Organization Performance

Customer
Loyalty

Organization Performance Model

Customer Loyalty Model

360º Feedback

Internal Partnering

PDi Followup
Action Planning

Multi-Stakeholder Assessments

If you don't stay in touch with your stakeholders, you're working on assumptions instead of facts, and you'll feel blindsided when they leave.

John P. Kotter and James L. Heskett (Corporate Culture and Performance. New York: Free Press. 1992) empirically studied the performance of firms whose culture balanced stakeholder rewards. They compared these "balanced" firms to the general market, and to firms who valued maximizing returns for a single stakeholder - the shareholders. After examining over 200 corporations for over a decade, the results were clear: those with a culture of balancing stakeholder rewards generated superior returns:

What explains this discrepancy? The short term gains of taking advantage of some stakeholder groups for the benefit of others has high long term costs. Opportunism does not build loyalty and commitment with stakeholders - quite the opposite. On the other hand, when employees feel valued and fairly treated, they are willing to invest the kind of motivation and creativity that yields distinctive competence, and the kind of commitment and initiative which allows them to successfully adapt to industry changes and overcome unexpected problems. When customers feel valued and fairly treated, this relationship becomes part of the purchase criteria, and they are more forgiving when problems happen, because they know things will be made right. When owners feel valued and fairly treated they can have confidence that their investment will yield superior returns, particularly over time.

Depending upon the nature of the industry your organization is competing in, the list of stakeholders only begins with customers, employees, and owner/investors. Other internal and external constituencies may also become important stakeholders. For example, in pharmaceuticals, the Food and Drug Administration is federal regulatory agency that can be considered as an important external stakeholder -- one who can dramatically affect a drug company's success. In health care, the American Medical Association is a powerful professional organization that affects your company by influencing the physicians under your employ. In construction and government agencies, labor unions typically represent powerful stakeholders who must be reckoned with. The manufacturing and production, vendors and subcontractors are often critical stakeholders in this era of just-in-time manufacturing. The list of potential stakeholders varies widely from industry to industry, and may include customer protection watchdogs, environmental or animal rights groups, professional associations, local cities or communities, state governments and regulatory agencies, industry associations, courts or other legal organizations, and so on.

Most survey research efforts gather data from one source (usually customers or employees) to generate their findings, and with good reason. Gathering data from multiple sources is more costly and time consuming. However, some executives feel that the additional insights gained from multiple perspectives justify the additional investment. This is the same rationale behind 360 degree profiles for individuals - feedback from all directions (boss, peers, subordinates, etc.) is superior to feedback from only one. Many executives will agree that it is important to keep in touch with stakeholder loyalty to discover any problems before they become crises. What is the quality of the data you are using, and is it representative of the entire stakeholder group? If you think you need an upgrade, PDi can help.