A framework for stakeholder engagement practices in South African businesses.

• Main Author: Mwangi, John Ceasar
• Published: 2007
• Subjects: Social responsibility of business; Social responsibility of business - South Africa; Corporate government; Corporate government - South Africa
• Online Access: http://hdl.handle.net/10210/138

The term “stakeholder engagement” has gained increasing prominence over the last few years in a variety of contexts. This interest has been fuelled by a range of issues that have taken place over time both from a global perspective and also from a South African perspective. From an international perspective, key among these issues include an increased dissatisfaction with business’s focus on stockholder/shareholder interests and the proliferation of business scandals that have been driven by an often singular focus on (financial) “bottom line”. This dissatisfaction has been further facilitated by the dramatic advances in communication technology that has enabled business malpractices to be instantaneously communicated around the globe with disastrous implications for business reputation. This dissatisfaction has resulted in calls on business for greater engagement with other stakeholders who have traditionally been on the periphery of business and have not received the attention it perhaps deserves, except when their interests had been blatantly violated. From a South African perspective the response to this issue is manifested in the attempt to review the corporate governance practices and guidelines of South African business through the lens provided by the King II Report on Corporate Governance for South Africa. This report has specifically highlighted the need for business to engage with all their stakeholders as contributors to the sustainable business success. This has resulted in an expansion of the notion of a singular (financial) “bottom line” to a so-called “triple bottom line” which also accommodates the social (including ethical) and environmental “bottom lines”. Typical questions that arise from a broader stakeholder approach need to be addressed. Examples of these are: Why should business engage with stakeholders? What are or should be the underlying reasons for engaging with stakeholders? Who are stakeholders? What are the implications of engaging with stakeholders? To answer these and other questions, the researcher set out to develop a framework for stakeholder engagement practices for South African business. In order to achieve this objective, the concept of stakeholder engagement was analyzed. This was conducted by reviewing the historical background that has led to the increasing emergence of stakeholder engagement interest by business. To facilitate an understanding of the field of stakeholder engagement an overview of stakeholder literature was presented and the current issues in the literature in relation to stakeholders reviewed. The applied research component of the study involved a qualitative content analysis of the annual reports of a sample of listed South African companies (N=22) to determine whether structured stakeholder engagement practices had been executed. If this had been the case, patterns of stakeholder engagement practices could have been identified. It was, however, found that these companies did not seem to have specific structured approaches to engage with their stakeholders. By integrating the findings from the literature review and the content analysis a framework for stakeholder engagement practices for South African business was developed. This framework depicts stakeholder engagement as a three-step process that broadly consists of stakeholder identification, planning for engagement (setting objectives, prioritizing and developing strategies) and implementation (defining performance measures, monitoring outcomes and reporting). === Prof. LJ Van Vuuren