If an organisation or team is to perform, the people who have expectations or place demands on that system have to be satisfied.
Many organisations focus on one group of stakeholders at the expense of other groups.
For example, after the Second World War, many organisations in countries such as Australia, the USA and Canada still had enormous resources, growing internal and external demand, and the commercial advantage of an infrastructure still intact. There was little global competition and organisations could thrive by concentrating on shareholder returns. Other organisations in countries such as Japan, deprived of these competitive advantages, strived for financial returns by concentrating on customer satisfaction and quality.
Few organisations would remain competitive in today's world without satisfying rising employee expectations. More and more employees are demanding quality of work life, greater meaning in their work, autonomy, and a small organisational team to which they can belong. This organisational team serves as the organisational equivalent of the family unit. By focusing on the needs of employees, the most competitive organisations have incorporated the best aspects of home life into the workplace.
Many organisations are replacing historically adversarial relations with their suppliers with a more committed, cooperative relationship. This can contribute to a sustainable competitive advantage and the achievement of major goals for both parties.
Government and regulatory groups are also stakeholders whose expectations and demands have been steadily rising, particularly in the areas of the environment and safety.
So, organisations are arriving at the concept of total stakeholder satisfaction. To optimise the organisation system there needs to be an emphasis on the rigorously measured demands and expectations of all stakeholders.
The balanced scorecard is a structured way of building a performance measurement system that links outputs, measures and targets directly to strategy. The development of outputs, measures and targets are necessary to implement strategy and provide total stakeholder satisfaction.Once the stakeholders have been identified, the next step is to find out exactly what the stakeholders’ expectations are.
It should be emphasised that all stakeholders care about the welfare of the entire organization. So while stakeholders are identified with particular outputs, they are all generally concerned with the overall optimisation of the organization as a total system.
The step of weighting the targets enables the strategic goals to be balanced and clarified so as to achieve the overall aim of optimising the business system to achieve total stakeholder satisfaction. This will ensure that the needs of one stakeholder are not optimised at the expense of other stakeholders.