Stakeholders are vital to the operations and growth of a business. Stakeholders are all individuals and organizations whose interests are influenced by an organization's initiatives and activities.
The stakeholders ensure that the organization's efforts and products are flawless. In return, the organization strives to satisfy the stakeholders. Each party receives something in exchange for their contributions.
Major stakeholder groups pertinent to the vast majority of enterprises may be categorized into 4 types:
- Clientele – all constituents serviced by the organization
- Employees – the persons who serve the organization and consider themselves its representatives.
- Suppliers – Third-party businesses, subcontractors, and partners who provide the necessary raw materials, equipment, technology, and supplies for the production of products and services.
- Stewards – the company's directors, senior managers, and board members who are accountable for developing the brand and achieving sustainable progress.
In order to analyze the performance of different stakeholders, it is vital to measure their key contributions and inducements. Exactly this is the purpose of a Stakeholder Scorecard. The Stakeholder Scorecard is a record of all major business stakeholders, their contributions, and the compensation they get in return. The Stakeholder Scorecard prioritizes stakeholder satisfaction and utilizes this to boost productivity, performance, and achievement of company objectives.
In contrast to the Balanced Scorecard, the Stakeholder Scorecard provides a stakeholder-centric approach to measuring organizational performance by evaluating the extent to which an organization strives to meet the needs of its stakeholders, encourages them to take ownership of it, and invites them to contribute to its growth.
A Stakeholder Scorecard can be created using these five methodical steps:
- Distinguish the categories of stakeholders.
- Document each stakeholder’s contributions and inducements
- Prioritize the contributions and inducements.
- Determine measures for assessing the contributions and inducements.
- Implement the metrics
Let's investigate some of these steps in further depth.
Step 1: Distinguish the categories of Stakeholders.
Developing a Stakeholder Scorecard begins with identifying the key stakeholder groups. Key stakeholder groups consist of suppliers, customers serviced, personnel, and senior management. Members of society, regulatory bodies, creditors, and investors may also comprise this group. This should be displayed as a list of names and organizations in black and white.
Step 2: Document Each Stakeholder's Contributions and Inducements.
This step entails creating a columnar list of each stakeholder group's contributions and incentives. Examples of employee contributions include the effective completion of assigned duties, the continual enhancement of performance, and/or dependability. The offered inducements may consist of pay, rewards, steady income, etc.
Step 3: Prioritize the Contributions and Inducements.
After identifying contributions and inducements, the following step is to rank and prioritize the most significant contributions and inducements. When assessing contributions and inducements, consideration must be given to both the organization and its stakeholders.
Documenting the stakeholders, their contributions, and inducements helps determine the influence of inducements on persuading stakeholders to put out their best effort.
Interested in learning more about the other steps of the Stakeholder Scorecard process? You can download an editable PowerPoint presentation on Stakeholder Scorecard here on the Flevy documents marketplace.
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