Page 60 - Performance Leadership

Chapter 3 Measurement Drives Behavior • 49

they seldom have the same objectives. Everyone is interested in the
organization obeying the law. Regulators focus on the organization’s
strictly following processes; whereas shareholders may worry about the
cost of these processes. Customers like the organization to be trust-
worthy, but they are also asking for a certain speed and flexibility. Both
customers and suppliers would like a high stock turnover, for fast busi-
ness. However, customers want a good deal from the organization, and
suppliers want a large margin. An understanding of stakeholder require-
ments (and their contributions) starts with an understanding of the type
of relationship the organization has with its stakeholders.
Consider the example of a telecom company, seeking a good rela-
tionship with its regulator. It would like to have clear and reasonable
rules to obey and advice and guidance on how to follow the rules. The
telecom company works under the assumption that the regulator
wants the telecom company to be successful, realizing joint value in
the market. The telecom company supports the economy; the blessing
of the regulator adds to the trustworthiness of the organization. How-
ever, the telecom regulator has a different view. It sees itself more as
a police officer, critically watching the telecom’s behaviors. The reg-
ulator is not looking to give guidance and advice beforehand; it is only
interested in judging the results afterward. It treats the telecom com-
pany in a transactional way. Nothing will change until both stake-
holders have the same understanding of their mutual relationship.
Every type of relationship needs to be managed, and the key in doing
so is to create transparency. Without sharing information, organizations
cannot collaborate and build a functional relationship. In transactional
relationships transparency usually consists of operational information,
such as status information on processes and perhaps financial results.
In richer and deeper relationships, organizations share information on
what impact they have on each other’s operations, or they even build
integrated balanced scorecards. The performance indicators in such
relationships should be reciprocal of nature. They should focus on
understanding what the stakeholders require from each other and what
they contribute to each other.
For instance, the success of product sales to customers should be
measured in terms of cost savings, better business opportunities, or con-
tribution to a customer’s life, instead of product or service profitability.