SHAREHOLDER WEALTH

Spending On Staff Training and Health and Safety Should Be Minimized In Order To Maximize Shareholder Wealth

Spending On Staff Training and Health and Safety Should Be Minimized In Order To Maximize Shareholder Wealth

Introduction

I think that the idea of spending on staff training and health and safety should be minimized in order to maximize shareholder wealth do not fit in the current global world. Since, this is the time when the companies and organizations across the globe consider its employees as an asset and maintain the long term relationship with them. Employees are the blood of any organization, so it is vital to motivate them through various incentives both monetary and non-monetary. High productive, satisfied and committed workforce in the organization can maximize the shareholder wealth.

Discussion

Shareholders Profit and its Relevance

There is no possible way to completely satisfy each and every employee of the organization; therefore, it does not mean that the shareholder reject the concern of their employees. The traditional and generalized answer to the question about the purpose or primary business objective is profit maximization.

Ultimate aim of the company and of the whole financial management is to maximize the wealth of the owners for whom they work for. The share price measures the wealth of corporate owners, which in turn is based on the timing of returns, their magnitude and risk. In considering each decision alternative in terms of its impact on the price of the shares of the company, financial managers should accept decisions which are expected to increase the stock price. Since, the stock price represents the wealth of the owners in the company: maximizing the stock price will maximize the owner's wealth. Therefore, it becomes clear that the shareholder wealth cannot be maximized by reducing the employee compensation packages, healthcare benefits and work place safety benefits. Encouragement of employees and other stakeholders is the factor that actually drives the organizations toward the sustainable profits and achievements. Recognition is the prime motivator because it increases the commitment levels and self-esteem of the employees. Shareholders should recognize the achievements of the employees and managers in order to have maximum wealth maximization (Budworth 2004, pp. 80).

Shareholders Profit and its Comparability

For shareholder wealth maximization, it is vital that the employees should be sincere and highly motivated. It is essential that the there must be positive long term relationship between the employees and organization shareholders. Employees more often want more influence in the company's decision-making and management which lead to more control over the satisfaction of the employees (Colbert 2002, pp. 93).

The researches show that sometimes the company's shareholders focus on the short term goals at the expense of the gimmicks that may boost a stock's value. Such practices impact negatively on the long term value of stocks and other securities.

In a professional work environment, satisfaction or dissatisfaction of individuals can be seen through the consequences it generates. Such as through turnover, absenteeism, physical health, mental health, complaints and grievances, attitude toward life and ...