HBR's 10 Must Reads 2019

Nature of shareholders

Undiff

erentiated, self-interested wealth

maximizers

Diverse, with diff

ering objectives, incentives, time horizons,

and preferences

Role of directors

Shareholders’ agents, delegates, or representatives

Fiduciaries for the corporation and its shareholders

Role of management

Shareholders’ agents

Leaders of the organization; fi duciaries for the corporation and its shareholders

Management’s objective

Maximize returns to shareholders

Sustain performance of the enterprise

Management’s time frame

Present/near term (theory assumes the current share price captures all available knowledge about the company’s future)

Established by the board; potentially indefi nite, requiring attention to near, medium, and long term

Management performance metrics

Single: returns to shareholders

Multiple: returns to shareholders; company value; achievement of strategic goals; quality of goods and services; employee well-being

Strength

Simple structure permits clear economic argument

Consistent with law, history, and the realities facing managers

Weakness

Principles do not accord with law or good management; shareholders have power without accountability

Principles describe complex relationships and responsibilities; success is diffi

cult to assess