Maximising shareholder value can lead to environments where labour is exploited. Workers are often constantly reliant on the goodwill gestures of shareholders to not exploit their contributions.
Critique
Maximising shareholder value can lead to environments where labour is exploited. Workers are often constantly reliant on the goodwill gestures of shareholders to not exploit their contributions.
Incentivised to exploit contribution
The disconnect between contribution and ownership creates an environment where the shareholders of an organisation have an incentive to try and exploit other people's contributions so they can financially benefit themselves. Some organisations might issue shares to workers for their contributions, however it is not required that they give them the amount of shares that would represent the fair value that they have provided. Any small gap between what was fair and what they receive would just mean this is a milder form of exploitation. Other organisations might decide to give workers no shares and also actively try to minimise the income that workers receive. This is a more severe form of exploitation. Companies limited by shares can create an environment where owners are incentivised to exploit other people's contributions. The ease and ability for workers to earn income elsewhere will impact the ability of shareholders from being able to exploit them. Workers with more employment options will be more difficult to exploit than workers who have fewer job opportunities that they could pursue.
Goodwill gestures are unreliable
Workers that are part of organisations that treat contributions more fairly could face an ongoing risk that the leadership changes their approach to evaluating and rewarding contribution. If the owners change there is a risk that the new leadership does not continue the gesture of goodwill that the previous owners were making. The issuance of shares to workers would help to reduce or remove the issues around requiring goodwill gestures from shareholders and leadership. This is because a wider distribution of shares across the organisation would mean that all workers become owners that can then influence how the organisation is operated.
Companies limited by shares can still compensate people fairly
Owners might not be incentivised to compensate workers fully for their value however this can still occur in numerous organisations. Workers are often reliant on the goodwill gestures of owners to be paid fairly. However some organisation owners may decide to properly reward each contributor with larger amounts of compensation or shares of ownership that reflect the value of their contributions. This could give workers more of an opportunity to influence the organisation or it could mean they are better rewarded and more fairly.
Last updated
