At Impact Hub, members are connected by the shared goal of using business as a tool to drive positive change. These leaders recognize that doing good is good business which means, profit is not the end goal, but a result of doing great work. For many social enterprises, being stakeholder-centric, instead of exclusively shareholder-centric, is crucial in living their values and executing their mission.
According to Corporate Governance professor Dr. Ralph A. Walking, being stakeholder-centric means that management considers the well-being of every entity that is affected by the business or organization when making decisions. That includes any population that you draw resources from or impact, like shareholders, employees, suppliers, bondholders, customers, the environment, the community, unions, and the government.
When engaging with all of your stakeholders, you are able to better achieve your strategic objectives, while minimizing possible adverse impacts. With good relationships with your stakeholders, you can also reap the positive economic, social, cultural, and environmental impacts of your business.
If your business or organization is in the middle of making the cultural and operational shift into being stakeholder-centric, you know that it will take time but, the good new is that you’re not starting from scratch. You already work with and have relationships with stakeholders. The next step is to invite them into the value creation process of your company.
How do you do that?
Kathleen Hosfeld of Hosfeld & Associates says there are several things you should keep in mind when implementing a stakeholder-centric approach to your enterprise:
- Prioritize stakeholder influences: Evaluate all stakeholders in your value chain using the criteria of power, legitimacy, urgency, interdependence, cooperation, and conflict. Since research shows that investing in employees makes the largest contribution to financial performance, this may a good place to start your evaluation.
- Assess stakeholder interests and satisfaction: Assess stakeholder interests and the current state of their satisfaction through discussions, surveys, and group processes. Moving forward, use this data when making any decisions that may impact them.
- Harmonize stakeholder interests: Look at the interests of all stakeholders and identify areas of possible conflict. If you find situations where the interests of two stakeholders clash with each other, look for a way to re-design your operations so they are no longer in competition.
- Develop stakeholder strategies: To create value for everyone involved in your enterprise, it’s important to develop, implement and evaluate stakeholder strategies with measurable outcomes.
There are several large companies who do stakeholder engagement really well. Consider Cummins, a leader in the design and manufacture of high-performance engines for trucks, buses, light-duty vehicles, and heavy equipment. Not only are they renowned for their fuel efficiency and reliability, they also boast consistently high customer satisfaction which they say, enables them to earn superior returns on capital. Cummins is also known for their integrity, employee work-life balance, and culture of personal development.
“Cummins has aggressively cut its own greenhouse gas emissions and invests significantly in education and philanthropy efforts across the globe. As more countries adopt progressively stricter efficiency and emissions standards, Cummins' technological edge should prove an enduring advantage,” says investment guide, Motley Fool.
For more advice, strategies and stories on how to become more stakeholder-centric check out these books:
Firms of Endearment: How World-Class Companies Profit from Passion and Purpose by Rajendra Sisodia, Jagdish N. Sheth, and David Wolfe.
Conscious Capitalism by John Mackey, Rajendra Sisodia, and Bill George
Everybody Matters: The Extraordinary Power of Caring for Your People Like Family by Bob Chapman and Raj Sisodia.