Research has identified that the most important stakeholders of large organizations are employees – who come ahead of customers, suppliers, community groups, and especially far ahead of shareholders.
For his PhD research, Professor Nigel de Bussy, head of the business school at Curtin University in Western Australia, conducted a national study to identify the stakeholders who have the most impact on corporate financial performance. He surveyed financial managers of 626 companies, employing 100 employees or more, to investigate which stakeholder groups were the most important for developing positive relationships.
De Bussy reported that employees are the most vital stakeholder group by a long way. He found that organizations positively engaging in stakeholder orientation activities achieved greater stakeholder satisfaction, which in turn led to stronger financial performance. In other words, organizations who adopted the stakeholder concept made more money.
Image, right: Professor Nigel de Bussy
De Bussy measured how strongly orientation towards different stakeholder groups influences financial performance. The coefficient for employee orientation was 0.84 compared with much lower but still substantial values for customers (0.36), suppliers (0.35) and communities (0.32). The coefficient for shareholder orientation was minimal at 0.08.
The participating organizations comprised companies (85%) and not-for-profit organizations (15%). The questionnaire specially developed for the research (‘STAKOR’) can be used as a diagnostic tool by organizations wishing to assess their stakeholder orientation practices.
A stakeholder is a group or individual who can legitimately affect or is affected by the achievement of an organization’s objectives. Stakeholder orientation is about creating social as well as economic value for stakeholders, listening and responding to stakeholder concerns, with a spirit of goodwill between the two parties.
Respondents contacted for the research were chief financial officers because they were considered to be best positioned to comment on their organization’s financial performance..
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