GROWING AND COORDINATING STAKEHOLDER COMMITMENT
of wisdom and because of daily pressures, most of us think too much about our
own needs and not enough about the needs of the communities that feed us-such
as, family, company, domestic economy, etc. We can not outperform our
communities with which we are interdependent.
of all types have, therefore, been preaching since the beginning - "united
we stand, divided we fall." The four main stakeholders in a business - the
employees, the customers, the suppliers, and the shareholders - have the same
challenge in these most competitive
times. It is difficult for stakeholders to pull together, however, if they do
not understand the stakeholder success cycle and how they must be responsible
to it first and themselves second.
WHAT IS A STAKEHOLDER?
stakeholder is any person or institution that has a vested interest in the
future well-being of a company. Business stakeholders can always take their
bodies and skills; their purchases; their services; or their invested dollars
to better alternatives if current payoff slides and future prospects dim. These
collective expectations put much pressure on management to grow and reinvest
profits for a better company future to attract and keep quality stakeholders'
HOW TO EXPAND THE PIE FOR ALL
growth times or in growth industries managers can focus aggressively on growing
sales and margin contribution dollars hopefully follow enough to afford raises
and profits to reinvest, and most stakeholders are happy. But today, 80% of all
firms are in mature industries with excess supply selling to a flat,
post-consumer society demand. Growing profitably is difficult.
at the diagram below, consider this method for growing. First, the employees
win by getting market-plus wages and a motivating environment which includes
understanding the strategic big picture and how they fit in and can make a
difference. They work hard to produce perfect quality goods and/or services so
that the customer can win second. If the customer is getting exactly what they
need, they - will be more successful in doing their value-added activity; will
return to buy more; and will tell their friends about you.
wins third by retaining customers at a greater rate than the less effective
competitors which will grow sales faster than the industry. And with superior
quality, the firm can charge more to improve profits. By growing profitably the
firm can: buy more from suppliers and discount the bills; hire new employees;
promote or keep secure the existing ones; occasionally achieve premium levels
of profits which can be shared among employees, investors, and special
investments for better future care of customers. Premium profits reinvested can
prime the cycle for another round of pie-expansion.
LEADERSHIP, INNOVATION AND TRUST
clever leaders to be able to attract, motivate, and keep good people. Leaders
must be willing to forward invest in wages and education to have skilled
players. Then they must articulate a strategic direction and guiding values
which will sustainably motivate and align everyone's energies.
is required to leapfrog the competition, adapt to environmental change, and
turn unforeseen negatives into learning positives. When a leader offers or
endorses a new program it means change and risk above the norm for employees.
If it is a large-scale program, then suppliers, investors, lenders, and even
guinea-pig customers may have to contribute extra resources or share risk. Why
should they? What is in it for
them? What if the plan doesn't work?
stakeholders trust management's plan, implementation competence, and intentions
to share fairly in any gains, then they may sign-up for the effort. Management
can build trust in the plan by involving everyone who must buy in during the
formulation stage. They can build trust in their implementation ability with a
successful track record of doing similar programs of increasing size.
personal fairness must be earned by historically being trustworthy. If we keep
all of our promises and even the ones that others thought we made; if we carry
water for the troops, and serve ourselves last; if we do more for others than
they thought necessary to have excess goodwill for offsetting occasional
failings; and if we negotiate the sharing of any premium gains in a balanced
way using measurable, objective market standards - then it is possible for us
to have the trust and the commitment of the stakeholders.
profits has become so difficult that we need greater amounts of stakeholder
commitment and coordinated effort to achieve new levels of quality,
productivity, and strategic fit with targeted customer needs. We won't get motivated
stakeholders unless we can explain the big picture and how we are all
inter-dependent. Then good leadership must earn the trust necessary to get
everyone to sacrifice today so tomorrow's pie will be bigger and better for
all. If not, the best stakeholders will start to withdraw their contributions
if not leave for better situations. The best companies will prosper while the
rest will deteriorate faster in these faster changing, more competitive times.
ÓMerrifield Consulting Group, Inc.
Article # 2.6