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5th Constituency
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Wednesday, May 15, 2002

5c Defined

Traditionally, the working definition of "management" includes accountability to four key groups of "stakeholders":

  • Investors / Stockholders (The Stock Market)
  • Suppliers (The Supply Chain)
  • Customers (The Market)
  • Employees (The Workforce)

It seems to us that the labor shortage has the implied consequence of creating a fifth constituency: Past and Future Workers (The Labor Supply). Without a secure relationship to the Labor Supply, all growth plans and, at some level, the very existence of the company, are subject to a high level of suspicion.

This may seem like a silly distinction on first pass. What we are saying, however, is striking in its consequences. If Potential Employees are at least as important as The Stock Market, The Market, The Supply Chain and The Employees, it means that a lot of standard assumptions are about to be subjected to a great deal of pressure. 

By definition, the addition of a fifth constituency changes Management's relationships with the other four. Besides the fact that they are each a good source of Potential employees (and that ground must be managed carefully), Potential Employees are entitled to the same seriousness with which the other four are treated.

The job of being a "C" level executive involves trading off the interests of the four current key stakeholder groups in order to achieve the optimal balance for the organization at this particular time. Adding Potential Employees to the mix suggests the probability that a company may have to trade short term stock performance in favor of maintaining supply; that occasionally, the interests of Potential Employees will prevail over the supply chain or the customer base. Since the very survival of the firm can be tied to the management of the availability of a labor supply, we see all sorts of innovation emerging from the recognition of the Fifth Constituency.

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From The Mailbag

From: Renner, Shirley
Sent: Wednesday, May 15, 2002 12:46 PM
To: Sumser

Subject: executive recruiting

Hi John, The reason executive recruiters do not use the net is because their customers will not PAY A FEE for someone they can find on their own. This will never change. This is also why great executive recruiters don't advertise. Good candidates that will bring a fee are not looking and are not on anyone's mailing list. The net is just a means to network. I was an executive recruiter for over 8 years. I would have been in business 2 months if I used the net to recruit.

Shirley L. Renner Talent Team Leader Volkswagen of America

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