3e2a1b56-dafb-454d-87ad-86adea3e7b86

Chapter 2 Operations performance 37
Figure 2.3 Stakeholder groups with a ‘legitimate interest in the operation’s activities’
expect of the operations function. Finally, we look at a common set of more detailed operations
performance objectives.
Operations may attempt
to satisfy a wide range
of stakeholders
The ‘stakeholder’ perspective on operations performance
All operations have a stakeholders. Stakeholders are the people and groups that have a
legitimate interest in the operation’s activities. Some stakeholders are internal, for example
the operation’s employees; others are external, for example customers, society or community
groups, and a company’s shareholders. Some external stakeholders have a direct commercial
relationship with the organization, for example suppliers and customers; others do not,
for example, industry regulators. In not-for-profit operations, these stakeholder groups can
overlap. So, voluntary workers in a charity may be employees, shareholders and customers
all at once. However, in any kind of organization, it is a responsibility of the operations
function to understand the (sometimes conflicting) objectives of its stakeholders and set its
objectives accordingly.
Figure 2.3 illustrates just some of the stakeholder groups that would have an interest
in how an organization’s operations function performs. But although each of these groups,
to different extents, will be interested in operations performance, they are likely to have very
different views of which aspect of performance is important. Table 2.3 identifies typical
stakeholder requirements. But stakeholder relationships are not just one-way. It is also useful
to consider what an individual organization or business wants of the stakeholder groups
themselves. Some of these requirements are also illustrated in Table 2.3.
Corporate social responsibility (CSR)
Strongly related to the stakeholder perspective of operations performance is that of corporate
social responsibility (generally known as CSR). According to the UK government’s definition,
‘CSR is essentially about how business takes account of its economic, social and environmental
impacts in the way it operates – maximizing the benefits and minimizing the downsides. ...
Specifically, we see CSR as the voluntary actions that business can take, over and above compliance
with minimum legal requirements, to address both its own competitive interests and the interests
of wider society.’ A more direct link with the stakeholder concept is to be found in the definition
used by Marks and Spencer, the UK-based retailer. ‘Corporate Social Responsibility ...is
listening and responding to the needs of a company’s stakeholders. This includes the requirements
of sustainable development. We believe that building good relationships with employees,
suppliers and wider society is the best guarantee of long-term success. This is the backbone of our
approach to CSR.’
The issue of how broader social performance objectives can be included in operations
management’s activities is of increasing importance, from both an ethical and a commercial
point of view. It is treated again at various points throughout this book, and the final chapter
(Chapter 21) is devoted entirely to the topic.