In the context of business operations—and even in institutions and associations—the term stakeholder engagement is frequently discussed, along with how important it is. So, what exactly are stakeholders, and why is working with them so important?
No one is truly alone, not even a solo entrepreneur. There is always someone involved who is affected by the company’s operations or who, through their own actions, influences the company’s activities. This influence does not have to be constant—it can also occur indirectly or in a less direct manner. These individuals or groups are the company’s stakeholders.
A company’s stakeholders can be divided in several ways, for example, into internal and external stakeholders. Internal stakeholders include the company’s own groups, such as owners, management, and other employees. External stakeholders may include parties that have a financial interest in the company, such as partners, subcontractors, distributors, customers, and creditors. Not all external stakeholders necessarily have financial interests. These can include groups such as the media, NGOs, industry associations, or legislators, who may have very different non-financial interests in relation to the company.
Successful and effective stakeholder engagement requires not only identifying the stakeholders that significantly influence the company’s operations, but also prioritizing the most important stakeholders for the company’s activities. Since our time is limited, it makes sense to focus stakeholder engagement efforts on those stakeholders who have the greatest impact.
When considering stakeholders from the perspective of corporate responsibility work, it is important to note that the group of stakeholders interested in the company’s societal impact may be larger than the group focused solely on business perspectives. Some of these stakeholders may be entities with whom the company had no prior contact before embarking on corporate responsibility efforts, such as NGOs.
Once we understand what stakeholders mean and identify the key stakeholders relevant to our operations, we can think more carefully about our relationship with them. What do stakeholders expect from us and our actions, and on the other hand, what do stakeholders provide to us as a company? This brings us to stakeholder engagement.
Stakeholder engagement is largely about listening and having discussions.
At its best, stakeholder engagement is active, open, and honest interaction between the company and its stakeholders, where both parties value each other. Stakeholder engagement is largely about listening and having discussions. At the same time, as a company, we gain insights into stakeholders’ attitudes toward us and their expectations of our actions and operations. Simply chatting isn’t enough; we should systematically record the key points that arise in these conversations, as they provide a strong foundation for improving our operations, for example, in the direction our customers desire. Sometimes, it may be necessary to conduct a separate survey to gather stakeholders' thoughts and expectations. The feedback gathered in this way clarifies our operational focus and helps steer our actions in the right direction.
Since stakeholders may have differing interests in relation to the company, it is essential to keep the company’s core values, mission, and vision firmly in mind when examining these interests and developing business operations. The focus should be on suggestions and ideas that contribute to the development of the core business. Not all ideas and suggestions presented by stakeholders should necessarily be pursued.
Stakeholder engagement is also important for the company because it allows the company to identify weak signals and emerging risks, enabling timely responses. The interaction with stakeholders serves as a valuable tool for risk management as well.
Stakeholder engagement should be seen as a tool for business development. While casual conversation and coffee breaks can be enjoyable, it may not be worth investing time in them unless there is some concrete benefit for the company. While it's not always appropriate to focus solely on the benefit aspect, it is important to keep it in mind at all times. Information, or data, that we don’t use or leverage simply isn't worth collecting.
Stakeholder engagement as a tool for business development. Key points summarized on one slide
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