Principle 10: Value for All Stakeholders (Item 3)

Sustainability is determined by an organization's ability to create and deliver value for all stakeholders.

Why this is important

You should negotiate a balance with representatives of all your major stakeholder groups.

It is clear that the company must be designed to provide value to each of the six stakeholder groups. You need to establish a balance between what the company can provide to each group and the value each stakeholder wants. This balance is crucial.

How do you find a balance? You should negotiate it.

All six of these stakeholders to some extent require value from the company. The Business Excellence Principles 3, 7 and 9 say that the company should be designed to provide value to three of them (customers, employees and community). Two of them the others (owners and the company itself) have a very logical right for the company to be structured for their benefit.

Each stakeholder group has its own needs and expectations.

Negotiating a way through that quagmire of conflicting needs and demands is a major task for executive management. Doing it formally and with structure is rarely achieved.

Representatives

Because all six stakeholder groups require value from the company, and five of them expect the company to be designed for them, they all expect to have some input into running of the company.

Companies that are doing this well include representatives from each stakeholder group in strategic decision making, strategic planning, products and service design, process redesign and company design.

This very revolutionary stuff is often met with serious opposition. Most companies only have representatives from the owners (the board) and the company itself (the executive managers). Those who are clinging to the old thinking, see no reason to allow any stakeholder other than the owners and executive managers to have their say in the company.

Although we agree that it always up to the executive managers to negotiate the balance between the needs of the stakeholders and to make the decisions, it is clear that all stakeholder groups must be represented at senior level and have input at major decision points.

We do not mean that they should be poking into every decision very day. However, all decisions every day must consider their interests and the balance between them.

In the stakeholders interests

Sustainability of the company is in the best interest of all stakeholders. They all want the company to keep going. Look at it from the stakeholders' side. Think of the unwanted effects on the stakeholders, if the company goes bankrupt.

• The owners lose income.
• The customer sees good products lost – good products and services that might not be available from another source.
• The company itself disappears.
• The employee sees jobs lost – loss of income and loss of the work `family'.
• The community sees loss of employment opportunity and taxation income.
• The supplier loses a customer.

Unions

Some unions also appear to cling to the idea that companies must be designed for union members alone. This is just as unsustainable as the senior managers insisting the company must be designed for themselves. Unions must recognize that in order for the company to survive, it must make money now and in the future, or else there will not be a company to employ the union members.

There is no place for bloody-mindedness. Both sides have a legitimate role – provided both are working for the good of the company and not just playing power games. Employees need their say in the way the company is designed so that they receive value. The company needs efficient work practices. The employees need the company and the company needs the employees.

Unfortunately, most companies and their employees have a downward spiral of ill will and lack of trust built over many years by both sides bluffing, lying and breaking promises. It usually takes considerable time and effort to restore that destroyed trust – as described in Principle 1 (`Role Models').

It is in the company's best interest for employees to volunteer enthusiastically – Principle 7. If the company is designed so employees think they are valued and receive value, there is probably no need for a union. Active union action usually indicates that Principles 1 (`Role Models'), 7 (`Enthusiastic People') and 10 (`Value for All Stakeholders') are being violated.

On the other hand, a union can be an excellent representative of employees' needs. A union can have a very active role in representing these needs even when trust exists and the employees as extremely satisfied with the company. It is a different role.

Providing value to each stakeholder group

There is a logical reason to include each one of the stakeholders. Each has a significant call on the value of the company. In each case, value to the owners is given up in exchange for promised value in the future – an investment.

As well as the benefits that each stakeholder group brings, it is useful to look at the effect on the company of the stakeholder not getting what they value from the arrangement.