CHAPTER 8: WHAT MOTIVATESMANAGERS?
Officially, managers in the private sector are motivated by their obligation to maximise the return on capital invested in the organisation by shareholders; in the public sector, by a sense of public duty; and in the third or voluntary sector, by a commitment to the cause of their members.
In those (mostly) smaller organisations in which management still holds the largest percentage of the shares (i.e. well over 50%), what management wants is usually in line with what the shareholders want. This is not always the case in larger organisations, where management is, in effect, the agent of the shareholders. There is a body of research which argues that the ‘agency effect’ is, in fact, detrimental to shareholders. ...
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