These stakeholders include customers, clients, employees, shareholders, communities, the environment, the government, and the media (traditional and social), among others.
Key external stakeholders are usually those outside of the organization who most directly influence a business’s bottom line and hold power over the business. Besides customers and clients, suppliers have a great deal of influence and command a great deal of attention from businesses of all sizes.
In the long run, stakeholder welfare must be kept at the heart of each company’s business operations for these significant, twin reasons: It is the right thing to do and it is good for business. Still, if managers need additional incentive to act on the basis of policies that benefit stakeholders, it is useful to recall that stakeholders who believe their interests have been ignored will readily make their displeasure known, both to company management and to the much wider community of social media.
They need to be able to trust that products and services are backed by the integrity of the company. They also provide reviews, positive or negative, and referrals. Customers’ perceptions of the business matter, too.
It broadly oversees decisions about the mission and direction of the business, the products or services offered, the markets in which the business will operate, and salary and benefits for the senior officers of the organization. The board also sets goals for income and profitability. Its most important function is to select and hire the chief executive officer (CEO) or president. The CEO is usually the only employee who reports directly to the board of directors, and he or she is charged with implementing the policies the board sets and consulting with them on significant issues pertaining to the company, such as a dramatic shift in products or services offered or discussions to acquire—or be acquired by—another firm.
In turn, the CEO hires executives to lead initiatives and carry out procedures in the various functional areas of the business, such as finance, sales and marketing, public relations, manufacturing, quality control, human resources (sometimes called human capital), accounting, and legal compliance.
Have you ever had a stake in a decision someone else was making? Depending on your relationship with that person and your level of interest in the decision, you may have tried to ensure that the choice made was in your best interests. Understanding your somewhat analogous role as a stakeholder in businesses large and small, local and global, will help you realize the value of prioritizing stakeholders in your own professional life and business decisions.
As any successful business leader knows, the primary objective of running a business is turning a profit. And yet, this universal truth is often burdened by negative connotations of making money at all costs, including the expense of customers, societies and even their employees. However, an increasing number of businesses are disproving that myth by operating under the conscious capitalism ideal.
Out of the 121 global companies that appeared on the RepTrak list at least once from 2018-2020, 56 of them (46%) are headquartered in the United States. California is home to the majority of them, likely because of the state’s high population density and its propensity for technology companies—the most represented industry on the list.
With a wide variety of companies scoring so well, it was clear that corporate responsibility is not limited to or dominated by any one industry. To determine whether there are any synergies between corporate responsibility and industry, we analyzed the most represented industries out of the companies that appeared on the RepTrak 100 at least once.
Of course, operating in the interests of stakeholders is just half of the conscious capitalism equation. There must be an element of revenue seeking and even profit. For that, we looked into earnings for each company on the list to find out which ones made the most money.
Stakeholders orientation (part of the HPO Factor: Long-term Orientation) is defined as ‘the aim to benefit all parties that are affected by the future success or failure of an organization. ’. People in an HPO find shareholder thinking too limited and therefore make sure they maintain good and long-term relationships ...
Apply co-creation with stakeholders, by inviting them to participate in the dialogue around new products and services of the organization.
These stakeholders include customers, clients, employees, shareholders, communities, the environment, the government, and the media (traditional and social), among others. All stakeholders should be considered essential to a business, but not all have equal priority. Different groups of stakeholders carry different weights with decision makers in companies and assert varying levels of interest and influence. As we examine their roles, consider how an organization benefits by working with its stakeholders and how it may benefit from encouraging stakeholders to work together to promote their mutual interests.
Key external stakeholders are usually those outside of the organization who most directly influence a business’s bottom line and hold power over the business. Besides customers and clients, suppliers have a great deal of influence and command a great deal of attention from businesses of all sizes. Governments hold power through regulatory bodies, from federal agencies such as the Environmental Protection Agency to the local planning and zoning boards of the communities in which businesses exist. These latter groups often exercise influence over the physical spaces where businesses work and try to grow ( Figure 1.1 ).
One challenge for any organization’s managers is that not all stakeholders agree on where the company should strive to land when it chooses between ethical minimums and maximums. Take stockholders, for example. Logically, most stockholders are interested in maximizing the return on their investment in the firm, which earns profit for them in the form of dividends. Lynn Stout, late Professor of Law at Cornell Law School, described the role of shareholders in this way:
In the long run, stakeholder welfare must be kept at the heart of each company’s business operations for these significant, twin reasons: It is the right thing to do and it is good for business. Still, if managers need additional incentive to act on the basis of policies that benefit stakeholders, it is useful to recall that stakeholders who believe their interests have been ignored will readily make their displeasure known, both to company management and to the much wider community of social media.
In turn, the CEO hires executives to lead initiatives and carry out procedures in the various functional areas of the business, such as finance, sales and marketing, public relations, manufacturing, quality control, human resources (sometimes called human capital), accounting, and legal compliance. Employees in these areas are internal stakeholders in the success of both their division and the larger corporation. Some interact with the outside environment in which the business operates and serve as contact points for external stakeholders, such as media and government, as well.
It broadly oversees decisions about the mission and direction of the business, the products or services offered, the markets in which the business will operate, and salary and benefits for the senior officers of the organization. The board also sets goals for income and profitability. Its most important function is to select and hire the chief executive officer (CEO) or president. The CEO is usually the only employee who reports directly to the board of directors, and he or she is charged with implementing the policies the board sets and consulting with them on significant issues pertaining to the company, such as a dramatic shift in products or services offered or discussions to acquire—or be acquired by—another firm.
Have you ever had a stake in a decision someone else was making? Depending on your relationship with that person and your level of interest in the decision, you may have tried to ensure that the choice made was in your best interests. Understanding your somewhat analogous role as a stakeholder in businesses large and small, local and global, will help you realize the value of prioritizing stakeholders in your own professional life and business decisions.