Internal Stakeholders' Needs Satisfaction

The internal stakeholders are the people of the organization – and that means all the people, whether they are at the top of any hierarchy or at the bottom, and whether they are engaged in leadership, manufacturing, marketing, research, or any other function.

The most important need for the organization's people is meaningful work. This is followed by reward and recognition for the work they do.

The reward (or pay) for the work is satisfying to employees when they judge it to be fair compensation for the work done. In this regard, fairness is a function of the personal values – the beliefs, philosophy, and principles – of the individual employee. Most employees, however, make this judgment based on comparisons with other people both inside and outside their organization. It is common practice for business organizations to measure the pay rates of other organizations, and leaders do this with great transparency so that their employees will perceive their compensation as fair.

Many employees consider recognition for work done to be as important as pay – that is, as long as their pay meets their needs. When pay is inadequate as perceived by the employee, recognition may become of secondary
importance, though it will still be very important. There is nothing more satisfying to an individual or a team than for an admired leader to say “thank you,” “good work,” “we appreciate your effort.” This is a synergistic event: the employee is being satisied, and the leader is growing as a role model in the eyes of the employee.

Reward and recognition satisfy important needs for employees. But even more important to them is meaningful, challenging work. In conventional organizations, a common fallacy among managers, leaders, and followers is that some people just want to do the work, get paid, and go home. In my experience, this is not true. These people are not being given the right work, in the right way, in the right place. An important challenge for leaders is to satisfy the unrealized needs of individual employees.

Meaningful work, whether recognized or not, is work that challenges employees' mental, emotional, and social intelligences. People want to engage in work that requires them to expend energy. There is nothing more damaging to the human condition than boring, monotonous work.

People want to better themselves and serve others. The best highperformance work systems recognize this and challenge their employees to develop new capabilities. They also set goals for employees that can be and are measured in value-add terms – that is, value-add for customers and for society. This includes productivity measures such as delivery-time improvement for customers; quality measures such as the amount of material manufactured within customers' speciications; and service measures such as reductions in emissions and waste materials released into the environment.

External Stakeholders' Needs Satisfaction

Many organizations, regrettably, make little effort to seek out the needs and opinions of external stakeholders beyond the minimum – that is, beyond communicating with customers as necessary. Many organizations routinely ignore societal stakeholders, such as the communities around their facilities, plants, and ofices.

These comments may sound extreme, but they relect my experience, which is that some companies are oblivious to the needs of their external stakeholders beyond the requirements of satisfying either customers or the ego needs of the organization. So, I next illustrate what I mean by satisfying the needs of all external stakeholders.

Soft drink manufacturers are in business to improve the lives of people. So are the operators of medical clinics. That is the purpose of all businesses. Their products and services and all other outputs are directed mainly at satisfying customers' wants and needs. Those who buy a soft drink are seeking a taste experience that will improve their lives at least at that moment. The medical clinic is improving – perhaps even saving – the lives of its customers. Each in its own way is improving its customers' lives.

The workers in the bottling plant that makes the soft drinks receive pay for their services. Clearly, this improves their lives and the lives of their dependents. The same applies for the employees of the medical clinic and for every other business.

Then there are the people beyond the customers and employees – that is, the communities affected by these businesses. It must be the purpose and intent of the business organization to improve society. For a business not to have that goal would be sheer folly – a business, after all, can continue to exist only with society's permission. Even the most backward society has the power to destroy a business by resorting to punitive laws or by giving way to its citizens' activism.

And the inal stakeholders to be considered are, of course, the owners

– that is, those customers of the business or highly motivated members of society or sometimes employees who have provided the means (typically money) to start and sustain the business. Clearly, the owners will expect their lives to be improved by the organization's actions as well as by the results it obtains. For proit-seeking enterprises, this, of course, is measured by inancial returns. But the concept of return on investment (ROI) also applies to not-for-proit organizations, which look for their investment to cause certain effects – a principal one being the happiness of the donors, who are special stakeholders at not-for-proit organizations. A related ROI for not-for-proit donors is the emotional satisfaction of doing the “right” thing.

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