The high cost of ignoring stakeholder engagement

For years, Qantas has been viewed as Australia's flag carrier – an airline synonymous with reliability, customer service, and Aussie pride. But recent events have painted a less flattering picture. 

Some argue that the company and its board (previously led by CEO Alan Joyce) seem to have lost sight of these core values, focussing instead on short term profitability.

Critics question if the drive for profits serves mainly as a tactic to inflate executive salaries and share portfolios, casting doubt on the sustainability of such a profit-focussed approach in the long term.

At the same time, customer dissatisfaction appears to be at an all-time high. There was a time when being a platinum or lifetime gold member of Qantas meant something. For example, in the past if you were stranded due to unforeseen circumstances, the airline would put you up in a hotel – no questions asked. Now, the emphasis has shifted towards treating everyone the same, removing the incentives for brand loyalty.

Much like banks and phone companies that lure in new customers with attractive deals while sidelining their existing ones, Qantas appears to have fallen into a similar trap.

The parallels in schools and not-for-profit organisations

Interestingly, this phenomenon is not limited to commercial enterprises; it has spilled over into schools and non-profit organisations.

The school principal, much like a CEO, becomes the face of the organisation. But whose interests are they really serving? Take the case of a school allocating funds for a pool apparently for the headmaster’s residence. The question arises: is this investment for the collective good or merely to shore up the image and comfort of the person at the helm?

Schools, like airlines, offer a service that goes beyond the tangible. Factors such as location, faith, or a sense of community often determine where parents choose to send their children. Once an organisation starts commoditising its offerings, it risks losing that vital connection with its stakeholders – whether they are parents, students, or employees.

Emotional intelligence and stakeholder engagement: the path forward

The loss of engagement with stakeholders isn't just a sign. It's a warning that the core values that once defined an organisation are eroding.

In my advisory role with not-for-profits, I've observed this happening all too often. The board and the principals or CEOs need to be visible and accessible. It's not enough to be present at major functions; making an appearance at daily activities like school drop-offs or participating in simple games can go a long way.

The key is to genuinely engage – not merely as a protocol but as a meaningful interaction. In a world that's becoming increasingly transactional, such interactions add the 'stickiness' that keeps people loyal to an organisation. It's the same whether you are a national carrier like Qantas or a small community school. The culture you build can either uplift the entire organisation or steer it off course.

In this digital age, the temptation to systematise everything is high. Qantas, for instance, has reduced its reliance on customer service centres and opted for app-based solutions. While digitalisation has its place, it can't replace the need for actual human interaction. This holds especially true for organisations serving a diverse population, from baby boomers who may not be tech-savvy to individuals who may face language barriers.

Ultimately, whether it's about bolstering profits, ensuring employee engagement, or providing a superior service, the focus should be on understanding and fulfilling the needs of stakeholders. Neglecting this aspect may give an illusion of short term success but will likely lead to long term failure.

It's high time organisations like Qantas and others take a step back to reassess and realign their core business principles before the disconnect becomes too severe to mend.

Bridging profitability and principles

Navigating the intricate landscape between profitability and stakeholder engagement can be complicated. An advisory service like RSM offers a neutral viewpoint, helping to assess and refine your existing strategies.

You can engage us to assist with:

Objective analysis: Sometimes it takes an outside view to identify the real issues. We use sentiment analysis tools and focus groups to gauge stakeholder sentiment.

Strategic re-alignment: Armed with these insights, we can help you adjust your business approach and realign it with stakeholder needs and core values.

Practical measures: We suggest actionable steps that are far-reaching yet achievable. This might include restoring customer benefits that have been cut, or initiating new forms of community engagement.

The aim is not to provide a quick fix, but to develop sustainable solutions. We help you get a handle on sentiment, turn it around where necessary, and maintain it over the long term. This assists you in reconnecting with your core values and stakeholders, making your organisation not just profitable, but also principled and sustainable.

FOR MORE INFORMATION

For a confidential discussion about the challenges facing your organisation, contact Andrew Bowcher on (02) 6937 7001 or your local RSM office.