, H. (2015). Organization theory & design.
Hill, L. (2007). Adam Smith, Adam Ferguson and Karl Marx on the Division of Labour. Journal of Classical Sociology, 7(3), pp.339-366.
Lazonick, W. (2014). Profits Without Prosperity: How Stock Buybacks Manipulate the Market, and Leave Most Americans Worse Off. [ebook] Massachusetts: University of Massachusetts Lowell. Available at: https://www.ineteconomics.org/uploads/papers/LAZONICK_William_Profits-without-Prosperity-20140406.pdf [Accessed 30 Oct. 2018].
Rosenberg, N. (1965). Division of Labor. Journal of Political Economy, 84(2, Part 1), pp.851-858.