Who's 1st? Shareholders, Management, Suppliers, Employees, or Customers?

Hi Lynn,

The obvious answer people may give is consumer. But... there is equal importance of all in a value chain.

I would answer it as the who is #1st? THE END USER.

For a design engineer end user is vendor manager for vendor manager the end user is Assembly engineer for assembly engineer the end user is sales for sales end user is retailer for retailer end user is Customer. Similarly for management end user is stake holder, for HR end user is employee.

So it will depend on business nature which end user comes first.

Thanks, Pankaj, for your reply. What percentage of companies do you suppose actually place equal emphasis on shareholders and customers' well-being?

Thanks, Anan, for your keen observation that "there is equal importance of all in a value chain" -- I wonder how that supposedly equal importance plays out in reality, as you note, with each functional area separately focusing on a different #1, creaing silos of effort ... do you suppose the functional area with the most power in the organization skews the corporate culture accordingly?

Hi Lynn, as you said correctly, there is no equal importance of all in reality and therefore a client needs consultants to fix the problems :). About working in silos, as per my experience the function that does not care about their end user and just care about their own KRAs can be an example of silos.

I will give an example of a leading automobile manufacturing company from India. Even in functions say on operation floor at assembly line a worker is performing a job of fitting a jig or fixtures and he has target of completing 50 vehicles a day for his wedges. In 50 there could be some parts defective where screws can not be fixed correctly and the part he is fixing is not fitted appropriately. The assembly goes ahead and the final product is defective. When I buy such car at expensive cost and find it faulty who is to blame?

When we worked upon and changed the status of his KRAs to care about next person on line the faults reduced as he used to stop the production and send it back. What happened slowly the person who was delivering the components started taking care of avoiding defective material to go on floor. In turn vendor manager became more cautious in vendor quality delivery. In turn service got more focus on customer satisfaction. In turn sales and marketing got good orders.

So... when you think of your end user the things change. If one thinks of his own KRA work gets into silos. Designing interdependent KRAs could be of great use. It might not be very easy to operate but once done could be of great help.

The answer is that none of them is more important than the other.

You can have all the customers in the world, but if you have no one to do the work, then you can't serve them.

You can have the most productive workforce the world has ever seen, and more customers than you know what to do with, but if you can't get your supplies in a timely and cost-effective manner, your business will soon die.

You can have the plenty of customers, outstanding employees, and a supply chain that would make an operations management scholar drool, but if the managers are incompetent, they'll destroy the business.

And if you have more orders than you can fill, employees who are willing to work 24/7 to fill them, an efficient supply chain, and brilliant managers, but you have no working capital or a negative cash flow, you're dead.

All of these people rely on one another, and it's a big mistake to assume that one can be successful in the absence of the others.

There is a company that is right near the top of the Fortune 500 list whose priorities for most of its history was (in order) employee satisfaction, customer satisfaction, and then profitability. The rationale for this was that happy and committed employees instill confidence and satisfaction among customers and prospects. As a result- profits happen. Moreover, satisfied employees believe in their company and products which is further reflected in a customer relationship.
This company “inexplicably” began to lose money in about 1984 which, coincidentally, corresponds to rearranging only the first 2 priorities. Ten years later, they instituted their first layoff policy.
Of course you need customers, employees, and profits. Having a product or service that is in demand doesn’t hurt. However, I am of the opinion that there is an order to things that will breed more success and I see this in the history of business.

@Bruce rightly said as management should give importance to all and none should be favorite. but practically you can easily identify whether company is consumer centric, shareholder centric or employee centric. And many times it is imbalanced with more focus on either one. Thanks for sharing your views.