Sustaining effective ecosystems into the future Powering long-term success through strategic stakeholder management - Kahumbya Bashige, CDir

When steering the strategic direction of an organisation, there is a general tendency for boards to focus on the needs of shareholders and push for profitability at the expense of other qualitative results. This could lead to short term gains but have negative implications on the institution in the long run.

Granted, owners of the company have a significant impact on the business considering that they provide funding in form of equity as well as influence the company’s raison d’être. However, focusing solely on shareholders needs could come with externalities such as lack of consideration for the environment, undermining employee needs, failure to keep up with customers’ demands and infringement of communities’ rights among others.

Groups with varying interests and influences on an institution go beyond shareholders and are known as stakeholders to the company. They include employees, customers, suppliers, communities, governments, and regulators. The influence of these various groups is enormous and as summarised below, overlooking this influence can be detrimental to an organisation in the long run.

Employees: Employees skills and engagement are crucial for a company’s success. Disengaged employees can lead to low productivity and affect a company’s competitive advantage.

Customers: Customers influence business activities through buying behaviours. Changes in customer taste may necessitate product changes to remain competitive.

Suppliers: Suppliers control availability, timely delivery and cost of inputs, all of which can impact the quality and price of a company’s product.

Governments/Regulators: Governments can influence a company’s activities through regulations and legislations.

Local Communities: Local communities can have a big influence on the reputation of a company e.g. where displacements of populations occur without appropriate compensation, or environmental pollution from factory emissions affecting the surrounding community.

With increased stakeholder influence, stakeholder management is not just advantageous but imperative and should be at the top of the agenda for all boards. The following guidelines can be applied to ensure effective stakeholder management from a board perspective:

Strategic Oversight: This involves stakeholder mapping and prioritising them based on their level of influence and interest. Their needs should then be integrated into the companies strategic planning process.

Transparency: The board needs to ensure that the company operates with high levels of accountability and transparency when dealing with stakeholders in order to build trust and foster a positive reputation for the company.

Engagement and Communication: Develop a communication plan tailored to each stakeholder group.

Policies and Risk Management: The board oversees and approves development of policies that guide the company’s interactions with stakeholders. The board must also be aware of potential risks arising from stakeholder relationships and ensure appropriate mitigation strategies are in place to prevent conflict and crises that could harm the company.

Monitoring and Evaluation: Establishing KPIs to measure success of stakeholder engagement and satisfaction through reviewing feedback from surveys and making necessary adjustments to strategies and policies.

In an ever-evolving business landscape, the ability to manage stakeholder relationships strategically is a critical skill for any organisation aiming for long-term success. By identifying and prioritising stakeholders, understanding their needs, engaging them effectively, and building trust, companies can create a supportive ecosystem that drives sustainable growth.

About the author

Kahumbya Bashige,

Governance and leadership expert

Kahumbya is a chartered director and a seasoned professional in governance, development finance, fundraising, commercial banking and corporate finance.

She is an elected member of the Council of the Institute of Directors, a body that acts in an oversight and advisory capacity of the Board to ensure the delivery of the objectives of the Institute. She is also an Independent Board Member and Chairperson of the Audit Committee of CRDB Bank Burundi S.A. and sits on the Advisory Board of SESDCorp. She has extensive international experience having worked for four different multinational institutions namely Citibank, Deloitte and Touche, African Development Bank and Shelter Afrique.

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