It’s All About Stakeholder Engagement

stakeholder

The three biggest challenges facing organizations today are the attraction and retention of talent, the erosion of trust by stakeholders, and the mental health and addiction crisis. However, the bigger challenge is finding sustainable practical solutions. From my experience, the solution is for organizations to view the challenges as business opportunities that go beyond the employee/employer relationship; and take an integrated and strategic approach that fosters active and positive stakeholder engagement. The relationships that organizations have with investors, customers, employees, contractors, vendors and communities are all inter-related and interdependent.

To be sure, over the last couple of decades there has been a focus and huge spend on employee engagement. Most large and medium-sized organizations have been conducting regular engagement surveys; yet, Gallop polling has shown that employee engagement has not exceeded thirty five percent in the eighteen years they have been monitoring this. So, why is this the case? To a great extent, it relates to imbalanced value exchange propositions that organizations have with the other stakeholders which are in conflict with the employee/employer relationship.

For example, how often do we hear about a company which espouses something to the effect, “employees are our greatest asset”; yet, when short term expectations are not met, they announce layoffs to show shareholders they are taking action. Layoffs may be necessary, however if this action is taken as a first resort, rather than as a last, the value exchange proposition with the shareholder takes precedence to that of the employee.

Google is another example where value exchange propositions are in conflict with the employer/employee relationship. About one half of people who work at Google are employed by a contractor. These contract employees receive significantly lower compensation than direct employees; and while they work in the same facilities, they do not enjoy the fancy perks that direct employees get. A few noteworthy points on this: first – Accenture, a company that consults with organizations on culture, is a contract employer for Google; second – this year for the sixth straight year running, Google was ranked by Fortune as the countries ‘Best Companies to Work For’; and third – the world wide walkout by thousands of Google employees in late 2018, exposed how out of whack their value exchange propositions are.

What is being advanced here is that organizational cultures are defined by the relationships they have with all stakeholders, not just employees; and the relationships are defined by the value exchange propositions they have with all stakeholders. As these value exchange propositions are inter- related and interdependent, they need to be complimentary, aligned and consistent.

Let me illustrate this using what we did after acquiring Shoppers Drug Mart, Canada’s largest drug store chain, in a management led buyout. At the time the chain had 567 locations, and the opportunity for us was to double the number within a decade; and to do this we required the active and positive engagement of all stakeholders. Specifically, we required:

  • investors to fund the expansion, be patient and supportive;
  • customers to buy our products and services, come back and buy more, and refer others to become customers;
  • employees to join, stay, work to full potential, meet and exceed customer expectations, and refer others to join and stay;
  • vendors to become partners (particularly our private label suppliers) to maximize the various categories; and
  • communities to welcome and support our entry.

Understanding what we required from each, we then solicited from them what they required from us to deliver on our expectations of them; the result of which became our value exchange propositions.

The initial and biggest challenge we faced was attracting and retaining pharmacists. At the time was a world-wide shortage of pharmacists and we, to just keep the current compliment of staff, kept increasing the compensation, which became a losing battle, as our competitors were doing the same thing. In establishing the value exchange proposition with them, the number one expectation they had of us was “treat us with respect”; which, by the way, was high on the list of expectations all of the other stakeholders registered with us.

The second expectation pharmacists had was “allow us to practice our profession so our patients can rely on us as a health care provider”. What we heard from the customers reinforced the inter relationship and interdependency of value exchange propositions in that they expected the pharmacists to be the one constant in the health care chain of specialists, in particular as it relates to drug interactions.

We delivered on all of the expectations that our stakeholders had of us; and they in return exceeded the expectations we had of them. As a result, we became the organization of choice for investors, customers, employees, vendors and communities; and we reached our objective of doubling the number of store locations within the decade.

The approach we took is not rocket science. It is pretty simple, but it has to run deep, addressing every aspect of the way an organization operates, so all of the value exchanges are aligned and complimentary.

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