Principle-Centered Leadership

360° Quality

by Stephen R. Covey

Cultivating total stakeholder commitment
will sustain the viability of your organization.

What business are you really in? Regardless of the products or services you provide, or whether you work in the private sector, government service, military or educational community, your organization has one overpowering quality need-building relationships.

Stakeholder relationships: Consider all the stakeholder relationships that influence your organization's performance. How important are all your employees? What difference does meeting your owners' financial and other needs make? How mutually interdependent are you with your suppliers?

Are good community relations significant? How does the media influence your public image? Are your distributors your first-line customers? How are your relationships with your customers?

Which of these stakeholders can you alienate or treat with casual indifference, or afford to lose? Whose trust can you do without if you are to thrive as an enduring, world-class player in your industry?

Beyond total customer satisfaction: The high-performance organization of the 21st century must progress beyond the paradigm shift that marked the quality movement of the 1980s. Total customer satisfaction has been a battle cry taken up by organizations in all sectors of our economy. But this paradigm that provided a competitive quality advantage 15 years ago is today fundamental to survival.

What's next? What represents the next paradigm shift leading to higher levels of performance capability? It is the principle-based foundation of 360° total stakeholder commitment: understanding, anticipating, prioritizing, balancing, organizing and executing to meet and exceed the needs of all your key stakeholders.

This means achieving more than customer satisfaction. It means striving to cultivate the total commitment to your organization to customers and other essential stakeholders. It means developing stakeholder relationships built on total trust.

Your organization is a complex ecosystem of multiple, interdependent parts both inside and outside its formal boundaries-and your stakeholders are its most important elements. What ultimately happens when you conserve cash by stretching out payments to suppliers? Does it make a quality difference if your employees perceive that management neither walks their talk nor lives the organization's published mission statement? In these and many other scenarios, what happens to the trust and future commitment of your stakeholders and the future performance of your organization?

The process of building total stakeholder commitment is challenging. Stakeholders have needs in conflict: Employees want more pay, shareholders want higher dividends, and customers want lower prices and higher service levels. It is difficult for any one stakeholder group-even departments within the same organization-to appreciate or understand each other's needs and how they must all work together to maximize the long-term benefit for all. Ultimately, the system that principle-centered leaders need to optimize is the ecosystem, the entire organization.

360° feedback: A key to developing total stakeholder commitment is to institute "stakeholder information systems" that provide regular 360° feedback concerning the perceptions of your primary constituents in all aspects of your organization. These systems can become the core catalyst for catapulting your organization to its next level of high performance and quality by using this data to grow powerful, trusting relationships.

While traditional financial reporting is essential, it provides only a 90° perspective of your organization's past performance; it is a lagging indicator. Feedback meeting essential criteria from customers, employees, suppliers and other stakeholders can provide 360° feedback that becomes a leading indicator of future performance.

Courageous, principle-centered leaders can use 360° feedback to build 360° trust-based relationships and, ultimately, 360° quality. Cultivating total stakeholder commitment will sustain the viability of your organization within the risky, uncertain and turbulent environment now and into the next century.

About the authors . . .
Stephen R. Covey is chairman of the Covey Leadership Center and author of Principle-Centered Leadership and the 7 Habits of Highly Effective People.
Keith A. Gulledge is vice president and senior consultant with Covey Leadership Center's Professional Resource Group.
© 1996 Covey Leadership Center. For more information, telephone (800) 553-8889.

Editor's note: This will be Stephen Covey's last regular column in Quality Digest. Unfortunately, his busy schedule doesn't allow him to write a regular column. He will be contributing articles in the future.