Strategy for building a network of supportive stakeholders toward actualizing a common goal
As managers embark on building the accountable organization, they can easily become embroiled in an age-old argument: To whom is the firm accountable? The battle lines are typically drawn between two parties, those who answer shareholders and those who answer one or several other stakeholders, typically customers, employees, and community. The argument can stir strident philosophical debate. As the interests of society and business increasingly overlap, the stakeholder question stirs far fewer debates in practice. Neither the company nor its multiple stakeholders can ignore the benefits offered by the other, and neither can bite the hand that delivers benefits (Birchard & Epstein 2000). On the contrary, company managers must work cooperatively with investors, customers, employees, suppliers, and communities to create value together. To be sure, not every stakeholder wins an equal share in every corporate decision. Managers are often faced with trade-offs that pit the interests of shareholders against those of society or those of customers against those of employees. Of course, many in business today believe that stakeholders, and often society as a whole, place more demands on the corporation than they are due. They also believe that stakeholders’ demands, like support for education, extend beyond what the company is able to fulfill. Many people believe the public gives business a license to operate, that business operates at the pleasure of the public (Hanlan 2004).
For good reason or not, small groups of stakeholders can threaten to pull that license. They can pull it, if not in the court of law, in the court of public opinion. So managers will find it in their interest to remain sensitive to outside demands. A prime way of remaining sensitive is to determine if outsiders are happy, to measure the impacts the company has on various stakeholders, to factor a knowledge of those impacts into daily decision making, and to demonstrate with numbers how the company is paying its due. In many instances, companies will recognize that decision-making power is shifting away from corporate managers to communities, regulators, and the public. If companies do not proactively give an accounting to society, these constituencies, to remain loyal, will demand it (Hunt & Phillips 2002). Often, through the political or regulatory process, these demands will lead inexorably to more reporting. So in the same way that a company can adopt full accountability to remain competitive, it may find that taking action to gauge and report its social performance will help ensure its continued free operation as a valued institution in society. In the end, the difference between working in the shareholders’ interest and working in the stakeholders’ interest is small. Of course, sometimes it doesn’t look that way, as when a bloated firm runs into trouble and turnaround managers have to cut and wrestle their way back to levels of profitability that pay shareholders a fair return. Moreover, in the short term, it sometimes isn’t that way, as executives push win-lose transactions for short-term gain that cost stakeholders far more than they benefit. In the long run, however, what’s good for business is often good for society (Owen 2006).
Managers must take a broad look at performance, measure its many aspects, and report fully on their effect on all constituencies. Organizations undergoing major market, product, and structural change often have significantly increased focus on the intangible aspects of each key business dimension. For new markets, these organizations will have considerable focus on customer relationships and their management. As differing workforce skills and expertise are required, employee motivation and commitment become critical issues. Trust in the organization from all stakeholders becomes critical to the organization´s success, whether from suppliers believing an existing company will not be forced into bankruptcy or from new customers believing that a new company will be able to meet their needs. In times of crisis, intangibles often become much more ‘mission critical´ than tangible measures (Klimoski & Zaccaro 2001). With ever decreasing business cycle times, there is often a subsequent pressure on key stakeholders to adapt more quickly. For new markets, customers and employees are asked to adapt, understand, and be proficient in new areas of products and services. For companies undergoing frequent changes in executive management, employees are typically asked to embrace new corporate values with each shift in management. For each compression of business cycle, individuals are expected to compress their own cycles of acceptance and commitment. Emotional cycles are not able to follow the speed and compression of business cycles. This creates a significant disparity for many stakeholders and can significantly hinder the organization´s overall ability to adapt to its change pressures. For business changes involving only activity and behavioral shifts from its stakeholders, Directive Change Management can appear to be very effective at matching emotional cycles with the business cycles (Fox, J & Fox, R 2004). To build a network of supportive stakeholders toward actualizing a common goal a company must make sure that they have open lines of communication. The company must make sure that they have representatives that can be easily reached whenever stakeholders have some questions.
References
Birchard, B & Epstein, MJ 2000, Counting what counts: Turning
corporate accountability to competitive advantage, Perseus
Books, Cambridge, MA.
Fox, J & Fox, R 2004, Organizational discourse: A language-
ideology-power perspective, Praeger, Westport, CT.
Hanlan, M 2004, High performance teams: How to make them work,
Praeger, Westport, CT.
Hunt, JG & Phillips, RL (eds.) 2002, Strategic leadership: A
multi-organizational level perspective, Quorum Books, Westport,
CT.
Klimoski, RJ & Zaccaro, SJ (eds.) 2001, The nature of
organizational leadership: Understanding the performance
imperatives confronting today’s leaders, Jossey-Bass, San
Francisco.
Owen, JM 2006, Program evaluation: Forms and approaches, Allen &
Unwin, Crows Nest, N.S.W.
Credit:ivythesis.typepad.com
0 comments:
Post a Comment