Principle 10: Value for All Stakeholders (Item 7)

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

Why this is important [1]

You must measure your success in meeting your objectives for all your stakeholder groups. You must measure success including and beyond financial performance by determining how you are achieving success for each of your stakeholders by integrating and balancing their needs.

You will need to measure in order to find out if your investment is paying off. Are you getting value for money for your investments? Are you getting the promised benefits?

For example, for your owners are revenue, RONA and ROI increasing? Are earnings per share increasing?

Do your customer and employees think the value they get is increasing; are customer and employees increasingly satisfied; does the community think it is increasingly safe and prosperous; are alliance partners increasingly satisfied with the partnership? To find out, you must ask, and ask often.

You need to measure your progress by obtaining results for all indicators. You should present your results in a way that shows trends, comparisons with competitors or best in class and allows meaning interpretation of variation.

In order to assess its performance to date and its sustainability, the company should collect results about the following issues.

Owners' Results. For example

• return on investment, return on net assets, return on equity
• net margin, operating margins, pre-tax profit margin
• dividends paid per net assets, present value of projected future dividends, earnings per share, PE ratio
• profit forecast reliability
• cash flow
• liquidity and financial activity measurements.
• Comparative data for these measurements might include industry best, best competitor, industry average and appropriate benchmarks from outside your industry.

Customer Results to assess the customer perception of value. For example, customer satisfaction, customer dissatisfaction, customer satisfaction relative to competitors, and product/service performance.

• Other indicators of the company's performance as viewed by the customer might include retention, gains, and losses of customers and customer accounts; positive customer referrals; customer complaints and warranty claims; competitive awards, ratings, recognition from customers and independent companies; product and service performance measurements, especially those related to customer specifications.
• Product/service field performance based upon data collected by the company or for the company; or customer surveys on product and service performance. They should include attributes that cannot be accurately assessed through direct measurement (e.g., ease of use) and customer's perception of value received relative to quality and price.
• Marketplace performance could include market share measurements, business growth, new product and geographic markets entered and percent new product sales.
• Measurements of the success of product and service features are also useful `listening posts'. Improvements in features should show a clear, positive correlation with customer perception of value and other marketplace indicators. Using such correlations focuses the company on essential customer requirements and helps identify what differentiates product and service in the marketplace. The correlation might reveal emerging or changing market segments, the changing importance of requirements, or even the potential obsolescence of products and services.

Company Improvement Results to assess the success of the company investing in itself through strategies, capital investment, innovation, diversification, maintenance. For example

• improvement in responsiveness indicators such as throughput, cycle time, lead times, set-up times
• reduction in inventory
• reduction in rework; cost of quality (including rework and variation from standards and averages); scrap and waste reduction; product/process yield; complete and accurate shipments
• investment in standards and process assessment results such as customer assessment or third-party assessment (such as ISO 9000)
• innovation rates, innovation effectiveness, cost reductions through innovation, time to market
• measurements of strategic goal achievement
• profitability and operational effectiveness in all important areas.

Employee Results to assess the employees' perception of value. For example, how the company tracks employee well being, satisfaction, development, motivation, work system performance, and effectiveness.

• employee perceptions of well being, safety, morale, motivation and job satisfaction
• employee satisfaction with pay, recognition, benefits, compensation
• employee views of leadership, executives and management
• employee satisfaction with development and career and promotion opportunities; equality of opportunity
• perceptions of improvement in job classification, job rotation, work layout and changes in local decision making
• employee perceptions of effectiveness of employee problem or grievance resolution
• employee view of preparation for changes in technology or introduction of new products, service or work practices
• employee perception of work environment; workload; cooperation and teamwork; communications
• employee perception of job security
• employee perception of capability to provide required services to customers
• effectiveness of training
• dissatisfaction index of departing employees
• safety; time between lost time incidents and near misses; numbers of lost time incidents and near misses, workers compensation payments
• absenteeism, turnover, turnover rate for customer-contact employees, grievances, strikes
• You should be also gathering comparative information so that you can evaluate your results meaningfully against relevant external companies including competitors. For some measurements, such as absenteeism and turnover, local or regional comparisons are appropriate.

Community Results to assess the company's contribution to a safe and prosperous community. For example

• environmental indicators (emissions levels, waste stream reductions, by-product use; recycling)
• compliance with regulatory/legal requirements
• using external rating system such as ISO 140001, International Safety Rating System or International Environmental Ration System
• community satisfaction index
• reduction in regulatory requirements; increase in community confidence in self-regulation
• reduction in negative media attention
• You should also be gathering comparative information so that you can evaluate your results meaningfully against competitors or other relevant external measurements of performance. These comparative data might include industry best, best competitor, industry average and appropriate benchmarks from outside your industry. Such data might be derived from independent surveys, studies, laboratory testing or other sources.

Supplier and Alliance Partner Results to assess the success of your supplier and alliance partnership arrangements. The focus should be on the most important requirements from the point of view of your company – the `buyer' of the products and services. For example,

• Data that shows improving results from suppliers and alliance partners because of selection of better performing suppliers and alliance partners and assisting suppliers and alliance partners improve their work practices.
• Measurement of suppliers and alliance partners' contribution to your company's performance goals.
• Measurements and indicators of major purchasing factors, e.g., quality, delivery and price.
• cost savings; reductions in scrap, waste, or rework; improved cycle time and productivity.
• Supplier and alliance partner satisfaction with the arrangement; satisfaction and dissatisfaction indexes.
• An index of your perception of your satisfaction with each major alliance partnership; satisfaction and dissatisfaction indexes
• You should also be gathering comparative information so that you can evaluate your results meaningfully against competitors or other relevant external companies.

Footnotes

^[1] Material presented on this page comes from the MBNQA, ABEF and EFQM.