The Stakeholders and their relationship with your business
A company is not an autonomous and independent entity without connections or responsibilities toward society. As a matter of fact, a company is responsible for the consequences of its actions and legally bonded to pay in case they cause a damage to a third party.
Nowadays, several observers are looking at the behaviors of companies and are able to exert a pressure on them or to control their actions by means of the law. These observers are called “stakeholders” and their point of view on the company is not marginal.
Using a traditional characterization, we can distinguish between two categories of stakeholders:
– primary stakeholders, who are linked to the company by means of a financial transaction (shareholders, managers, employees, suppliers, customers);
– secondary stakeholders, who indirectly impact the company or are impacted by its activities (governments, NGOs, society in general, the environment).
Even if all mentioned entities are nowadays still engaging in a relationship with companies, during the last decade we have seen a change in the meaning of these connections.
On the one hand, the bond between a company and its stakeholders is becoming more emotional than financial, due to the consequences of companies actions on people’s life;
on the other hand, the mutual impact between companies and stakeholders is affecting all parties involved and not only the so called secondary stakeholders, which means that the relationship among the primary stakeholders and between primary stakeholders and the company is no more a mere financial one.
Therefore, the point of view of all stakeholders involved is becoming really important in terms of sustainability and virtuous practices, since it brings a deeper and holistic meaning (environmental, ethical, psychological, sociological, etc.) to their claims towards the company.
Moreover, the stakeholders that are relevant actors in this process are not limited to the ones listed above. There are several subjects who started playing a significant role in the relationship between a company and the surrounding context.
– Researchers, students and NGOs have spent decades identifying the consequences of malpractices and addressing the relevant responsibilities. As these actors are the ones who professionally analyse the context and propose a new pathway for the future, they need to be identified as a specific category of stakeholders.
– Influencers can be divided in two categories: the ones acting as professional influencers and therefore exerting their influence in exchange for a compensation; and those who have a specific mission in their life and become influencers to convey their message without a commercial purpose on the background. The second category is the one we are considering in the current analysis.
– Children and teenagers have been the main actors of the recent demonstrations for a more sustainable life (e.g. “Fridays for Future”). The generation Z is leading a revolution in the trends and expectations towards companies, which pushed many brands to change their attitude and embrace the journey toward sustainability.
– The financial market is also a main actor in the choices driving companies in one direction or in the other. Investors include not only a company’s shareholders but all people and enterprises acting on the market. The choices made by investors in several fields have an influence on the trends of a market and dictate the future of any enterprise by shifting the balance of society in one direction or the other.
– Media coverage (e.g. newspapers, television channels, magazines, bloggers, independent journalists, etc.) can be involved either under solicitation of the company (press conferences, press releases, requests for publicity etc.) or for independent reasons (investigations, breaking news, reportages etc.). De facto they are involved in the process of providing information that is related either directly to companies or to the context in which companies are operating.
Each one of the stakeholders involved is therefore exerting its influence and the sum of their point of views shapes the average opinion and has an impact on the future of companies and consequently on our future.
To better understand the type of involvement of stakeholders and the motivations that drive them, we can distinguish them in categories that capture their main behaviors, although they do not ultimately define them.
This will help understanding the nature of the interactions between a company and its surroundings.
Direct involvement. Shareholders, managers, employees, suppliers and customer have an immediate relationship with the company. They are personally involved in its activity and they often have a direct contact with the product or service provided.
Indirect but potential involvement. Citizens, governments and natural environment do not necessarily have an involvement with the activities of a specific company, but they may have one in case its activity compromises or risks to compromise their interests or rights. Citizens may join a class action, demonstrate against companies or associate themselves to ask for a change; governments may take legal action, legislate or oblige companies to correct their conduct; the natural environment can show the consequences of human malpractice, but it cannot directly speak for itself and needs therefore to be represented by a public institution. However, this category of stakeholders does not get involved unless a specific matter draws its attention.
Direct involvement by choice. Children and teenagers (the so called Generation Z), students, NGOs, researchers and influencers are not necessarily involved in the activity of a specific company or category of companies, but they may be in case they invest themselves in analysing a fact or process, engaging a public discussion, performing a research, protesting against a malpractice. Their involvement is therefore dictated by a personal choice, based on specific values that are put at stake.
Active background involvement. The last category includes the financial market and the media coverage as they both have no choice but following the events. They are, therefore, active stakeholders, which can exert an influence on the future of the company and on other stakeholders while remaining in the background. They either act on the current trends (financial market) or provide information on facts and events (media coverage). The difference between these two actors is that medias have a coverage on the whole context and exert therefore and influence on the financial market while the opposite should not be happening.
Being able to relate to your stakeholders is fundamental for the development of a sustainable business and it is vital to avoid several kind of issues and the unexpected financial consequences related to a misconduct.
The development of a dialogue with your stakeholders is essential in order to run a sustainable and long-lasting business.