Shareholders, customers or staff – which of these key stakeholders is most important to the long term success of an organisation?
How a CEO answers this vital question will, to a large extent, determine their style of leadership.
And, as goes the leader, so goes the culture of the entire organisation.
Is it shareholders? After all, without the ongoing support of shareholders there is no funding for the firm to survive, let alone grow. What about customers ? Without clients, there would be no revenue and soon enough no company for shareholders to invest in. But wait a minute, without staff there would be no unique product or service to supply to customers in the first place. So which is it?
It’s a vexed question, so allow me to digress momentarily …
Early in the new year, I made my annual pilgrimage to the SCG to indulge my passion for test cricket. Inevitably, being the absent-minded fellow that I am, I had lost my membership cards and was advised in writing to collect the reprinted cards from the Members Office.
When I stepped into the Members Office, I immediately felt an iciness in the room, the type you feel when people don’t get on well together. I walked up to a smartly dressed young woman at the counter and explained my situation but she adamantly asserted: “No, the new cards are no longer here, they have been sent to the ticket office.” I expressed surprise but she was resolute: “The cards were collected about four hours ago and sent to the ticket office.” I then asked her if she could please check, just in case. To her credit, she did, and (surprise, surprise) they were there. “Here you go” she said brusquely as she promptly handed the cards over to me. That’s it, no acknowledgement of error, no apology.
So what’s this utterly trivial story got to do with the question at hand?
Now that I think about it, not a great deal (sorry) … except:
- As a paying customer of the SCG, I left feeling unsatisfied;
- The culture of the organisation clearly did not make it safe for the staff to admit error or apologise; and
- The staff did not appear to be happy working there.
And the experience reinforced a basic truth for me:
- Unhappy staff tend not to care properly for customers, and its less obvious corollary:
- Happy staff tend to make for happy customers.
Now back to the main question: shareholders, customers or staff? Who is the most important?
Shareholders are supremely important, but if pleasing them becomes the top priority of the CEO then it very often leads to a cowardly CEO. When the CEO is focused on delivering short term profit growth, this typically comes at the expense of bold long term decisions or doing the right thing by customers or staff (even if legally you are not obliged to do so).
Customers are vital to any business but I’m convinced that it’s impossible for grumpy employees to innovate great products or deliver outstanding customer service.
Treat staff ‘mean’ and they will treat your customers ‘mean’. Care for your staff and they will care for your customer. Love your staff and they will love your customer.
And well loved customers have a habit of making shareholders happy. It’s a virtuous circle that begins with happy staff.
So for me, the answer is staff – because it all starts with them. Focus on recruiting and empowering the right people and making them feel cared for and appreciated, and they will make your customers happy, which in turn will make your shareholders happy.
Which brings to mind one of my father’s many sayings during my teenage years:
Make sure all the good people that work for you go home every night with a smile on their face. Thrash out what you need to during the day but always end on a happy note.
I used to think it was just a feel good motherhood, but now I realise it is rock solid business advice.