Keith Hechtel
Dr. Keith Hechtel is the Vice President of Business Development and Marketing for Curbell Plastics, Inc., located in Orchard Park, NY. He has over 30 years of experience leading teams of engineers and industrial salespeople. Dr. Hechtel has delivered numerous presentations on leadership, business communication and engineering polymers in both academic and industrial settings.
Traditional leadership models involve senior executives acting as agents of business owners with the primary task of driving financial results. This leadership perspective operates on the assumption that the needs of customers, suppliers, employees and local communities are all secondary to achieving metrics such as stock price, sales growth, return on assets and operating profits.
However, due to the evolving nature of the business environment, this narrow perspective may not be sufficient to maintain the long-term health of organizations. The purpose of this article is to suggest a broader, multi-stakeholder approach to leadership, where senior managers balance the needs of owners, employees, customers, suppliers and the communities that they operate in to ensure the long-term health of the companies that they are responsible for.
The Changing Career Landscape
Traditional employment involved people staying with companies for a decade or more. Individuals who “jumped” from job to job were considered poor candidates for a hiring organization. This allowed employers to count on a stable workforce without necessarily focusing on employee motivation and career satisfaction.
The current career environment lacks the traditional stigma for people who frequently change employers and job seekers can easily view and apply for open positions using social medial and job search websites. Post-pandemic unemployment rates, which have consistently been below 4.5%, serve as a reminder of the intense competition among organizations to attract and retain talent. Traditional cost savings initiatives that come at the expense of the workforce include reducing benefits, increasing employee contributions to health insurance premiums and dramatically raising the targets for incentive compensation. These initiatives may appear to yield favorable results on a proforma P&L, however leaders who fail to consider the career needs of employees as important stakeholders in their organizations may quickly find their companies in crisis due to a lack of human capital. One can question if the recent mass layoffs by technology companies who are embracing artificial intelligence as a replacement for thousands of employees could have negative impacts on the motivation, job satisfaction and retention of their remaining workforces.
Alternative Sales Channels
Customers in both business-to-consumer and business-tobusiness settings have more choices than ever due to availability of products and services from alternative channels including online and in-store offerings as well as international sources. The struggles of retail shopping malls that have declined due to competition from online sellers provides a clear example of this. The implication for leaders is that customers are important organizational stakeholders and creating a clear value proposition as well as great customer experiences are essential to long-term business health. Senior managers who are considering cost-cutting measures such as outsourcing customer service may wish to evaluate the effects of long wait times and poorly informed sales agents on customer satisfaction.
Leaders who fail to consider the career needs of employees as important stakeholders in their organizations may quickly find their companies in crisis due to a lack of human capital.
Elevated Community Expectations
Businesses have traditionally engaged the communities that they operate in with enticements such as job creation and tax revenue. However, community expectations increasingly include safety, sustainability and environmental stewardship. For example, data center developers are under intense scrutiny over the vast amounts of electricity and water required for data center operations. Financial incentives alone are unlikely to generate community support for data center development projects if residents will be unable to obtain sufficient drinking water or affordable electricity to power their homes. It is important that business leaders consider local communities as important stakeholders of their organizations. Activities that tend to build community support might include partnering with colleges for workforce development, participating in charitable events, maintaining the aesthetics of buildings and grounds, limiting noise and pollution and being responsible consumers of resources such as power and water.
The Importance of Suppliers
Traditional supply chain relationships involve companies engaging in intense negotiations with multiple vendors to obtain the goods and services required for their operations at the lowest possible cost. In extreme cases, vendor profit margins can be driven down to the point where suppliers struggle to operate. This approach offers the perceived benefit of increased profitability for the purchasing organization; however, it fails to recognize the potential negative consequences of failing to treat suppliers as important stakeholders. Severely limiting supplier profitability may create a variety of negative results for the buying organization including:
• Late deliveries due to the inability of suppliers to buy their raw materials because of poor cash flow
• Reduced product quality as suppliers attempt to reduce costs
• Reduced commercial and technical support from suppliers
• Reduced buyer-supplier joint sales and marketing initiatives
Leaders who consider suppliers to be important stakeholders of their organizations are likely to realize benefits that more than offset paying slightly higher prices.
Implications for Leaders
The current business environment calls for senior leaders to take a balanced, multi-stakeholder approach to managing companies. This perspective involves a broader view when making business decisions including:
• Considering the potential impact of business initiatives on the motivation, job satisfaction, and retention of employees.
• Considering if cost savings measures and efficiency improvements may impact customer satisfaction and perceived value.
• Considering the impact of business operations on local communities
• Considering the impact of business decisions on key suppliers.
By taking a multi-stakeholder approach to leadership, senior managers can achieve superior financial results on behalf of owners while ensuring the long-term health and sustainability of their organizations.
