In many companies, decisions about the level and timing of share repurchases are left mainly to the management. But given their importance, corporate directors should probably pay closer attention.
Capital allocation is a significant function for company directors. How much of the company’s profits gets reinvested in the business rather than distributed to shareholders through cash dividends or share repurchases is a critical decision companies must make. Boards of directors typically approve a dividend policy and precise amounts for each quarter: Everyone knows that cutting the dividend will result in a sharp decline in the share price.
Read the rest at sloanreview.mit.edu…
Jay Clayton, the newly nominated chairman of the Securities and Exchange Commission, is slated to appear before the Senate Banking Committee on March 23 to begin his confirmation process. He should resist the rising clamor to stop quarterly reporting by U.S. companies, despite the efforts by some politicians and investment professionals.
Critics of quarterly reporting argue that it unduly focuses corporate executives on maximizing profits over the short term — usually defined as the next three months. Instead, these critics argue that shifting to semi-annual reporting would lead corporate executives to make longer-term business investments — usually defined as three to five years.
These arguments are not supported by our empirical study of the most relevant “natural experiment” — when, in 2007, the U.K. requirement moved to quarterly from semi-annual reports. Our study found that shifting the frequency of reporting by U.K. companies did not have any statistically significant impact on their business investments.
Read the rest at marketwatch.com…
Managing Your Team:
“To be an effective boss,” says Pozen, “you need to set up a system that enables both you and your employees to get meaningful work done. At the core of this system is the successful implementation of ownership.”
Pozen encourages the principal of “Owning Your Own Space,” whereby all employees of a large company view themselves as owners of a small business. This approach builds entrepreneurial spirit among your team and sets everyone up to succeed—including you.
Here are five steps to effectively implementing ownership:
- Set project goals. At the start of a new project, clearly communicate your goals and constraints—but let your employees establish the time frames for milestones. They will be more committed to meeting deadlines if they have a role in setting them.
- Establish accurate metrics. Reach an explicit agreement on quantitative and qualitative criteria that will guide your team’s work. Choosing the right metrics will also help you have a deeper discussion with your team about what you really consider important about the project.
- Supply needed resources. Make sure your team has the funds, head count, and equipment needed to get the project done. Also, be ready to help your “lieutenants” win battles with other parts of the organization. Leverage your authority to help them.
- Monitor without suffocating. You may be micromanaging, even if you think you’re not. Monitor the project in a supportive way by offering suggestions and revising goals and metrics as necessary, but be clear that they are free to achieve the revised goals in the way they think is best.
- Tolerate mistakes. Be quick to forgive employees if they make a well-intentioned error. Create an environment where employees can talk openly about mistakes and learn from them. Whatever you do, don’t humiliate them. According to research, half of all humiliated employees intentionally decreased their productivity in reaction to their boss’s actions.
Read the full article at MIT Innovations@Work…
By Brian Moore.
At first blush, Robert C. Pozen doesn’t seem like an extreme kind of guy.
He doesn’t BASE jump, BMX bike or bodyboard.
Instead, he has simultaneously taught a full load at Harvard Business School and served as executive chairman at MFS Investment Management in Boston, written six books and hundreds of articles and raised two children with his wife of more than forty years.
Read the rest at nypost.com
An excerpt from my newest book, Extreme Productivity.
If you and your boss disagree over a course of action but share a solid working relationship, you might be able to respectfully make your case by presenting data and engaging your boss in debate. However, what if your problem with your boss is more serious, resulting from repeated clashes rather than a onetime disagreement? In other words, what if you work for a bad boss?
Read the rest at FastCompany.com