When one examines the mission statement of many of the world’s leading corporations, one will inevitably find references to the satisfaction of stakeholder objectives. These references not only acknowledge the owners of the corporation, but more often than not, also identify other stakeholders such as employees, the community, the government, suppliers, and of course, the ubiquitous customer, among a range of stakeholder communities.

When one then examines the operating strategies employed by these corporations, one regularly finds that investment and operational decisions are made that attempt to maximise stakeholder satisfaction: i.e. they attempt to maximise the “benefits” provided to each of the corporation’s stakeholder constituents.

Philosophically, it is hard to argue against maximising value to stakeholders. The reality however, is that decisions to maximise stakeholder value never occur in an implications-vacuum. There are always implications and most often costs, associated with keeping stakeholders happy. And most frequently, one finds that to keep one set of stakeholders happy is inevitably at the expense of other stakeholders.  Who then gets primacy over the organisation’s efforts in satisfying its stakeholders?

If one is both honest and rigorous, one must recognise that no organisation exists to satisfy its non-owner stakeholders, per se. Rather, organisations must satisfy their non-owner stakeholders in order that the owners’ objectives can be satisfied. 

Business is all about delivering the best possible outcome to the owners of the organisation, whatever those desired owner outcomes may be. An owner never invests in a corporation because of the stakeholders or in order to satisfy them. However, owners know that in order for their objectives to be fulfilled, stakeholders must be “appeased”.

Generally speaking, and from an owner’s perspective, non-owner stakeholder satisfaction is about delivering the “lowest level of satisfaction” that the organisation, management and owners can “get away with” while still delivering the over-riding owner objectives. That does not imply that owners “abuse” non-owner stakeholders, but rather that any effort and resource applied to non-owner stakeholder satisfaction over the “minimum” needed to deliver owner objectives will detract from those objectives.

Although this may appear apocryphal and certainly politically incorrect in today’s environment, business is not about delighting stakeholders (customers or others) per se, but about satisfying owners in order to secure their desired benefits.

It is necessary sometimes to “delight” stakeholders (when “delight” is the difference between participation or purchase an non-participation or non-purchase) in order to satisfy those owners. Owners generally recognise however, that “unbridled” owner satisfaction is not possible in developed Western societies, and as such, it is widely accepted that owners must “invest” in non-owner stakeholder satisfaction in order for their own objectives to be satisfied.

Organisations that “elevate” non-owner stakeholders to primacy in their raison d’etre, risk making operational, management, strategic and investment decisions which maximise stakeholder objectives at the expense of owner objectives.  Non-owner stakeholders are, from an organisational perspective, enablers. Maximising (rather than optimising) enablers risks significant organisational misalignment.

One major global chartered accounting and consultancy had as part of its Mission Statement the “maximisation of customer satisfaction”, and coincidentally no mention what-so-ever of partner profits. Logically, the quintessence of “maximising customer satisfaction” must inevitably be the provision of service at no cost to the customer – clearly an inanity. When asked how much investment in customer satisfaction was needed to deliver partner objectives, no partner could provide an answer, yet hundreds of millions of dollars were spent on enhancing customer satisfaction.

Responsible management is all about “optimising” non-owner stakeholder objectives in the context of, and in order to fulfil (and maximise where possible), owner objectives. It is not about treating owners and other stakeholders as equal (as is being mooted by certain vocal community interest groups).  No owner will remain an owner if non-owner stakeholders secure their own objectives at the expense of owners.