by Randal Godden, Chairman and CEO, at TEC South Africa
This article was first published in Real Business, a supplement
to Business Day which appears on the third Monday of every month.
The challenge for many entrepreneurs or owner operators is getting
the balance right between planning and routine tasks. A crucial aspect
of the CEO’s responsibility is to develop the programme for
establishing the manner in which relationships will be managed for
each of the enterprise’s stakeholder groups.
And this does present a challenge for many leaders, as it requires
an approach of understanding, an inquisitive style and careful thought
as to desired outcomes. For leaders from technical and financial backgrounds
the challenge will be even more pronounced, as their people skills
and orientation are not always a key strength. It is nonetheless critical
that the relationship platform between the organisation and its stakeholders
be carefully developed, monitored and managed.
Stakeholders are predominantly customers or clients, suppliers,
employees, financiers, business associates, shareholders and the community.
Following is a brief outline of the style of program for each stakeholder
group:
The customer relationship plan is obviously dependant on the type
of business and size of the customer base. In retail or consumer related
business, the marketing proposition needs to be clearly promoted to
the customer (ie: product, quality and unique selling features). This
needs to be supported by a monitoring program that provides feedback
around customer perception of your success or otherwise.
In a business-to-business scenario, the number of customers is usually
more limited. A beneficial approach would be to develop key account
relationships with major customers, existing and potential, who typically
represent more than 50 percent of Gross Revenue. Depending on the size
of the customer, this program proves most successful where each major
client has a key account team of “experts” headed by a
client principal who interfaces directly, at a strategic level, with
their counterpart in the client organisation.
For many organisations, suppliers are at least as crucial as customers.
Assured supply, awareness of changes in our industry, JIT programs
and mutual programs for value adding are essential to ensuring continuous
products and services to your client base. My experience is that too
few organisations strategise effectively as to who their strategic
suppliers should be and how to develop a long-term relationship with
them. While an important factor, price is not the only supply determinant.
Toyota is an excellent example of how to build and sustain an effective
supplier network.
While many organisations state that their employees are their most
important asset, only a few develop programs that optimise the talents
of their people and provide the balance between the needs of the organisation
and those of the individual. Organisatios need to provide a challenging,
performance-based environment with a clearly communicated value system,
embraced by the whole organisation. Everybody’s behavior, from,
in particular, the leaders, through every level of the organisation
must be consistent with the value system. How we interface with the
various employees throughout the organisation is a key success factor.
Business associates include any key group, other than suppliers,
who are important contributors to the organisation. They can include
lawyers, accountants, auditors, consultants, and other service organisations
such as HR and IT. The key is to develop trust relationships with organizations
which have value systems consistent with our own organization. The
alternative is that the associate value system is assumed to be consistent
with ours which is often misleading or worse.
What our financiers want most is “no surprises”. This
effectively means keeping our bankers fully informed of our plans through
regular updates. If the relationship can include both the leader (owner,
CEO, or the like) and the senior finance person, it creates a stronger
link with the Financial Institution; they get the vision of the leader
and the definitive detail from the Finance Executive. This advice system
seems to be the most effective as it precludes the necessity of explaining
away SURPRISES.
The purpose of any business is to create unique relationships with
customers over time that, because of the value provided, create profit
for the organisation and ultimately for shareholders. However, profit
is the outcome of our endeavors and not the purpose. The relationship
with shareholders is usually more involved in private than in public
companies. It is however crucial to clearly delineate the roles and
responsibilities between Shareholder, Director and Manager. Too often
the fact that one is a Shareholder creates the belief or expectation
that management roles are automatic. Whenever possible, it is important
to clearly delineate the requirements, and not fill key management
roles with shareholders who lack the necessary qualifications or capability.
This can be difficult to overcome, particularly in family business,
but is vital if the organisation is to perform effectively and outperform
the competition.
This is obviously a “choice” area and can be broad based,
local or both. While not essential, where the organisation, as a whole,
can participate meaningfully on a community basis, it enriches the
company both directly and indirectly.
In summary, stakeholder relationship management
is a significant challenge, but I believe it is one of the most important
aspects of the CEO’s role. And, this is equally true for owner
/ operator businesses and Blue Chip listed companies. In my experience,
successful CEO’s spend more than half their time developing, managing
and monitoring the relationships with each of their key stakeholder
groups. Accordingly, CEO’s must have strongly developed skills,
in effective people communication, negotiation and influence as successful
people interface is a non negotiable attribute. |
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