Road to 100k
Thanks for the 80,000 blog views. Guess what? Only 20k more to a whopping 100,000. Wow!
Anyway, so, this morning, I was prompted to reflect on personal pursuits by Dr Kaul in our meeting. One thing about pursuits, both academic and professional, is that these endeavors have become relatively narrow and streamlined in recent years. The only paid work I have ever applied for or been in for have been executive staffing roles, mainly because as anyone who knows can testify, staffing is a sector I am quite interested in, alongside Learning and Development (B814), and Employee Relations (B813).
However, as the fit notes era is well and truly behind me, I have become quite "choosy" in my adult years concerning opportunity (I guess some of us have to be) and in terms of my outlook and career potential.
In utopia, I tabled the pursuit (it is much rather an aspiration) of becoming a Research Assistant (Post-Doc) to a prominent Professor of HRM at London Business School or King's College's Department of Human Resources, which is a bricks-and-mortar University, which I greatly admire.
However, even I had to acknowledge to Dr. Kaul, that there is a very small caveat that this career path inherently has. Though strikingly rich in vernacular and academic esteem, I may choose its course (spotting gaps, conducting original research, co-authoring, etc) and live to realize it was perhaps a feat only a lucky few could accomplish in their careers in academia.
That got me thinking. Whatever happened to good old shareholder capitalism?
A major element of Tianxi Wang's module is controversial. We all know what shareholder capitalism is though, right? Well if you didn't, I'll briefly explain. This term generally describes theories that deal with the concern of investors as owners of corporations (Jensen and Meckling, 1976) which are equally important to the rise of startups and smaller enterprises. It aims to answer the question: How can shareholders, who have the long-term value and ownership of the firm at heart, best delegate the control of decisions made by managerial actors who are entrusted to maintain this value, to varying degrees of stewardship? This is often called the 'separation of ownership and control' in the United Kingdom and other countries.
In Jensen and Meckling's (1976) abstract, we find the familiar problem of principal agency. It reads: "We define the concept of agency costs, show its relationship to the ‘separation and control’ issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears costs and why, and investigate the Pareto optimality of their existence." What exactly do Jensen and Meckling mean here by the use of the word "costs"?
Well, Prof. Edmans, and others such as Varela (2017), have argued, that they mean agency costs, which "arise when the firm is run by a manager who owns less than 100 percent of the company—so there’s a separation between shareholders (the ‘principal’) and the manager (‘agent’) who acts on their behalf. Agency costs arise when there is a ‘divergence between the agent’s decisions and those decisions that would maximize the welfare of the principal’. Human Resources as a function, are therefore quietly implicated in a very real sense in ideas that go above and beyond the importance of something as simple and simultaneously as complex as strategic planning. We are talking more along the lines of what value, governance, and stewardship on behalf of the principal owners of a firm, are, and in what Prof. Edmans refers to - as the overall "welfare" of the firm. To sum up, shareholder capitalism is of great importance to our perceptions of pluralism in Human Resource Management as a discipline and should be given more credence and granted more clemency.
References
1. Jensen, M.C. and Meckling, W.H. (1976) 'Theory of the firm: Managerial behavior, agency costs, and ownership structure', Journal of Financial Economics, 3(4), pp. 305-360 - Available at https://www.sfu.ca/~wainwrig/Econ400/jensen-meckling.pdf
2. Edmans, A. (2021) 'What Stakeholder Capitalism Can Learn from Jensen and Meckling'. Oxford Law Blogs - Available at https://blogs.law.ox.ac.uk/business-law-blog/blog/2021/05/what-stakeholder-capitalism-can-learn-jensen-and-meckling
3. Varela, O. (2017) "Agency costs” when agents perform better than owners, Finance Research Letters, 23, pp. 103-113 - Available at https://doi.org/10.1016/j.frl.2017.07.019