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Monday, February 22, 2010

Which Stakeholder Hat are you Wearing Right Now?

Different stakeholder groups have different standards when it comes to CR.

Members of civil society have the most demanding standards for how a company should discharge its corporate responsibility obligations. They are easily riled about a corporate misdeed in the paper. Of course they may have little invested.

A customer, wanting to buy a product, has slightly more invested in the company, and a lower threshold for what is acceptable. Much lower I suspect if they really want the product!

Shareholders have the lowest thresholds and give little or no thought to the corporate responsibility of the companies in which they invest. Perhaps they put a small proportion of their holdings into socially responsible investing (SRI) to ease their conscience. But for the most part shareholders look at quarterly returns, and trying to outperform the index.

What about employees? At times of strong employment when the potential employee has the stronger hand, reputational issues count for something in choosing an employer. Once in a company and committed though, employees can be defensive of their employer almost to a fault.

What is interesting to me is that the same individual can have multiple stakeholder relationships with a single company on the same day. And apply different values to that one company, depending on the moment.

I can envisage someone reading the morning papers as a member of civil society and feeling angry about a corporate misdeed by a particular oil company. But that same person will visit that company’s gas station on their way to work because it is on the right side of the road rather than go through the hassle of crossing oncoming traffic to the competitor’s station. And I would bet they don’t even consider reviewing their mutual fund or share holdings to weed out the company whose actions offended them so that morning.

What does it mean to us as CR practitioners that our stakeholders can change their spots so readily? Ideally we would hold our companies to the highest standards – that of the member of civil society. But if the invested stakeholders (customers and investors) don’t support us, we are left at a competitive disadvantage.

Perhaps CR practitioners could make more progress if individuals applied their values more consistently whichever stakeholder hat they were wearing at that moment. If investors and customers would put their money where their civil society values sit we would have stronger business cases for taking action.

Awareness is the first step in change. If we could help stakeholders to see the inconsistencies in their own value judgments we would be making a start at closing that gap.

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