Stakeholder Engagement
Each organization has many Stakeholders, and they are not only limited to financially linked groups - shareholders - that are merely one of many stakeholders of a company.
Together with the growing influence and power gained by private companies in the globalized world, more parties and groups of people become interested in various aspects of the companies’ activities and deem it necessary that companies should provide them appropriate information and consider their opinions when making important decisions, i.e. such decisions that can impact the society and separate communities.
Stakeholders are defined as entities or individuals, that can be affected by the organization’s activities, products, or services; or whose actions can reasonably be expected to affect the ability of the organization to implement its strategies or achieve its objectives.
According to Stakeholder theory developed by Dr. F. Edward Freeman in his book “Strategic Management: A Stakeholder Approach” – a company’s real success lies in satisfying all its Stakeholders, not just those who might profit from its stock.
An organization may have many stakeholders, often with diverse interests and concerns. Examples of stakeholder groups are:
However, this list will be different for each company. Each group’s relevance for the company as well as the scales of company’s impact on them will also be different.
So, it is important that a company identifies its Stakeholders and prioritizes them by their impact and relevance.
Stakeholder communication and engagement, consideration of their opinions and needs are core components of corporate social responsibility.
A responsible company:
Should respect, consider and respond to the interests of its Stakeholders;
Provide transparent accounting to the Stakeholders on performance and the issues that matter to them;
Implement sustainable and innovative approaches and initiatives in order to respond to the Stakeholders’ demands and needs.
Listening to the Stakeholders and considering their opinions is an effective way for organizational strengthening and accomplishing of its objectives. This helps the company to:
Being a part of sustainability reporting, Stakeholder dialogue is also a pre-requisite for developing and implementing a successful CSR strategy.
Communication with Stakeholders can have various formal and informal methods, such as:
Desirably, applied methods should differ depending on the Stakeholder. The scale of various Stakeholder engagement could also be varying according to their importance and impact level – from simply providing information, and including consultations and cooperation.
Communication with the Stakeholders is a strategic process and has the following main stages:
For more information please see: