A New Path to Stakeholder Governance
A recent analysis
of 51 companies in the UK shed light on the growth and effectiveness of joint management-stakeholder committees.
Researchers Spitzeck, Hansen and Grayson found that joint management-stakeholder committees (JMSCs) proved to be significantly more effective in contrast to other forms of stakeholder engagement such as focus groups, surveys, interviews and advisory boards.
Only companies listed on the Corporate Responsibility Index (CRI) – a benchmarking tool to which over 400 UK-based companies voluntarily report – were included in the study. To obtain a spot on the index, companies must complete a rigorous questionnaire that is independently evaluated for accuracy and credibility.
Using CRI data as a foundation, the research team conducted quantitative and qualitative analyses to uncover patterns in stakeholder engagement and governance arrangements that demonstrated a mix of management and other stakeholders. Where key information was lacking, the team consulted company websites and reports, validating this information with an independent team of experts.
Of companies surveyed, 27% made use of JMSCs. In more than 75% of the JMSCs, stakeholders were key to advancements in five key areas: risk identification, policy development, dialogue, reporting, and product and service innovation.
Oxford Bus Company serves as one example of how JMSCs advance product and service. The company established a board made up of management and employees, customers, local pressure groups as well as representatives from other large employers. Key responsibilities include review of key performance indicators (KPIs) and innovation support. Board-derived innovations include transit route improvements and the repositioning of bus exhaust pipes to decrease emissions directed at pedestrians.
While internal stakeholder engagement has been commonplace for years – countries like Germany even require it by law – external stakeholder engagement has only recently hit the mainstream. To drive corporate governance effectively, this study suggests using JSMCs. Overall, JMSCs have a much higher likelihood of securing trust through collaboration and transparency and turning stakeholder dialogue into concrete policy changes.