Weekly Business Insights from Top Ten Business Magazines
Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Since September 2017 | Week 342 | March 29-April 4, 2024
Personal Development, Leading & Managing Section | 1
How Companies Should Weigh In on a Controversy
By David M. Bersoff et al., | Harvard Business Review Magazine | March–April 2024
Extractive Summary of the Article | Listen
Executives need guidance about managing their organizations’ engagement with societal issues, including hot-button topics such as gender, climate, and racial discrimination. The authors believe that companies can take a stand on such issues and successfully navigate both internal and external pushback if they acquire a more sophisticated understanding of their stakeholders’ concerns. Success does not mean avoiding public controversy or achieving unanimous support among key stakeholders. Rather, it results from adhering to processes and strategies that over the long term will lead to increased competitive advantage and an enhanced license to operate while also helping manage any short-term heat and scrutiny.
Around the world people are clear about the core economic function of business. Its main job, acknowledged by the vast majority (85%) of those the authors surveyed, is to produce safe and reliable products, create jobs, create wealth, grow the economy, and drive innovation. But its second job is nearly as important: The societal duties of business were also deemed central by 75% of the respondents. Those duties include, for example, tackling climate change, addressing discrimination, supporting local communities, and stepping in when government is ineffectual. Clearly, societal expectations haven’t superseded traditional economic expectations; they are simply being added to business’s plate. Unfortunately, the public doesn’t believe that business has done enough to address those challenges.
How should a company decide which stakeholders to disappoint when goals and expectations conflict? The data doesn’t offer a simple answer, but it does indicate criteria that employees, customers, and communities may use to judge your decisions. First, no one stakeholder group should always take precedence. Second, the two stakeholder-oriented considerations you will most likely be expected to take into account are (a) who is most responsible for the long-term success of the company and (b) who is going to be the most affected by your decision. It is no easy task to balance stakeholder concerns. Arbitrating the trade-offs is sensitive work that requires managerial judgment.
The authors found strong links between issue engagement and the key prerequisites for business success. Engagement increases customer loyalty: A majority of consumers (58%) say they buy or advocate for a brand when their values align with its values. Engagement helps win the war for talent. Engagement attracts investors.
Defining and consistently defending your values, adopting an overarching multistakeholder orientation, practicing effective stakeholder management, and developing rigorous, thoughtful, and fair processes for weighing and balancing the potential impact of your business decisions across stakeholder groups (including future generations) are all necessary if you are to be the company your customers, employees, investors, and neighbors want and expect you to be.
2 key takeaways from the article
- Executives need guidance about managing their organizations’ engagement with societal issues, including hot-button topics such as gender, climate, and racial discrimination. The authors believe that companies can take a stand on such issues and successfully navigate both internal and external pushback if they acquire a more sophisticated understanding of their stakeholders’ concerns. Success does not mean avoiding public controversy or achieving unanimous support among key stakeholders. Rather, it results from adhering to processes and strategies that over the long term will lead to increased competitive advantage and an enhanced license to operate while also helping manage any short-term heat and scrutiny.
- Defining and consistently defending your values, adopting an overarching multistakeholder orientation, practicing effective stakeholder management, and developing rigorous, thoughtful, and fair processes for weighing and balancing the potential impact of your business decisions across stakeholder groups (including future generations) are all necessary if you are to be the company your customers, employees, investors, and neighbors want and expect you to be.
(Copyright lies with the publisher)
Topics: Stakeholders, Social Issues, Corporate Social Responsibility, Business