Business Firms - Shareholders

Shareholders invest and create business enterprises for a " purpose" expressed in the form of mission and vision statements.. They set objectives to be achieved by the enterprises expressed in terms of levels of market share, profits, dividends and business growth. Shareholders usually do not manage the enterprises they set up. They delegate the management functions and responsibility to recruited and hired management teams on agreed terms and conditions of service. It then becomes the responsibility of the hired managers to undertake day today business management activities that are meant to achieve the enterprises' objectives as required by the shareholders.

Shareholders delegate management responsibility to hired managers in the belief that the managers can do a better job in achieving objectives than themselves. This is because they know that the managers have been professionally trained and have acquired appropriate skills in their respective areas of specialization to be able, acting as a team, to deliver the expected objectives of increasing the firm's productivity, profitability and growth on behalf of the shareholders

To realize the foregoing objectives, the managers, on their part, are expected to optimally utilize all the firm's resources, particularly the human resource, to produce quality products at affordable prices to satisfy the needs of customers and society at large. As the saying goes, managers do not work but obtain required results through the coordination of the production activities of their subordinates.

It is through this process of coordinating to achieve expected results through subordinates that managers are called upon to exercise their motivational skills to" energize their subordinates' behavior to accept and commit their work efforts willingly, freely and efficiently to perform their assigned production tasks that contribute