Are you thinking of using shareholder return or shareholder value statements at the top of a strategy map or balanced scorecard.
Some organisations want shareholder value at the top
Rather than linking their financial objectives to profitability, some organisations put shareholder value or shareholder return at the top of their financial perspective. Shareholder return consists of the increase in both the value of shares and the dividends received from that holding. So it is a higher level objective than profitability. It expresses the creation of the company’s value beyond its mere profit.
Advantages and disadvantages
Using shareholder return is useful to raise the horizon, but does have some disadvantages. For listed businesses, shareholder value or the total return to shareholders for their investment consists of movements in the stock price as well as dividends distributed. A company can be making a good profit, yet be subject to stock market fluctuations which are outside its control that lower its share price (and those of all the other companies in its segment or the market). So you might improve but the market might move against you. Likewise the dividend distribution strategy can also play a part.
Using organisational purpose instead
The other way of doing this is to use organisational purpose at the top of the strategy map or balanced scorecard. If you use purpose, and achieve that purpose (which I assume is about satisfying customers or beneficiaries’ needs) then income will flow. As long as you manage costs, then you should be creating shareholder value (in simple terms). therefore the higher purpose of the organisation is often a better motivator than using shareholder value (unless you are all shareholders). Personally I think purpose or mission statements are far more preferable.
Use with care
I have used shareholder return sometimes with organisations, but I would caution you if you do as it places some of the results outside management’s control.
You can use it: Just use it with care.
