Stakeholder Value generation vs. Meeting Expectations

I used to think, somewhat naively, that organisational “excellence” was all about meeting or exceeding stakeholders expectations. But I’ve had to realise how limited that view is. Expectations can fluctuate enormously – often on account of external factors such as the state of the economy, changes in the market, changes in government policy and so forth. Also the performance of an organisation might be consistently low, leading the stakeholders expectations of that organisation to become low. If these expectations are realised in practice is the organisational therefore “excellent”? Hardly!! ¬†And if the performance of an organisation is generally high but something happens externally that causes the performance to drop a little below the ‘high’ expectations of its’ stakeholders, is it no longer “excellent”? No, I don’t think it necessarily is. So whilst the “expectations” of stakeholders are important to know and understand, they can be misleading if not fully understood and contextualised.

So how else can we determine the level of excellence of an organisation? On reflection it seems to me that the best measures are those related to the level of value generated, with an excellent organisation generating exceptional levels of value over a sustained period. ¬†Conceptually, the notion of “value” is not difficult to understand, being at its simplest the difference between benefit and cost. For some stakeholders this can be quite readily measured, for example returns on investments made for the “investor” stakeholder group. (It is perhaps not surprising that the tangible nature of financial measures has led to a plentiful supply of value related financial measures such as Economic Value Add – EVA). But for others it can become quite complex, particularly where the “benefits” and “costs” are not entirely tangible but include subjective perception. This is particularly true of non financial stakeholders such as customers, employees, suppliers and the wider society. Clearly in these cases some perception related measures can be readily identified but these are only useful if the reasons behind the perceptions are identified and fully understood. However my research suggests that very little work has been done in the area of non financial stakeholder value generation measures and consequently, apart from some financial measures, very few organisations have any. If you have knowledge and experience in this area of measurement and would like to engage, I’d be very pleased to hear from you. (I can be contacted by email at markiwebster@icloud.com).