Agency Effect

An accurate description of a relevant contemporary business problem. It is known as the “agency effect”, which basically means managers manipulating the company for their personal profit, not for optimal profit for the owners. It is also a very real reason it is hard to find dedicated employees and harder to grow a business now.

“If average Americans don’t get paid living wages, they can’t spend much money buying products and services. And when average Americans can’t buy products and services, companies that sell products and services can’t grow. So the profit obsession of America’s big companies is, ironically, hurting their ability to grow.”

Comments are closed