Conscious Capitalism Definition: Stakeholder Orientation

Stakeholders make up a business. They include all the people who are impacted by a business. We must honor them as people first before treating them according to the role they happen to be playing. They all contribute to the creation of value, and it is therefore vital that they share fairly in the distribution of that value. Each business has at least the following six core stakeholders:

Customers: Without them, your organization would quickly fail. The more value you can create for them, the more likely they are to be loyal and enthusiastic promoters of your organization and its products.

Team/Employees: Far more than ‘a factor of production,’ employees are human beings. When you provide value for them including fair pay and benefits, some measure of input and autonomy in their jobs, work that is meaningful, and enthusiastic recognition and thanks, you’ll tap a power source that can dramatically increase engagement, job satisfaction, work quality and productivity.  They’ll take great care of your other stakeholders too.

Suppliers: The people and companies that provide you with the things you need to do business are very important, and often overlooked stakeholders.  Rather than shrewdly negotiating lower prices, doing what you can to help your suppliers achieve success in their own endeavors pays off in preferred treatment, faster service, and increased collaboration and innovation.

Society/Community: There are companies so bad at this that communities actively organize to keep them out.  The opposite is also true.  Creating value for the community (or communities) where you do business can pay off through word of mouth endorsements, high-profile thanks and acknowledgments, and collaborative relationships with leaders of other organizations in your community.

Environment: Clean air, clean water, and a nice place to live and work are not traditional business concerns.  That oversight is largely why we find ourselves in our present ecological situation. Creating value for the environment at large at a local, if not global level may pay the greatest dividends of all by ensuring that future generations have the resources to meet their own needs.  Vigilant attention to the efficient use of resources can provide great value to your organization in this generation too.

Shareholders: Like every other key stakeholder, an organization must create value for its owners and/or financiers.  Value can be paid in money to be sure, but don’t underestimate non-monetary value.  Shareholders are people too, and while they certainly expect a return on their investment, they may also be happy to grant you more favorable terms if they can see your organization is also making a positive impact. 

In addition to those six, You may also wish to consider other stakeholders like the media, government, and trade associations.  Again, Stakeholder Orientation is: creating value for everyone that is significantly impacted by, or who can significantly impact your business.

Here is the trick though.  It is easy enough to name the categories, but for stakeholder orientation to actually work, your clients need to name people who can represent each of these categories.  Who is the one person who can represent the broad and sometimes conflicting interests of your customers?  What about your employees?  You must work with your clients to make sure that they have identified people who can represent not just the category but, within reason, the diverse interests and perspectives within the category.

What about the categories that don’t have an obvious pool of people like community and environment?  Who can speak for them?  This is a judgment call for conscious businesses, but they do have to name at least one person for each.  Some companies have used the mayor or the executive of the local chamber of commerce or other civic organization to represent community.  Other companies worked with a local environmental organization or a third-party certifier, such as B-Lab, to represent the environment.