Understanding and Measuring Stakeholder Engagement: A Managerial Perspective

Black LD¹*

1. Australian Centre for Corporate Social Responsibility, Melbourne, Victoria, Australia

If the private sector is develop the ability to effectively engage with its many stakeholders for positive societal outcomes, it must develop stakeholder engagement as an organisation-wide capability. This paper presents an approach to defining and measuring the embeddedness of stakeholder engagement within a corporation’s culture and structure.

Stakeholder engagement is embedded in a firm’s culture when employees understand the linkages and interdependencies between the firm and its stakeholders that contribute to long term prosperity. It is embedded in a firm’s structure when managers take stakeholder needs into consideration in operational decisions. Examples of stakeholder engagement capabilities at resources and banking firms are offered to illustrate the interaction of cultural and structural aspects in producing tangible and intangible outcomes such as reduced conflict with stakeholders and community capacity building.

Measurement of the stakeholder engagement capability is undertaken using Likert-style psychometric scales. The embeddedness of stakeholder engagement capabilities within groups within an organisation can be compared in this way and changes tracked over time. Studies using this measure of stakeholder engagement show that increases in stakeholder engagement capabilities are associated with increases in employee commitment and identification. This helps explain why employee volunteering programs are central to improving the social responsiveness of organisations; they help employees understand stakeholder values and let employees express their own values at work.

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