This article is part of a series exploring the findings of our latest Board Report on stakeholder governance. You’ll find the entire series, including the research, at the end of this blog post.
In this blog, we aim to provide some helpful guidelines on how to identify the most telling stakeholder metrics and present them to your board in a way that drives insight, not frustration.
A sure way to get tangled in the weeds of stakeholder metrics is to start by sifting through the data you’re already collecting to pull out a metric to track. Instead, start with the questions you would like to answer.
What did you always want to understand about your stakeholders? What interesting questions were raised in conversations but couldn’t be answered? Perhaps your board would love to know:
Make a list of those questions and then see how data can help you answer them. Don’t avoid the important questions that are hard to measure. Just because you don’t currently measure something, or there isn’t an easy way to do it, doesn’t mean the question is any less worth answering.
The biggest stakeholder reporting challenge for most organisations is the standalone nature of many metrics. A raft of 10 metrics across key and secondary stakeholders is interesting — but unless performance for the stakeholders is linked to your strategy or purpose (and purpose that doesn’t link to strategy isn’t purpose) then those numbers will never be anything else but nice.
“Ask yourself ‘What is the opportunity to engage stakeholders to help us prosper?’ Companies that are doing well have the strongest narrative about their strategy.”
~ Founding Partner, Board Evaluation Firm
Ensuring all your stakeholders are reflected in your strategic planning starts with first understanding their impact on your long-term and short-term success and your own impact on their wellbeing. Starting with this reciprocal relationship in mind, think about where stakeholder interest and commercial impact meet for each stakeholder and then attach specific measures for value creation. More on how to link stakeholders to your strategy in our blog on how to embed stakeholders in your board’s decision-making.
The organisation dashboard is an at-a-glance view of the health of the organisation, illustrated through data. Your stakeholder performance is vital to the prosperity of your organisation, so stakeholder metrics belong side by side with metrics about your strategy, financial performance, and operational and governance information.
If you think of your board reporting as having a pyramid structure, then your organisation dashboard is the apex of the pyramid, containing within a single page the high-level message of the story you’re telling. Adding key stakeholder metrics to your dashboard allows you to see the performance of your stakeholders in the context of the wider organisational health and allows you to identify risks and opportunities faster.
We were surprised to find in our research that 82% of boards don’t track Glassdoor reviews — despite them offering a direct, unfiltered pulse of employees’ views and morale.
Your customers, future talent, and the wider community are looking at social media, review and news sites in reaching an opinion on you. How you are perceived will reflect their willingness to trust you with their money, support or career.
Universities, for example, might look at externally-reported league tables that present a range of metrics such as student satisfaction, percentage of students who find employment six months after graduation, and percentage of first-year students continuing to second year, which are all powerful data points in determining success.
The sooner you take externally-reported metrics really seriously, the better. See if any of the metrics you’re already tracking can be replaced with a metric monitored externally or if you can supplement an internally reported metric with the findings from an externally reported one.
Related to the point above, the board must grasp the nettle of predictive metrics. Nearly all boards track revenue pipeline as being one way to predict future performance. Within a stakeholder-driven market, your stakeholders’ perception of your organisation can serve as a predictive indicator.
In our recent research, however, we found that boards underestimate the power of perception. Instead, they focus on metrics directly related to financial performance such as growth in customer spend and supplier on-time payments, for example.
“Beating last year’s numbers is not the point; a performance measurement system needs to tell you whether the decisions you’re making now are going to help you in the coming months.”
~ Sir Andrew Likierman, London Business School professor
For each stakeholder group ask yourself “what could we track that could indicate potential risks and opportunities?” For example, measuring your customer sentiment through a simple metric such as Net Promoter Score or customer satisfaction can give you an indication of whether you’re moving in the right direction (surprisingly 40% of boards don't measure this). Similarly, public sentiment and employee engagement scores can be helpful in course-correcting your strategy to improve those relationships.
There is no right answer on how frequently your board needs to monitor metrics about each one of your stakeholders. How often you look at stakeholder metrics will be determined by the nature of the question you’ve asked, the impact the stakeholder has on your organisation and several external factors.
If you are a retailer, for example, you probably reviewed metrics relating to your suppliers at least weekly during the Covid-19 crisis. For some key stakeholders such as your customers and employees, there is information you need to have at your fingertips as it happens.
“We have a sentiment tracker (how are you feeling today?) on the intranet that’s monitored hourly and CEO has direct access to see whether sentiment is going up or down throughout the day.”
~ Company Secretary, UK Building Society
A surprisingly high number of organisations feel annual reviews of stakeholder groups are sufficient with 50% of boards looking at metrics such as employee engagement only once a year and 29% looking at public sentiment once a year. We believe this is insufficient as problems in employee or public sentiment could emerge as major risks to the business in the meantime.