Study Calls for More Independent Board Directors and Better Stakeholder Management in China

Heidrick & Struggles International, Inc. (Nasdaq: HSII), the world’s premier executive search and leadership consulting firm, has sponsored a Benchmarking Corporate Governance in China study based on 15 months of research conducted by Fudan University in Shanghai.

Recommendations from the study include a call for Chinese companies to recruit and value the opinions of independent directors. The study found that, as in Chinese society, patriarchy – especially in private enterprises — prevails. The tendency toward having a "weak board and strong chairman" is common, and boards tend to be tight-knit groups built on business or personal networks.

What I found interesting but not really unusual is the finding that their power to influence stakeholder interests is limited.

You see, unless organisations make stakeholder relationship management a business priority and manage it as such this will happen.

Organisations that understand this concept will develop and implement organisational policies and practices that take into account the goals and concerns of all relevant stakeholders.

The first thing do then is to ask any of your managers if they know the Clarkson Principles of Stakeholder Management. These are the universal principles that were devised at more than four large scale conferences the past 15 years that have set the tone for stakeholder development. You can take a look at these principles at:

Without knowing those principles you cannot even start to address stakeholder concerns and needs. Look at it from another angle: "How Stakeholder-friendly is your organisation?"

If you want to manage stakeholders effectively and efficiently you will have to:

  • Develop a real understanding of who are your stakeholders, as well as what are their specific needs, wants, desires, goals and expectations;
  • Understand how stakeholder reputation manifests itself;
  • Devise meaningful ways to establish and maintain positive, collaborative and mutually beneficial stakeholder relationships;
  • Fine tune stakeholder profiling, stakeholder relations and reputation management strategies and tactics;
  • Outline programmatic steps to better align operational and communication objectives for success;
  • Develop a more strategic and proactive framework for developing and managing stakeholder relations;
  • Develop meaningful engagement and communication strategies with various stakeholders.

Reputation Risk emerges when the reasonable expectations of stakeholders are not met. So what you do in managing stakeholders is vital to the reputation of the organisation.

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