Does Your Organization Already Practice Stakeholder Management: Use This Benchmarking Checklist to Find Out Now
Contrary to popular belief, the concept of stakeholder management goes back at least to the 1950s and probably earlier to a small group of business leaders and academics who recognized that there is no way to optimize returns for shareholders over time without addressing the interests of their customers, employees, supply chain and distribution partners, and communities. This internal benchmarking survey is designed to help you quickly find out if your organization is already on its way to benefiting from a business approach that seeks to enhance sustainable returns for investors only by creating value for stakeholders and the environment.A Clarification of the Definition
Stakeholder Management Benchmarking Checklist
As the fourth anniversary approaches of the Business Roundtable announcement on Aug. 18, 2023 that organizations should address the needs of all stakeholders, confusion around the definition remains. Neither the Business Roundtable pronouncement nor the January 2020 investment letter of Larry Fink, CEO of BlackRock, also raising the need to address all the interests of all stakeholders, included a clear definition of stakeholder capitalism, leaving it to its opponents to define for themselves. This explains how it quickly became redefined as "woke" capitalism or greenwashing when in fact its principles are based on practical business theory going back at least to the 1950s and probably much earlier.
A Clarification of the Definition
It’s impossible to effectively evaluate your organization without understanding the definition upon which the framework is provided.
The right defines stakeholder capitalism as the diversion of profits to disinterested third-parties to address ad hoc social issues favored by CEOs at the expense of investors that amounts to theft or even corporatism. Progressives define it as little more than greenwashing: the “Davos Man” proclaiming to save the world while continuing to enrich themselves, in the words of Peter S. Goodman, New York Times Global Economics Editor. The trouble is, neither side has taken the time to study the history of stakeholder capitalism, which goes back decades before the concept of “woke” and “ESG.”
A review of the long history of the field finds that in almost all cases the focus is on what R. Edward Freeman, one of the academic founders of this field, calls in one of his books the Power of And, or what Alex Edmans, Professor of Finance at the London Business School, calls “pie-enomics” in his book, Grow the Pie. Both argue that there does not need to be any inherent conflict between purpose and profit. It is not only unethical to make money by offloading social and environmental costs on to society but it’s actually bad business to do so over the longer term due to heightened risks of customer, employee, or other stakeholder disaffection, environmental or other legal penalties, or unsuccessful mergers.
A review history and literature quickly reveals that the field is more akin to total quality management principles in manufacturing than it is to “corporatism” or any political ideology, right or left. Stakeholder capitalism simply holds that companies cannot optimize for returns in a sustainable manner without creating value for customers, employees, supply chain and distribution partners, communities.
As a result of the confusion over definitions, Alex Edmans joined Martin Whittaker, Co-founder and CEO of JUST Capital, and the Enterprise Engagement Alliance to create the following definition, published in Forbes in August 2020: “Enhancing returns for investors only by creating value for customers, employees, supply chain and distribution partners, communities, and the environment.”
For further background, click here for what is potentially the most comprehensive library of resources on stakeholder management.
Stakeholder Management Benchmarking Checklist
These are the foundational requirements for addressing the needs of all stakeholders in a strategic and systematic process to fulfill the purpose, goals, and objectives of an organization. As is immediately apparent when viewing the questions, the more positive responses, the further your organization is along the path to a strategic and systematic approach to engagement across the enterprise.
| Principles | Explanation | Yes/No |
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1. A clear leadership vision that creates a North star. |
· Your organization’s leadership is focused on enhancing returns for investors only by creating value for customers, employees, supply chain and distribution partners, communities, and the environment. · Your annual business plan is focused on achieving the purpose, goals, and objectives of the organization by welcoming and engaging the broadest possible audience of customers, employees, supply chain and distribution partners, and communities, without offloading employee, environmental, or other costs or risks on to society. |
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2. A business operating system to ensure consistent management. |
· Your organization has a system in place to strategically manage the organization’s business plan across the year in a manner that aligns the interests of all stakeholders through carefully coordinated processes to maintain consistency of all engagement practices, including recruitment, communications, learning, stakeholder voice, rewards and recognition, DEI (diversity, equity and inclusion) across the organization. |
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3. Customers: A strategic focus on delivering marketing promises. |
· Your organization has a clear value proposition and specified product and service standards for its customers, distribution, and supply chain partners that it rigorously monitors using a systematic listening process through which it seeks to continuously improve. · You look for new customers from the broadest possible sources to maximize market reach and have a clear strategy to engage them. · You transparently convey your pricing, terms, and conditions to minimize surprises and confusion. · You use clear metrics such as customer loyalty; referrals; engagement scores; revenues, costs, and profits per customer to manage a continuous improvement process. |
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4. Employees: Managed as an asset instead of a sunk cost. |
· Your organization bakes its purpose, goals, objectives, and values into all employee management activities and has a system for singling out leaders and others at any level whose behavior contradicts its principles. · Your organization has a strategic and systematic process for attracting and developing talent from the broadest possible sources to benefit from the widest possible choice of potential. · All full-time employees earn at least a minimum wage with the benefits necessary to live without the need for government aid and can clearly share in the organization’s success over time; independent contractors benefit from transparent pay and terms. · Serious consideration is given to the design of jobs and the employee experience and engagement and development process, including a career development roadmap when appropriate and regular check-ins from management to make sure employees are okay. · There is a systematic approach to listening to employees and using their suggestions. · You have clear metrics to monitor the impact of employee management practices on business results, including: revenues, costs, and profits per employee; referrals; loyalty; wellness, safety, and health; diversity, as well as human capital value add and human capital ROI. |
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5. Supply chain and distribution partners: partners in success. |
· Your organization views your suppliers and distribution partners as critical to success, with transparent policies for selecting and developing effective relationships. · Your organization reaches out to the broadest possible selection of suppliers and distribution partners to maximize your impact in the largest possible marketplace. · You have a systematic approach to communicating with and developing effective relationships through training and a formal listening process. · There is a clear system for measuring the effectiveness of supply chain and distribution management based on the metrics most relevant to the organization and its industry and there is a system in place for continuous improvement. |
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6. Communities: Strategic philanthropy aligned with organizational goals. |
Your organization strategically directs philanthropy to activities that support its own stated purpose, goals, and objectives. For instance: · Your organization has a long-term “farm team” strategy for developing talent, customers, distribution, and supply chain partners, from the communities in which it operates. These could include training programs at schools in disadvantaged areas that develop skills the company can benefit from later on; looking for ways to successfully recruit and develop neuro-divergent or others who are disadvantaged, seniors, disabled, homeless, ex-convicts, people in alcohol and/or drug recovery, etc. · Your organization strategically supports community activities that provide it with important marketing visibility with targeted audiences. · Any charitable contribution to any political or social cause outside of the organization’s stated goals and objectives is disclosed and explained. · Your company takes advantage of all reasonable advantages in the tax code without abusing dubious loopholes that make it so that its taxes are far below the intent of the law. · The company’s strategic philanthropy metrics are tied to broader organizational goals such as talent, customer, distribution, and supply chain partners, and not to the undisclosed interests of the organization’s management. · Your organization stays out of politics unless an issue is core to its stated purpose, goals, and objectives. |
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7. The environment: A commitment to Milton Friedman’s stated dictum to not impose hidden costs on society. |
· Your organization does everything in its power to continuously and transparently, improve its Scope 1, 2 and 3 emissions, re-use, and recycling practices in a manner that, whenever possible, improves productivity and quality or provides other organizational benefits, such as customer or community good will. · Your organization makes every effort to design its facilities consistent with the communities in which it operates and ro leave nothing behind if it departs. Clear metrics are published, along with a transparent continuous improvement process. |
ESM Is Published by The EEA: Your Source for Effective Stakeholder Management, Engagement, and Reporting
Through education, media, business development, advisory services, and outreach, the Enterprise Engagement Alliance supports professionals, educators, organizations, asset managers, investors, and engagement solution providers seeking a competitive advantage by profiting from a strategic and systematic approach to stakeholder engagement across the enterprise. Click here for details on all EEA and ESM media services.
1. Professional Education on Stakeholder Management and Total Rewards
- Become part of the EEA as an individual, corporation, or solution provider to gain access to valuable learning, thought leadership, and marketing resources to master stakeholder management and reporting.
- The only education and certification program focusing on Stakeholder Engagement and Human Capital metrics and reporting, featuring nine members-only training videos that provide preparation for certification in Enterprise Engagement.
- EEA books: Paid EEA participants receive Enterprise Engagement for CEOs: The Little Blue Book for People-Centric Capitalists, a quick implementation guide for CEOs; Enterprise Engagement: The Roadmap 5th Edition implementation guide; a comprehensive textbook for practitioners, academics, and students, plus four books on theory and implementation from leaders in Stakeholder Management, Finance, Human Capital Management, and Culture.
2. Media
- ESM at EnterpriseEngagement.org, EEXAdvisors.com marketplace, ESM e–newsletters, and library.
- RRN at RewardsRecognitionNetwork.com; BrandMediaCoalition.com marketplace, RRN e-newsletters, and library.
- EEA YouTube Channel with over three dozen how-to and insight videos and growing with nearly 100 expert guests.
3. Fully Integrated Business Development for Engagement and Total Rewards
Strategic Business Development for Stakeholder Management and Total Rewards solution providers, including Integrated blog, social media, and e-newsletter campaigns managed by content marketing experts.
4. Advisory Services for Organizations
Stakeholder Management Business Plans; Human Capital Management, Metrics, and Corporate Sustainability Reporting for organizations, including ISO human capital certifications, and services for solution providers.
5. Outreach in the US and Around the World on Stakeholder Management and Total Rewards
The EEA promotes a strategic approach to people management and total rewards through its e-newsletters, web sites, and social media reaching 20,000 professionals a month and through other activities, such as:
- Association of National Advertisers Brand Engagement 360 Knowledge Center to educate brands and agencies.
