Whether you are in the public or private sector, each of us has many bosses. Each of these bosses have different wants but in some ways they are alike: they want to be paid first and they want to be paid now.
For the private sector, the question is how to balance the business versus the stock holders. That is, there is an ongoing tension between investing in your business/employees and paying out dividends to stock holders. As a large business owner, if you get the balance wrong, you go out of business. So it is important to get it right.
But sometimes, the stockholders forget that the money is generated by a well run business. Indeed, if the business is not running well, there will be no stock dividends. Nonetheless, the stock holders want money and if they don't get it from business X, they will get it from business Y.
One interesting comparison is this article from the Wall Street Journal comparing warehouse giants Costco and Sams/Wall*Mart. The first pays their employees a living wage and good medical benefits (as a government worker, I pay three times more in medical costs then Costco employees) but doesn't pay that much in dividends to investors. The other, pays as little as possible to its workers but keeps its investors happy by paying steady dividends.
This is not an easy question to answer and I can't say one way will always work over the other. But in my opinion, if you have good employees, the long term prospects are better for them then the one that squeezes the life out their workers.
