Balancing Stakeholder Experiences: A Macro View

Revel Casino in Atlantic City hires its employees for four to six year terms, after which the employees have to re-apply for their jobs. Whether you agree with the policy or not, it highlights the importance of a company balancing the experiences of its various stakeholders. In this case, it’s primarily a balancing act between providing a sense of belonging and value for employees, and delivering a compelling and fresh guest experience. 

Facebook is likely to struggle with a similar challenge when it goes public. The IPO will add another key stakeholder to the company – the outsider investor. As the investor looks from the outside in, one thing will drive all decisions:  financial results. The investor may also be interested in providing a great experience for Facebook users, but only to the extent that those experiences drive financial results. Given the estimates that are going around today, Facebook will have to grow to four times its size to make it worth the investment. The investors’ key measuring sticks – financial statements and projections – will be used at shorter intervals with the impact of favoring short-term actions over long-term strategies. It’s not that investors don’t appreciate how money is made in a company; it’s just that those are details that managers need to deal with. For the investor, it’s less a matter of how (businesses) than what (returns).

The varying expectations of a company’s stakeholders lead to conflicts that the company must resolve and resolutions are typically brought about along a spectrum. With respect to employees, the spectrum might span from an acceptance of mutual interdependence and benefit on one end, through collaboration and negotiation, to labor strikes and lock-outs on the other end.

Articulating the psychological contracts between a company and its stakeholders at its founding can help companies productively cope with these issues. At a very basic level, this is a process of answering three questions from the perspective of each stakeholder:

1. Where are we going?
2. What will it cost me?
3. What’s in it for me?

The first question is about values alignment and the second and third are about value. 

The answer to the first question determines whether the stakeholder (customer, employee, investor, supplier, etc.) feels that the company’s aspirations are aligned with his or her own. It allows the stakeholder to judge whether this is something they’d like to be a part of.

The answer to the second question certainly includes the monetary price for a customer, but it also alludes to other aspects of the “whole cost,” including inconvenience, effort, aggravation, time, etc. For an employee, the costs include effort, ramp-up time, accountability and more.

The answer to the third question lets a stakeholder judge whether the company is offering something compelling (I’ve got to have this! ) and differentiating (I can’t get this anywhere else! ).

The answers to all three questions are at the very core of the decisions that stakeholders make about a company and determine the loyalty that stakeholders demonstrate (or don’t) with a company. Many companies do a great job at answering these questions for a single stakeholder (think Wal-Mart for consumers and The Blackstone Group for investors). But it is rarer to find companies that do a great job at answering these questions for ALL of its stakeholders.

Articulating a vision is not only about setting your sights on what the company will become with respect to the market or its competition. More importantly, a vision helps to resolve competing interests. In every transaction and every touchpoint between two or more stakeholders in a company there’s an exchange – a give and a get for each. Marketers understand this when it comes to establishing pricing. But companies often fail to consider their broader network of gives and gets with other stakeholders and how they’re all interrelated.