Geoffrey Fountain accurately describes how employees invest in mutual
funds which in turn wield inordinate power over corporations to maximize
profits, perhaps ironically, at the expense of the very employees who
invest in the mutual fund.
This appears to be the current situation. Power has, in essence, been
concentrated in the hands of a few fund managers who do not have the
longer term perspective of a) managers, or b) the power brokers in large
Japanese and German firms.
As a manager I can confidently assert a) above. However, I am only
speculating about the horizon of mutual fund managers, and I would not
want to characterize them unfairly. It would be good to hear from Peter
Lynch on this subject.
[Quotes from the prior msg appear below...]
- employees invest their savings in mutual funds, expecting maximum
returns - mutual funds grow in size as huge amounts of money are shifted
to equity mutual funds - mutual fund managers yield greater influence
allowing them to make demands of company CEOs and boards to maximize
profit - company CEOs layoff workers to maximize profit
We come full circle.
This might explain why downsizings are occurring even as companies are
making record earnings. They are expected to "maximize" their earnings,
not stop at a certain level. Anybody heard a mutual fund manager demand a
CEO retain their employment level while maximizing profits ?
--Rol Fessenden LL Bean 76234.3636@compuserve.com
Learning-org -- An Internet Dialog on Learning Organizations For info: <rkarash@karash.com> -or- <http://world.std.com/~lo/>