A very strategic engagement: stakeholders and long-term value
Fri 23 Feb 2018
Companies have always had a responsibility to their shareholders, and now that responsibility is widening to include all stakeholders – employees, customers, suppliers and regulators – as well as the impact their actions have on wider society – the environment, the local and national economy, tax policy, the local community.
Attending to the needs of all stakeholders will make an enterprise more successful in the long-term, but it’s up to boards to engage with them in a fair and open way.
Ultimately, businesses create value, but that value has to be shared across a range of stakeholders. Companies need to make a strategic allocation of that value across this range of stakeholders, and if they allocate it properly, then tomorrow they will have more value to distribute.
The board should place a strong emphasis on engaging with its stakeholders and treating them fairly, including in financial terms. The board needs to set out, in a clear statement, the nature of the relationship it will seek to develop with each of the principal stakeholders in the business.
For instance, on employee matters, the board should develop clear policies and targets with regard to diversity and inclusion, including gender and ethnic diversity in senior roles, monitor them and report on progress being made towards meeting its goals. If the values are to be seen by members of staff, in particular, as being at the heart of the business, it is essential that they are visibly ‘lived’ by board members and those in senior management positions.
The culture of the business is the glue that holds it together. There is increasing interdependency in the way we behave, and it can tip one way or another very quickly. There will either be a virtuous cycle or a vicious circle. If you get it wrong, it will destroy the business. Our values at Mazars have been engrained as part of our Board Charter below:
This blog is an excerpt of an article, “A very strategic engagement: stakeholders and long-term value” which appears in the Winter 2018 edition of Board Agenda. The full article can be found here.
Corporate culture has been high on the boardroom agenda in the UK in the past year at least partly due to the FRC’s well-received report on ‘Corporate Culture and the Role of Boards’. Healthy culture essential for sustainable success Providing a concise definition of corporate culture, however, seems elusive, not surprising given its all-pervasive nature. […]
Mazars and the Quoted Companies Alliance welcomed over 50 Finance Directors and board members of AIM quoted and smaller listed companies across the UK for our annual year-end update. Much of the discussions focused on corporate reporting and it was interesting to hear that while most boards appreciate the importance of narrative reporting, they also […]
Investors are placing environmental, social and governance issues at the top of their agendas, and they expect companies to do the same. They are increasingly looking for companies that have adjusted the balance between short and long-term value creation to develop strategies that lean toward sustainable outcomes and provide societal good. US investment house BlackRock […]
Corporate governance is rarely out of the business headlines. In spite of 25 years of an evolving corporate governance framework for UK listed companies, in the wake of any high profile collapse or breach, the finger of blame inevitably tends to etch out terms such as ‘management failure’, ‘domineering bosses’ or ‘toxic company culture’. The […]
Whether a business achieves sustainable success for the benefit of its stakeholders and wider society is critically influenced both by the board’s decisions and, also very importantly, by how board members act in the boardroom. Boardroom behaviour has a crucial impact on corporate culture since how the executive and non-executive directors treat each other reverberates […]
Boards must understand the importance of sustainability and long-term value to their businesses, and that means taking non-financial reporting requirements more seriously. The EU Non-Financial Reporting Directive (NFRD) is the latest attempt to persuade companies to integrate sustainability, amongst other areas, into key business structures and processes, and report what they are doing to tackle […]
Buying a technology start-up could be a fast-track to digital success for a large traditional business, or a way to avoid becoming obsolete. But culture clashes mean that digital acquisitions by non-digital companies are prone to failure even when standard due diligence practices are followed. In our experience, compatibility of corporate cultures is often the […]
Two cheers for the Government’s Green Paper on Corporate Governance Reform published last week. The first is for indicating that ‘we need to support strong businesses that focus on long-term value creation and command public confidence and respect’.The second is for focusing on strengthening the employee, customer and wider stakeholder voice in a relatively broad […]
We should always be cautious in saying we are living through periods of unprecedented change. At this time of year one is very conscious that in the 20th century there were two world wars but there can be little doubt that historians will look back on 2016 as a year of major political change in […]
In yet another financial scandal, record fines were announced for six international banks involved in forex rate fixing, despite the not-dissimilar prior Libor scandal. A day later the CEO of the FCA, Martin Wheatley, was reported as saying that fines were having an effect on board culture in the City. But it’s not just banks […]
This website uses cookies.
Some of these cookies are necessary, while others help us analyse our traffic, serve advertising and deliver customised experiences for you.
This website cannot function properly without these cookies.
Analytical cookies help us enhance our website by collecting information on its usage.
We use marketing cookies to increase the relevancy of our advertising campaigns.