Corporations could learn a lot from health workers says UCD corporate governance expert
Posted 22 April, 2020
The corporate world could learn from the attitude shown by health workers says Professor Niamh Brennan, who has criticised shareholder interests being put ahead of employees.
As the COVID-19 pandemic has left tens of millions of workers jobless, some companies who have laid off staff have continued to pay shareholders their scheduled dividends.
Describing this behaviour as “disgusting”, Professor Brennan, an expert in corporate governance, said the belief that companies have “only group that counts... shareholders, and shareholder value, is very problematic in terms of how to run companies properly”.
“There is a discussion around the moral integrity of those companies that have paid rich shareholders but have no qualms about making staff redundant or putting them on furlough.
“We teach our students in university about agency theory - the fundamental assumption of which is self interest - and I've said it is just as well that we don't teach [it] to the healthcare workers selflessly putting their own lives at risk for the benefit of other people.
“I feel that if only some of that disposition could come into the corporate world we'd be so much better off,” she added.
Speaking as part of a new 'Impact' podcast series launched by the UCD College of Business looking at the economic impact from the COVID-19 crisis, Professor Brennan said many companies had acted to protect their workers and were providing much needed support in the fight against the virus.
“As is always the case, there will be decent people doing the best they can in very adverse circumstances and then, unfortunately, there will be the chancers... for example I have been completely disappointed, and that's not even a strong enough word... disgusted is the right word at the companies who have recently paid a dividend when they saw this coming.”
The pay out of dividends is generally a two-stage process. First,the board of directors typically proposes a dividend payout. Then shareholders vote to ratify the directors' proposal at the AGM.
Professor Brennan said the responsibility of shareholders to look beyond their own short-term interests during the current COVID-19 crisis should not be overlooked.
The UCD College of Business' new 30-minute 'Impact' podcast series is hosted by former Business Post editor and current UCD Quinn School lecturer Emmet Oliver.
Each week, it will feature leading figures from academia and industry to discuss the most compelling issues affecting society from a business perspective.
“As Ireland’s leading business school, we see it as imperative to continue to serve our community during one of the greatest challenges of our generation,” said Professor Anthony Brabazon, College Principal And Dean of UCD College of Business.
“Through our new UCD Business Impact podcast, thought leaders from academia and industry will contribute their perspective on COVID-19 challenges and ripple effects on business and society globally.
"Drawing from our academic expertise, as well as impact makers amongst our alumni community, we will be reaching out to our students and the wider business community through a compelling series of conversations on a range of topical issues during these unprecedented times.”
By: David Kearns, Digital Journalist / Media Officer, UCD University Relations