Creating value through balancing stakeholders' needs
The Australian Leadership Index (ALI) is a national survey that provides a comprehensive picture of perceptions of leadership for the greater good in the government, public, private and not-for-profit sectors.
The ALI model of institutional leadership for the greater good delineates three sets of indicators of leadership for the greater good that pertain to the type of value that institutions seek to create, how institutions create value, and for whom institutions create value.
For each of these indicators, we measure public perceptions and expectations. In addition to this, we calculate the relationship between perceptions of each indicator and overall perceptions of leadership for the greater good, yielding insights into the key drivers of public perceptions of leadership in the government, public, private, and not-for-profit sectors.
This note is part of a three-part series on the stakeholders for whom institutions create. The focus of this note, the final in the series, is on the extent to leaders strike a balance between the needs of internal stakeholders (e.g., employees), external stakeholders (e.g., customers) and society.
A note on the survey process
The results reported in this research note are the average of the results obtained from quarterly ALI surveys (1,000 people per quarter) between September 2018 and March 2020, which represents seven quarters of data collection.
Respondents are recruited via an online panel by Dynata and recruitment is designed to ensure that the sample is nationally representative in terms of locality (i.e., States and Territories), gender and age.
Results are analysed at the overall national level, as well as at the sector (i.e., government, public, private and not-for-profit sectors) and institution-level. ALI results can be further segmented according to a range of demographic variables. More information about the survey process can be found here and the ALI data portal can be found here.
What is the relationship between balancing stakeholders’ needs and leadership?
One of the many factors that makes leadership complicated is identifying the stakeholders whose needs and interests ought to be considered in any given decision or course of action. The growing appreciation of the need to consider the interests of specific communities, society-at-large and future generations is complicated further by the challenge of ‘balancing’ the interests of these different stakeholders, which may co-exist uneasily or even be at odds.
What role do public perceptions of leaders’ success in balancing stakeholders’ needs and interests play in public perceptions of leadership for the greater good in the government, public, private and not-for-profit sectors?
ALI research reveals that balancing stakeholders’ needs is a weak-moderate predictor, or driver, of perceptions of leadership for the greater good in the government, public, private and not-for-profit sectors. This means that the more institutional leaders are perceived as balancing the needs of different stakeholders, the more they are perceived to show leadership for the greater good.
Balancing stakeholders’ needs at the sector-level
Having established the relationship between balancing stakeholders’ needs and leadership for the greater good, it’s pertinent to consider what ALI reveals about perceptions and expectations of balancing stakeholders’ needs in the government, public, private and not-for-profit sectors.
The public have high expectations of the degree to which institutions in the government, public, and not-for-profit sectors should balance stakeholder needs. Roughly two-thirds of respondents expect the government, public, and not-for-profit sectors to balance stakeholder needs to a “fairly large” or “extremely large” extent. By contrast, the public have moderate expectations of the degree to which institutions in the private sector should balance stakeholder needs. Only half of respondents think business should balance stakeholder needs to a “fairly large” or “extremely large” extent.
The public sector is regarded as the strongest performer in terms of balancing stakeholder needs, with 36% of respondents judging this sector as balancing stakeholder needs to a “fairly large” or “extremely large” extent. The public sector is associated with a moderate gap between perceptions and expectations (30-percentage points).
The not-for-profit sector is a close second, with 33% of respondents judging the not-for-profit sector as balancing stakeholder needs to a “fairly large” or “extremely large” extent. The not-for-profit sector is also associated with a moderate gap between perceptions and expectations (30-percentage points).
The government sector is seen as the weakest performer on this criterion, with only 24% of respondents regarding government as balancing stakeholder needs to a “fairly large” or “extremely large” extent. Consistent with this, the government sector is associated with the largest gap between perceptions and expectations (42-percentage points).
The private sector is perceived similarly to the government sector, with 25% of respondents regarding the private sector as balancing stakeholder needs to a “fairly large” or “extremely large” extent. Combined with the lowest public expectations, the private sector is associated with the smallest gap between perceptions and expectations (29-percentage points).
Figure 1. Perceived and expected balance between different stakeholders’ needs, sector-level, September 2018-March 2020
Explore this data for yourself via the ALI custom chart builder.
Balancing stakeholders’ needs at the institution-level
Charities are regarded as the strongest performer in terms of balancing stakeholder needs, with 46% of respondents judging charities as balancing stakeholder needs to a “fairly large” or “extremely large” extent. Consistent with this, charities are also associated with the second smallest gap between perceptions and expectations of balancing stakeholder needs (22-percentage points).
However, perceptions of charities differ markedly from the two other institutions the comprise the ALI measure of the not-for-profit sector; namely, trade unions and religious institutions. Both trade unions and religious institutions are perceived by only 26% of respondents as balancing stakeholder needs to a “fairly large” or “extremely large” extent.
Although charities are associated with the most favourable public perceptions of balancing stakeholder needs, public health and public education institutions are also well-regarded, with 38% of respondents viewing both institutions as balancing stakeholder needs to a “fairly large” or “extremely large” extent.
A similar pattern is observed for the institutions of the private sector. National businesses and multinational corporations are viewed by 23% and 22% of respondents, respectively, as balancing stakeholder needs to a “fairly large” or “extremely large” extent. Consistent with this, the institutions are associated with some of the largest gaps between perceptions and expectations. By contrast, the public expects considerably less from small and medium enterprises (SMEs) than other types of business and evaluations SMEs more favourably, which produces the smallest perception-expectation gap of all institutions measured by ALI.
The institutions of the government sector are perceived as among the worst performers in terms of balancing stakeholder needs and hold the three largest gaps between public perceptions and expectations. The Federal Government is perceived as the worst performer in terms of balancing the interests of different stakeholders. Specifically, only 21% of respondents view the Federal Government as balancing stakeholder needs to a “fairly large” or “extremely large” extent. Consistent with this, the Federal Government is associated with the largest gap between perceptions and expectations (44-percentage points).
State Governments do not fare much better. Only 24% of respondents view State Governments as balancing stakeholder needs to a “fairly large” or “extremely large” extent, which, when combined with high expectations of State Government, produces the second largest gap between perceptions and expectations (43-percentage points). Local Governments are perceived as somewhat better than Federal and State Governments – 26% of respondents view Local Governments as balancing stakeholder needs to a “fairly large” or “extremely large” extent.
Figure 2. Perceived and expected balance between different stakeholders’ needs, institution-level, September 2018-March 2020
Explore this data for yourself via the ALI custom chart builder.
Please note that full details about public perceptions and expectations of balancing the needs of different stakeholders in government, public, private and not-for-profit sector institutions are provided in the ALI 2019 Annual Report, which is available here.
