article thumbnail

We Can’t Study Short-Termism Without the Right Metrics

Harvard Business Review

The McKinsey Global Institute, in conjunction with FCLT Global, recently released research stating that long-term-oriented companies perform better than those that focus on short-term results. Getting the measurement right is central to providing convincing evidence on the debate over short-termism.

EPS 8
article thumbnail

How Incentives for Long-Term Management Backfire

Harvard Business Review

To hear long-term investors tell it, company executives have embraced short-term thinking like never before. Two obvious pieces of evidence: The use of earnings for share buybacks that cost more than they’re worth, and dividend increases that divert cash from long-term investment.

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

Managing in an Age of Winner-Take-All

Harvard Business Review

The advent of the modern organization and the practice of management constitutes a “social technology” that has been equally transformative. The forces of technology and management will continue to hold equal sway as the 21st century unfolds. This is a situation that cannot endure.

article thumbnail

Yes, Short-Termism Really Is a Problem

Harvard Business Review

With Hillary Clinton’s tax proposals to encourage longer-term investing , the debate over whether American business is too fixated on the short term has moved from the dimly lit offices of earnest policy wonks into the klieg lights of U.S. primary season. But that is far from true. ” A Review of Relevant Studies. .”

Hedge 8
article thumbnail

You Can't Impress Stock Analysts.and Shouldn't Try

Harvard Business Review

Nobody writes a paean to the search for 9 percent EPS growth. But the pressure to "impress analysts" means that leaders can't pursue the long-term perspective that creates truly lasting, great, and sustainable organizations. want people to focus on cash flow, which is a much longer-term measure than short-term profit.".

GAAP 8
article thumbnail

Business Needs to Do What Government Can't

Harvard Business Review

In short, change would happen, but at a dangerously slow pace. The oft-cited CEO of Unilever, Paul Polman, announced the company's Sustainable Living Plan , saying to investors: "if you don't buy into [our long-term value model], I respect you as a human being, but don't put your money in our company.". Breakthrough Institutions.

EPS 8
article thumbnail

?Numbers Show Apple Shareholders Have Already Gotten Plenty

Harvard Business Review

But with his open letter to Cook, Icahn has let the public know once again that however much Apple buys back, he feels it has the current cash, borrowing capacity, and long-term profit prospects to do much, much more. Apple is a company with phenomenal products and profits. Executives can use them to increase their gains from stock-based pay.