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Stakeholders Inclusivity

Stakeholders’ inclusivity is increasingly recognized in good corporate governance practices. Control of organizations and ownership lead to separation of roles through agency theory. The agency theory obligates agents to work in the best interest of shareholders. Decision-making is central to this role, and major players are required to weigh in with their perspectives. The role promotes stakeholders’ engagement in facilitating shareholders’ economic interests.

Companies must strive to improve the decision-making process. Inclusive stakeholder engagement ensures that all voices are heard and that decisions are made with a broader understanding of the impact they may have. Setting the right policies and procedures is implemented in a good, transparent, responsible, and ethical business environment. Self-regulation is necessary while practicing stakeholders’ inclusivity.

In order to achieve stakeholder inclusivity, organizations should consider the following:

  1. Identify and engage with all relevant stakeholders, including those who may be traditionally marginalized or underrepresented.
  2. Provide opportunities for stakeholders to provide feedback and share their perspectives.
  3. Ensure communication is clear and accessible to all stakeholders, regardless of language and ability.
  4. Use a variety of engagement methods to ensure that all stakeholders have an opportunity to participate.
  5. Consider the potential impacts of decisions on all stakeholders, and take steps to mitigate any negative impact.

Inclusive decisions increase acceptability when implementing business activities. Corporate governance facilitates financial stability in organizations, investor confidence, capital growth, and good corporate culture. Teamwork is cultivated on the board and management levels, establishing a clear corporate structure and shared responsibility in the delivery of the common objective. Stakeholder inclusivity affects the following groups in corporations and requires critical consideration in strategic alignment;

Shareholders: good corporate governance ensures shareholder participation and equitable treatment. Decisions that require shareholder ratification, such as changes to the memorandum and articles of association, increasing share capital, changing voting rights, the appointment of auditors, appointment of directors, and profit distribution, should be fair game for member proposals.

Board of Directors: it all commences when directors are appointed in a transparent process. Directors should act diligently, professionally, and in the best interest of the company.

Creditors: their rights should be safeguarded in matters of insolvency proceedings and creditors rights.

Employees: a healthy work environment facilitates steady growth for those implementing a corporate strategic plan. A constant dialogue is necessary for monitoring, evaluation, and realignment. Employees should have the opportunity to freely voice their concern and ensure company practices are within the set policies, laws, or corporate ethics.

Compliance Officers and Risk Managers: to function properly, they must have the required information and resources for conducting tests, assessing policy implementation, managing risks, and reporting accordingly. It is important to ensure their remuneration is fairly set according to market rates to ensure they do not compromise their objectivity and independence.

By embracing stakeholders’ inclusivity, organizations can build strong relationships with their stakeholders, foster a culture of trust, and create more sustainable solutions.