The Growing Gap in Stakeholder Management: Bridging Expectations with Performance

 In the complex tapestry of modern business, the management of stakeholder relationships stands out as a cornerstone for success and integrity. Stakeholder management involves identifying, understanding, and addressing the needs and concerns of a company’s stakeholders – anyone from shareholders and employees to suppliers and the wider community who is affected by the company’s operations. The harmony between a business and its stakeholders is vital, yet an emerging challenge is the ‘expectation gap’ – the divergence between what stakeholders expect and what companies deliver.

This gap was the focus of a recent survey by the Edelman Trust Institute, which sought to understand stakeholder perceptions across key domains of corporate responsibility.

Survey Insights: The survey aimed to quantify the expectation-performance gap in five critical stakeholder categories. It explored the priority level of each stakeholder group as perceived by survey respondents and then measured it against the perceived performance of companies regarding these groups.

Analysis of Results:

1. Employees:
   • Expectation: A priority for 60%, signaling the importance of employee well-being and engagement.
   • Performance: Only 44% feel that companies are performing well for employees.
   • Gap: A 16-point gap, suggesting a disconnect between employee expectations and their experiences in the workplace.
2. Future Generations:
   • Expectation: 53% demand consideration for future generations, emphasizing the role of businesses in sustainability.
   • Performance: Just 39% see companies acting favorably towards future interests.
   • Gap: A 14-point shortfall, raising questions about corporate long-term planning and responsibility.
3. Customers:
   • Expectation: Standing highest at 64%, customer needs are seen as paramount.
   • Performance: A 53% satisfaction rate indicates only moderate success in meeting customer expectations.
   • Gap: An 11-point difference, highlighting potential weaknesses in customer service and value delivery.
4. Communities in which they operate:
   • Expectation: 50% believe local communities deserve a high priority.
   • Performance: With 42% approval, companies are seen as moderately engaged with their communities.
   • Gap: An 8-point gap, potentially undermining community support and social license to operate.
5. Owners or Shareholders:
   • Expectation: The lowest priority at 49%, reflecting a possible shift in stakeholder value perception.
   • Performance: Notably, 57% find that companies are performing well, indicating a performance surplus.
   • Gap: A positive 8-point difference, suggesting a possible overemphasis on financial returns.

Discussion: The expectation gaps identified are a warning and an opportunity. They indicate areas where companies might be at risk of losing stakeholder trust and support but also show where they can improve. The positive gap for owners or shareholders suggests a potential overemphasis on financial metrics, possibly at the expense of other stakeholders’ interests, raising ethical considerations for businesses.

Bridging the Gap: To address these gaps, businesses should adopt a multi-pronged strategy:

• Prioritize stakeholder engagement to understand and meet their evolving needs.
• Foster transparency and open communication channels with stakeholders.
• Implement actions that resonate with stakeholders’ values and concerns, such as sustainability initiatives, improved customer service, and employee welfare programs.

The expectation gaps highlighted by the Edelman Trust Institute survey are a clarion call for businesses to realign their strategies and operations. Bridging these gaps is not just about mitigating risks; it’s a strategic imperative for sustainable growth. It’s time for companies to reassess their priorities and put stakeholder management at the forefront of their agenda.

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