10/07/2025

When Shareholder Engagement Hurts More Than It Helps

Too much engagement can fuel organizational frustration

As shareholder groups grow more diverse and dispersed—whether in family firms, co-owned private companies, or scaling startups—leaders often obsess over shareholder engagement. The assumption seems straightforward: When managers and shareholders are more engaged, both sides will show increased commitment, more alignment on the best use of resources and more constructive contributions.

But it doesn't always work that way. In fact, when managers spend too much time trying to engage with shareholders, it can lead to slower decisions and fuel frustration within the organization. Instead of trying to create engaged shareholders, a better approach is to focus on supportiveness and build a relationship where shareholders provide quiet but clear support when alignment is mostly required.

We studied shareholder roles in expanded ownership structures through 29 interviews with multi-generational family firms in France. These companies had weathered market shocks, leadership transitions and generational change over decades or even several centuries. Our findings showed that supportiveness is not accidental—it is deliberately cultivated.

Please select this link to read the complete article from Harvard Business Review.