Stakeholder management has significant informational needs. It is extremely difficult to manage for a variety of stakeholders if there is no measurement of how the organisation has performed for those stakeholders. Thus for each stakeholder identified it is necessary to have a performance measure by which the stakeholder performance can be considered. Due to the nature of the stakeholders and their relationship with the organisation this will not necessarily be easy nor will it necessarily be possible in monetary terms.
Therefore non-financial measures will be of great importance but this information is often considered more subjective than financial information. Therefore measures of customer satisfaction are sometimes based on surveys and sometimes on statistical performance measures such as numbers of complaints or returns, or market share or customer retention. Recently there have been a number of multi-dimensional performance measurement frameworks that can be argued to have some level of stakeholder orientation.
Probably the best known of the multi-dimensional performance measurement frameworks is the "balanced scorecard" (Kaplan and Norton 1992, 1993, 1996a, 1996b). Another example is the service profit chain (Heskett et al. 1994) that specifically considers three stakeholders; namely employees, customers and shareholders. Again this model specifically considers the first two stakeholders as means to achieving superior financial results.
Thus they argue that satisfied and motivated employees are essential if service quality is to be of a high standard and hence customers are to be satisfied. Further it is then argued that satisfied customers provide the base for superior financial results. Both of these models acknowledge the needs of stakeholder groups and thus deem it necessary to measure performance for these groups but still target financial performance as the ultimate goal.
A stakeholder managed organisation therefore attempts to consider the diverse and conflicting interests of its stakeholders and balance these interests equitably. The motivations for organisations to use stakeholder management maybe in order to improve financial performance or social or ethical performance howsoever these may be measured. In order to be able to adequately manage stakeholder interests it is necessary to measure the organisation's performance for these stakeholders and this can prove complicated and time-consuming.
Recently the Centre for Business Performance, Cranfield University, has set up a "Catalogue of measures" related to their Performance Prism that contains measures of each of the "dimensions of performance" - stakeholder satisfaction; strategies; processes; capabilities; and stakeholder contributions. The stakeholders identified were customer, employee, investor, regulator & community, and suppliers and in total the catalogue includes over 200 relevant measures.
This shows the vast number of stakeholder measures that could be used to any organisation although it is not expected that all of these will be relevant for an individual organisation. This again highlights the potential complexity of measuring performance for stakeholders as these numerous measures will provide conflicting evidence on performance that somehow must be reconciled. In comparison Value Based Management techniques that propose the use of a single metric to measure performance as well as set objectives and reward executives appear far simpler.
In its Global Investor Opinion Survey of over 200 institutional investors first undertaken in 2000 (and subsequently updated), McKinsey found that 80% of the respondents would pay a premium for well-governed companies. They defined a well-governed company as one that had mostly outside directors, who had no management ties, undertook formal evaluation of its directors, and was responsive to investors' requests (and requests from other stakeholders) for information on governance issues. The size of the premium varied by market, from 11% for Canadian companies to around 40% for companies where the regulatory backdrop was least certain (eg those in Morocco, Egypt or Russia). Other studies have similarly linked broad perceptions of the quality of companies to superior share price performance. On the other hand, research into the relationship between specific corporate governance controls and the financial performance of companies has had very mixed results.