High Performance Boards, 2nd Edition

CHAPTER 32Managing Stakeholders

The economic and social upheavals of recent years have revived the old debate over the extent to which companies serve the interests of shareholders as opposed to stakeholders. Maximising shareholder value has been the prime focus of business ever since the birth of the corporation. Those who uphold this view may argue that the different groups that have a stake in the performance of a business often present conflicting agendas, and that these agendas will in any event be best served by keeping a close eye on the company's bottom line.

Many company directors share this outlook. They consider the firm's interactions with stakeholders such as governments, regulators, media, and the wider public as primarily a distraction from the business activities that the organisation was set up to perform. In extreme cases, boards may have an outright negative perception of some stakeholders, such as non-governmental organisations (NGOs). Directors may view NGOs as at best not having a direct relationship with the company; and at worst, as representatives of groups that are innately anti-business and typically a source of nuisance and opposition to a company's operations, as well as to its broader interests and general well-being.

Shareholders vs Stakeholders: A Definition

Whereas the definition of a shareholder has remained virtually unchanged for centuries, the concept of stakeholders has gone through many shifts over the past few decades. This has been ...