Frank Buytendijk Blog

I'm currently out of the office. On November 9th, Emilie Anna Max Buytendijk was born. Will resume blogging in just a few weeks.  Stay tuned!

frank

Thank you all for your kind wishes in the reactions to the blog, and via email. I truly appreciate it. As Jorgen Heizenberg said "More performance to measure! Congratulations."

Indeed, from a performance management point of view I would introduce Emilie as born on November 9, weighing 3650 gram, and 55 centimeters tall. That she recovered her original weight in 7 days, which is slightly better than average, and that she now weighs 3840 grams. I could share that the laboring process took about 8 hours, and that she was born 23:20pm exactly. I could cynically add that this was one of the few projects I ever completed on time and according to all specifications (let's not discuss budget).

I've been writing about this before. No organization stands on its own. In fact, an organization as such can be defined as a unique collaboration between stakeholders to achieve goals, that none of them could achieve by themselves. Yet most performance management initiatives focus only on "how do I optimize my performance?" instead of also recognizing stakeholder contributions: "how do my stakeholders contribute to my performance, as well?" This question can only be asked, I always add, if you are also prepared to ask the opposite question: "And how do I contribute to my stakeholders' performance?" Stakeholders include shareholders, customers, employees, regulators, business partners, suppliers and society at large.
 
Recently I spoke with a large global industrial manufacturing company, who wanted to reflect this reality, even in their financial reporting. Their financial consolidation system produced, next to all traditional reports, also the following report:

It looks like an ordinary P&L statements, but it has an interesting twist. It is a Stakeholder Profit and Loss statement. It first of all calculates, in a classic way, the added value of the company. This is defined as the net sales minus the procurements. Then it shows how the added value is distributed over the various stakeholders, being the employees, public sector, creditors and shareholders. This is their slice of the pie. Lastly, the traditional result is profitability, how much of the added value is retained in the business, to create sustainable growth. This is a great example of taking a more stakeholder oriented approach, creating a win-win mindset. It shows profitability cannot exist without the contributions of employees, society, shareholders and other stakeholders.
 
The next step would be to compare the distribution of value added with the collection of value added, what did the stakeholders contribute to the company. Together this would create a new performance indicator: Return on Stakeholder.
 
Interesting Profit and Loss statement, or should it be called Profit and Profit statement?