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Stakeholder Engagement - A Priority
Is Globalization Modern Kurukshetra?
Do we need Modern KRISHNA, a great analyst and negotiator for Stakeholder's Engagement for a meaningful, fulfilling, peaceful and naturally, a happy society?
Arun Maira, Ex-Planning Commission Member, Government of India says “Solutions to global issues like climate change, pervasive poverty, free and fair trade and spreading terrorism require collaboration amongst everyone from everywhere”.
“The wheel of progress that has been reinvented elsewhere has put more pressure on the Earth than it can bear. So, it is imperative we find a better and more sustainable way for economic growth”.
Creating enduring value for the stakeholders in accordance with the triple bottom line approach should be the company's core strategy.
Who are Stakeholders?
Those groups or individuals that can reasonably be expected to be significantly affected by an organization's business activities, outputs or outcomes, or whose actions can reasonably be expected to significantly affect the ability of the organization to create value over time.
As an Enterprise of Tomorrow, company should acknowledge its responsibility in meeting stakeholder expectations in today's fast-changing socio-economic landscape. An effective engagement with stakeholder groups plays an important role in ensuring that company continues to create larger societal value.
In line with the Board-approved policy, company has to evolve a structured framework for engaging with its stakeholders and fostering enduring relationships with each one of them. Company's engagement approach has to anchor on the principles of materiality, completeness and responsiveness.
The engagement approach has to take into consideration the fact that each stakeholder group is unique and has a distinctive set of priorities. The Insights gathered from stakeholder engagement helps in validating the Company's performance and get new perspectives.
Process of Stakeholder Engagement
1. Stakeholder Identification & Prioritisation
\ Identification of key stakeholders who, are directly/indirectly impacted by business activities as well as directly/ indirectly influence business activities
2. Stakeholder Engagement
Consultation with the key stakeholders with due weightage given to each stakeholder based on the nature of engagement with the organisation
3. Understanding Stakeholder Concerns
Identification and prioritisation of concerns and needs
4. Develop Strategic Response
Addressing the prioritised concerns and needs in a consistent and transparent manner
Consultation with Key Stakeholders for Sustainable Solutions
Creating enduring value for the stakeholders in accordance with the triple bottom line approach should be the company's core strategy. To understand the stakeholder needs and evolving expectations of stakeholder, company should engage in regular interactions with various stakeholders including Governments, development agencies, research organizations and communities. Such multi-disciplinary engagement processes stimulate deeper and nuanced understanding of challenges and enable the emergence of customized solutions which help in creating enduring value.
BROAD EXAMPLES OF STAKEHOLDERS -
|
• Investors & Shareholders • Central & State Governments, Regulatory Authorities • Customers including Patients • Employees & Other Workforce • Employee Unions • Media • Analysts |
• Value Chain Partners- Suppliers, Farmers & Service Providers including Dealers & Distributors • Local Communities • NGOs • Industry Associations • Civil Society • Auditors |
BROAD ENGAGEMENT PROCESS
| Significance/Importance | Frequency of Engagement | Mode of Engagement | Key Expectations |
| Employees | |||
| - Key to the Success of Business | - Weekly | - Employee Engagement Forums & Survey | - Training, Skill Development, Growth |
| - Sustained Business Growth | - Monthly | - Town-Hall Meetings | - Employee Well-being |
| - Need Base | - Town-Hall Meetings | - Health and Safety | |
| - Training Programmes | - Working Hours | ||
| - Intranet Portal | - Fair Wages and Recognition | ||
| - In-house Newsletters | - Transparent Communication | ||
| - Rewards and Recognition Programmes | - Diversity & Inclusion | ||
| - Grievance Redressal Mechanism | |||
| - Employee Well-being Programmes | |||
| - HR & Other Functional Cross-interactions | |||
| - Volunteering | |||
| Significance/Importance | Frequency of Engagement | Mode of Engagement | Key Expectations |
| Customers | |||
| - Drives the MarketSegments | - Continuous | - E-mails and Meetings | - Service Quality |
| - Customer Feedback | - Timely Delivery | ||
| - Business -Sales Visits | - Fair Pricing & Marketing | ||
| - Sustainable Products | |||
| - EHS Management Systems | |||
| - Effective Resolution of Customer Complaints | |||
| - Data Privacy | |||
| Significance/Importance | Frequency of Engagement | Mode of Engagement | Key Expectations |
| Suppliers & Partners | |||
| - Provide Operational Leverage to Optimise Value Chain | - Continuous | - E-mails and Meetings | - Fair and Long-term Business Relations |
| - Cost Competitiveness Exceed Customer Satisfactions | - Company Website | - Capacity Building | |
| - Improving Environmental Footprint | - Contract Negotiations | - Transparency | |
| - Supplier Evaluation/Due Diligence | - Innovation in Products & Services | ||
| - Seminars and Conferences | - Sustainability | ||
| Significance/Importance | Frequency of Engagement | Mode of Engagement | Key Expectations |
| Investors & Lenders | |||
| - Providers of Financial Capital & Debt Essential to Fund Growth | - Quarterly | - General Meetings | - Sustainable Growth and Returns |
| - Half Yearly | - Quarterly/ Annual Results | - EPS, Dividend, Profitability | |
| - Annual | - Integrated Annual Report | - Risk Management | |
| - Need Base | - Investor Roadshows | - Corporate Governance, Policies | |
| - Website Information | - Better Disclosures, Transparency | ||
| - Official Press Release | - Credibility of Financials | ||
| - Stock Exchange Filings | |||
| - Meetings with Analysts | |||
| - Grievance Redressal E-mail address | |||
| - Bulk e-mails for necessary and legal information | |||
| Significance/Importance | Frequency of Engagement | Mode of Engagement | Key Expectations |
| Community | |||
| - Social Support | - Monthly | - Community Meetings | - Welfare and Empowerment of Local Communities |
| - Create Shared Value | - Need Base | - CSR Programmes | - Fair Practices |
| - Community Impact Assessment Surveys | |||
| Significance/Importance | Frequency of Engagement | Mode of Engagement | Key Expectations |
| Industry Associations | |||
| - Develop Network and Enable Consensus Building to Present a Unified and Mutually Agreeable Perspective to the Government on Various Policy Intervention | - Need Base | - Specific Events | - Knowledge Sharing |
| - Conferences/ Seminars | - Compliance with Industry Standards & Regulations | ||
| - E-mails | - Providing Inputs for Issues | ||
| Significance/Importance | Frequency of Engagement | Mode of Engagement | Key Expectations |
| Government & Regulators | |||
| - Business Continuity in line with Regulatory Obligations as well as Changing Policies | Continuous & Need Base | - Advocacy through Trade and Industry Associations | - Compliance to Laws and Regulations |
| - Stakeholder Forums | - Pollution Prevention | ||
| - Annual Reports | - Local Economy Growth and Community Development | ||
| - Media Release | - Transparent Disclosures | ||
| - Information Security & Data Privacy | |||
| - Raising & Resolution of Issues Faced by the Industry & Commerce | |||
| Significance/Importance | Frequency of Engagement | Mode of Engagement | Key Expectations |
| Employee Unions | |||
| - Guidance & Consultation for Training & Skill Development, Wages, Compensation, Working Conditions, etc. | - Quarterly | - Personal Meetings | - Adherence to Code of Conduct |
| - Annual | - Plant, Office Visit | - Support for Diversity & Inclusion | |
| - Need Base | - Dedicated E-mail Address | - Human Rights | |
| - Support for Collective Bargaining | |||
| Significance/Importance | Frequency of Engagement | Mode of Engagement | Key Expectations |
| Media | |||
| - Medium to Reach Stakeholders | - Continuous & Need Base | - Briefings | - Compliance with Industry Standards & Regulations |
| - Company's Vision, Initiatives and Building a Distinct Identity | - Events | - Updating Company's Performance & Industry Standing | |
| - Conferences/ Seminars | - Increasing Corporate Reputation | ||
| Significance/Importance | Frequency of Engagement | Mode of Engagement | Key Expectations |
| Civil Society | |||
| - Smooth Functioning of Operations | - Continuous & Need Base | - Dialogue on Common Issues with Civil Society Organizations | - Responsible Corporate Citizenship |
| - Getting Feedback for Improvement | - Promotion of Human Rights | ||
| - Minimum Environmental Impact | |||
| Significance/Importance | Frequency of Engagement | Mode of Engagement | Key Expectations |
| Auditors | |||
| - For running transparent operations and good governance practices | - Monthly | - One to One | - Independent, Disciplined & Timely Execution |
| - Quarterly | - Red Flags at an Early Time | ||
| - Half-yearly | - Regular Meetings & | - Trusted & Confidential | |
| - Annual | - Review | ||
Stakeholder Engagement is a necessity and not a luxury.
Conclusion
Larry Fink, Chairman and CEO, BlackRock said:
“When my partners and I founded BlackRock as a startup 34 years ago, I had no experience running a company. Over the past three decades, I have had the opportunity to talk with countless CEOs and to learn what distinguishes truly great companies. Time and again, what they all share is that they have a clear sense of purpose; consistent values; and, crucially, they recognize the importance of engaging with and delivering for their key stakeholders. This is the foundation of stakeholder capitalism”.
Naturally, Stakeholder Engagement is a necessity and not a luxury. Let's co-create a better, happy and peaceful society through a distinct corporate purpose and good governance.
Back to HomeAuthor
CA Bimal R. Bhatt
He has over 35 years of experience in industry, consulting, guiding and mentoring of professionals, independent directors, entrepreneurs, etc. He has authored books like Business & Governance Insight, Corporate Governance, and Indian Corporate Citizenship-Case Study on CSR. He has authored articles on Good Governance & Brand Equity, Business Value Creation, and Audit Committee Functioning.
Owned by: Institute of Directors, India
Disclaimer: The opinions expressed in the articles/ stories are the personal opinions of the author. IOD/ Editor is not responsible for the accuracy, completeness, suitability, or validity of any information in those articles. The information, facts or opinions expressed in the articles/ speeches do not reflect the views of IOD/ Editor and IOD/ Editor does not assume any responsibility or liability for the same.
