A lawmaker in the US has proposed a policy which would alter businesses in the country significantly. The main tenet of this new law is that businesses with over a billion dollars in annual revenue need to act as “benefit corporations”. Under this, more than mere maximum benefits to shareholders, the focus will veer towards the other key stakeholders as well. The present avatar of simply trying to drive up profits is unsustainable in the long-run. Right now, managers try to raise up the profits simply to improve their standing within the company. Except for exceptional circumstances such as when the company has been put up for sales, firms do not overtly ask leaders to maximize profits. Employees need to have a strong voice within the company to ensure positive practices are followed. Investment needs to be made on infrastructure and corporate training in order to develop the existing staff.

Source:https://hbr.org/2018/08/what-would-it-take-to-get-businesses-to-focus-less-on-shareholder-value?utm_medium=email&utm_source=newsletter_daily&utm_campaign=dailyalert_activesubs&utm_content=signinnudge&referral=00563&deliveryName=DM12562

Uploaded Date:27 August 2018