A Good Place To Start On Performance Improvement


…do you know why customers buy from you?
…do you know why people are attracted to work for you?
…are you truly focussed on delivering shareholder value?

Welcome to my first PI (Performance Improvement) blog entry.

My aim is to create a forum for sharing and learning amongst performance improvement practitioners and business managers. We’ll be giving failures and successes equal airing because we can learn so much from both!

For the past 4 years most of my work has been in healthcare (acute care private hospitals) however all industry sectors are welcome to share their thoughts. Cross fertilisation of ideas often leads to breakthroughs – such as private hospitals adopting ideas from 5 star hotels.

To kick things off let’s talk about stakeholder management, an excellent and logical foundation to start a performance improvement project and something that is often overlooked.


performance-blog-post chances-text

Let’s give our CFO guy with the folded arms some ideas to work on.

What is stakeholder management?

Stakeholder management simply involves clarifying and improving on your stakeholder’s expectations.

Think of your stakeholders as shareholders, customers, employees, community, government authorities etc. Anyone who might ‘bear some form of risk as a result of having invested some form of capital, human or financial, something of value, in your organisation’, (Clarkson, 1994).

In a recent review we identified surgeons, nursing staff, management and patients as the main stakeholders for an operating room at a private hospital. Little had been done with any of these groups regarding surfacing their expectations of the hospital. Patients included!

Everyone has customers so try this with your team….

Ask your team what factors do you think attract our customers to buy our products (or services)?

We ran this same exercise with a client some years ago and check out the diversity of their responses below. BTW this business never really got the message that stakeholder management drives shareholder value. They ended up in receivership.

My guess is the diversity of responses alone will give your team a big wake up call. If not, this war story will generate urgency.
The leadership team came up with the 4 factors in the left-hand column below, after considerable argy bargy.

Then we asked 30 of their top customers why they dealt with XYZ Food. They provided the 5 factors in the right-hand column.

A perfect illustration of a business horribly off-track in understanding their key stakeholder, the customer:

Reputation meant nothing to the customers. Ditto brand recognition and long-standing relationships.

Run this simple exercise with your team and the right-hand column will give you something to work with and get your PI project launched.

If you are trying to sell the PI idea internally, the following research might also assist…

What is the pain of ignoring your stakeholders?

  • Customers will vote with their purchasing dollars and go elsewhere. Most likely with your competitor who does a better job of managing their expectations. We actually videotaped 3 of the 30 customers who had started to trade with another supplier. Playing this back to our food processing client certainly helped generate urgency!
  • Staff will vote with their feet. Training invested and intellectual value walks out the door each time your organisation loses a valued employee. The Gen Y factor exacerbates this risk.
  • Investors will vote, of course, with their investment dollars.
  • Suppliers will deny supply, restrict credit or whatever punitive action they can take as a result of you not accounting for their needs.
    If this is not enough to spark action to change, there is ample research to support moving toward becoming a stakeholder centric organisation…

The following research from 2001 continues to hold true: A study of S&P 500 firms has proven the direct correlation between stakeholder management and shareholder value (Hillman & Keim 2001).

Interestingly this study also showed that extending your efforts beyond primary stakeholders has the reverse effect. Social issue participation (i.e. avoiding nuclear energy, not engaging in “sin industries” like alcohol, tobacco and gaming) leads to decreased shareholder value.

Restricting your management to the stakeholder definition above will save you from getting into unproductive social issues and associated costs. Work with your primary stakeholders only.

You cannot satisfy all the people all of the time – however (primary) stakeholder management is non-negotiable.

Over to you….

Jeremy de Constantin was a former director of Vantage Performance and leader of its NSW practice. Vantage Performance is one of Australia’s leading turnaround management and profit improvement firms – solving complex problems for businesses experiencing major change.


Related Blogs

Talk directly
with our specialists
Michael Fingland
Andrew Birch VP

Call Michael Fingland Email View Michael Fingland on LinkedIn

Michael Fingland

My philosophy is that there is always a way to solve a crisis, as long as you’re engaged early enough.

Call Andrew Birch Email View Andrew Birch on LinkedIn

Andrew Birch

Cooperative leadership teams that develop prioritised actions to progress towards clear strategic objectives can achieve long-term business viability.