Corporates urged to strive for long-term gains

LAHORE: Corporates should strive for long term gains instead of keeping short term benefits in mind that may please the share holders for the time being but are volatile and unsustainable, experts have said on Saturday.
The quarterly reports of profit might please the shareholders but the quarterly capitalism might ruin the company in the long run, they warned, adding that achieving long term sustainability requires sacrificing short term gains and for that purpose investors need to be convinced.
There is no doubt that every head of the company aspires to make companies better and stronger over time, said manufacturer Adil Butt. However in practice what they prefer is short term gains, he added. Many are afraid of the uncertainties of the future and want to earn laurels in the short term. “The long term aspiration but short-term preference is one of the greatest challenges of modern management,” he added.
The chief executives knowing well their fault of ignoring long term stability often blame the pressure they face in quarterly board meetings, he said. The expectation of director for quarterly profits is cited as a reason for ignoring long term benefits but they still do not dare to reserve resources for long term, he regretted, adding that in many cases it is the company’s policy, the CEO or other groups that motivates the company to think short.
The factors that promote short term actions include the uncertainty of long term actions, said another entrepreneur Nabeel Hashmi. Another factor is the desire of CEO to continue to head the company by showing quarterly gains and create a legacy for his leadership, he added.
These short term phobias exhibited by the CEOs is in line with the capital markets however the managerial time horizons are certainly influenced by incentives and compensation, by the loud criticism of activists and by the real or anticipated pain that occurs when a company misses earnings and stock slides.
“When it comes to thinking, we’re trading depth for breadth,” he said, adding that most people are so focused on the immediate that they lose the ability to think more deeply about the long-term implications of complex problems. Technology and its disruptive impact make the matter worse, he added.
When people explore new data and get new information they feel elated without being sure of its authenticity, he added. New data releases pleasure-producing pulse in brain and makes people feel rewarded. To continue getting these rewards they become compulsive with the gadgets they carry around all day. Pharmaceutical manufacturer Amjad Jawa said higher ups in companies expect employees to be constantly connected, monitoring streams of messages and information. “This round the clock connectivity stress creates fear among workers of being disconnected, afraid that it may damage their careers, not to mention their social lives,” he revealed.
It is true that companies benefits from rapid communication and swift exchange of data, however they lose the human intellect to computer software, he deplored, adding that the employees lose the analytical and critical thinking that require a calm and attentive mind.
Elaborating his point, the pharmaceutical manufacturer said, we are experiencing the adverse impact of technology on our daily life. About 20 years back we were able to memorize dozens of telephone numbers now some people do not even remember mobile numbers of their immediate family members, because it is stored in their mobile phone, he said.
“Those using GPS device for step-by-step directions, know that computer automation has eroded awareness of surroundings and dulled their perceptions and talents,” he added.
It must be realized that computers cannot do everything that a human can, said Jawa, adding that software can only do what it has been programmed to do while humans have the ability to do the unexpected by applying their mind to it. “But the speed and precision of computers mask their fundamental mindlessness,” he regretted.
Willingness to forgo short-term gratification and keeping faith in the fundamentals can serve a corporate well as the value of discipline is at the heart of all successful corporates, he concluded.