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Engagement with other stakeholders - Coggle Diagram
Engagement with other stakeholders
The 2018 Code states that the board should understand the views of the company's other key stakeholders and describe in the annual report how their interests and the matters set out in s.172 have been considered in board discussions and decision making. The board should keep enagegemnt mechanisms under review so that they remain effective
A stakeholder is a person within an interest or concern in something especially business
Companies will be required to report in their annual reports how the interests of stakeholders have been considered in board discussions and decision making
Ways to engage with stakeholders
Reactively
The organisation engages defensively, when forced to in response to a crisis and usually in an attempt to beuild its reputation
Proactively
The organisation tries to understand its stakeholders concerns and issues
Carry out customer surveys, focus groups, shareholder surveys, competitor research. This information can then feed into the decision making process
Engage directly with stakeholders to get their input before making decisions. This is often the case with shareholders and their representative bodies. Organisations will run a proposal or idea past some of their larger shareholders before making a final decision on an issue, such as remuneration packages for directors or senior exectuvies
Involve stakeholders in the decision making process and ask them to vote on an action
Interactively
The organisation has ongoing relationships of mutual respect, openness and trust with stakeholders
Most engagements have fixed timetables to ensure that results are achieved
The CS may be asked to develop a timetable which should be based on input from all parties
It is important to establish ground rules for public disclosure and for managing expenses related to the enaggement
Organisations should avoid giving money to stakeholder groups as part of the engagement as this could be misconstrued as a bribe. Any money that is paid over should be documented and reported giving the reason for the payment
Communication to employees about the purpose of the engagement and what the organisation seeks to achieve from it is also important and ensures that the organisation communicates a consistent message
When issues and concerns are raised through a stakeholder engagement cannot be addressed, an organisation should be honest and transparent about why this is the case
Engagement with the workforce
The Code states that the board should ensure that workforce policies and practices are consistent with the company's values and support its long term sustainable success. The workforce should be able to raise matters of concern
The Code states that for engagement with the workforce, one of a combination of the following methods should be used
A director appointed from the workforce
A formal workforce advisory panel
A desinated NED
If a board has not chosen one or more of the methods, it should explain what alternative arrangements are in place and why it considers that they are effective
The Code states that there should be a means for the workforce to raise concerns in confidence and if they wish anonymously. The board should routinely review this and the reports arising from its operation. It should ensure that arrangements are in place for the proportionate and indepdnent investigation of such matters and follow up action
ICSA: The stakeholder voice in board decision making
Boards should identify and keep under regular review, who they consider their key stakeholders to be and why
Boards should determine which stakeholders they need to engage with directly, as opposed to relying soley on information from management
When evaluating their composition and effectiveness, boards should identify what stakeholder expertise is needed in the boardroom and decide whether they have, or would benefit from, directors with directly relevant experience or understanding
When recruiting any director, the nomination committee should take the stakeholder perspective into account when deciding on the recruitment process and selection criteria
The chiar, supported by the CS, should keep under review the adequacy of the training received by all directors on stakeholder related matters and the induction received by new directors, particularly those without pervious board experience
The chair, supported by the board, management and the CS should determine how best to ensure that thee board's decision making processes give sufficient consideration to key stakeholders
Boards should ensure that appropriate engagement with key stakeholders is taking place and is key under regular review
In designing engagement mechanisms, companies should consider what would be most effective and convenient for stakeholders, not just the company
The board should report to its shareholders on how it has taken the impaction key stakeholders into account when making deicsions
The board should provide feedback to those stakeholders with whom it has engaged which should be tailored to different stakeholder gorups