Reconciling stakeholders interests
(Originally published on the OUBS Blog)
There is a potential for conflict between the interests of any and all stakeholders in an organisation.
Society and business depend on each other.
Business:
\- Employment
\- Wealth creation: wages, dividends, taxes
\- Material needs: goods, services
\- Commitment: innovation, investment
Society:
\- Means of production: labour, raw material, land
\- Infrastructure: transport, services
\- Means of exchange: currency, banking, credit
\- Supportive environment: law and order, justice, stability
Organisations need to achieve a balance between philanthropy and self-interest in their community activities, aiming for social responsibility and avoiding the cynical use of cause-related marketing and pure philanthropy (Cannon’s enlightenment matrix)
You also need to establish priorities based on predictability, competition and capabilities.
Uncertainty can be assessed in terms of objectives and consequences (Earl and Hopwood’s uncertainty matrix). The greater the level of uncertainty, the more managers need to be inspirational rather than mechanistic in their approach (see organic or mechanistic organisation). If things are unpredictable, then keep your options open. Collaboration is far more widespread than you may think. But for competition one needs to consider:
a) objectives for customers, suppliers, resources and influence
b) in both the short and the longer term
In successful organisations, assets are converted into organisational capabilities which enable the organisations to survive and flourish.
physical assets
Know-how
Skills
Customer base
Brands
If you are evaluating performance then your choice of what you measure and how you measure it gives a strong signal about your strategic direction and priorities. There are several indicators for performance:
Economy: How cheaply can inputs be purchases.
Efficiency: refers to the relationship between inputs and outputs; usually expresses as a ratio.
Effectiveness: how well the final outcomes and impact of an organisation meets its objectives.
Equity: (Gerechtigkeit) fair and equal treatment of all service users.
The balanced scorecard assesses performance from four perspectives: financials, customers, internal processes and innovation/learning