At the end of the strength? – Communication management in stakeholder capitalism

For a number of years, business and political leaders have found themselves in a complex situation consisting of opportunities and challenges, brought on by fundamental environmental crises, accelerated technological progress, and the increasing polarization of interests within societies as well as between countries. While this makes the task of communication management within the business and political sphere more challenging, it also offers a major opportunity for our discipline – if we grasp it.

The debate about striking the right balance between economic progress, lasting prosperity, and social participation has produced a new overall concept: stakeholder capitalism. Larry Fink, CEO of BlackRock, the world’s largest asset manager, describes a company’s obligation when it comes to stakeholder capitalism as follows: “A company must create value for and be valued by its full range of stakeholders.” The tardiness of this realization may indeed come as somewhat of a surprise. Edward Freeman had already written “Strategic Management: A Stakeholder Approach” in 1984, while in Germany, the tradition of focusing entrepreneurial behavior on contributions to society beyond job security stretches from the founding era of the 1870s to today’s social market economy.

But it is, in fact, apparent that the question as to how business (and politics) adds value in light of existential threats from climate change and the coronavirus pandemic is being asked more loudly again. In extrapolating his Presencing theory of organizational and social transformation, MIT researcher Otto Scharmer speaks of three divides that need to be overcome in order to make the transition from egosystem awareness to ecosystem awareness: The ecological divide, i.e., the disconnect between self and nature; the social divide, meaning the disconnect between self and other; and the spiritual divide, denoting the disconnect between self and self. The focus on the needs of internal and external stakeholders, which in stakeholder capitalism is intended to build a bridge into the future, puts communication management skills and experience in the spotlight, because empathy and the ability to engage in dialogue with the aim of building credibility and trust are part of core communication management competencies.

However, this growth in importance is not a cause for celebration just yet, as the fruits of this labor – in the form of enhanced resources and more strategic involvement – will not come to corporate communication automatically. At the very moment when the “red-headed poor cousin of the industry” – as industry expert Paul Holmes described how PR is viewed by marketing – could be stepping into the limelight, other disciplines are discovering its traditional working methods and areas of responsibility. These days, marketing sees itself in a dialogue not only with customers, but also with the expectations of society. HR views current and future associates as stakeholders with interests that need to be understood and served and who need to be treated with good communications support. In Controlling and Finance, questions of how to measure and value intangible assets are playing an increasingly important role, while reputation is becoming an ever greater focus of attention for key stakeholders. Corporate risk management monitors stakeholder reactions to reputational crises and strives to ensure numerical accuracy when recording the corresponding financial risks.

Every so often, it seems as though communication management has achieved a fatal victory. Stakeholder orientation, communications to accompany controversial decisions, the ability to engage in dialogue at all levels – all of this is what businesses and government are striving to achieve these days. And this is – painful experiences aside – mainly thanks to decades of intervention and persuasion on the part of many practitioners and academics of the discipline. But when stakeholder-focused communication gains in importance and corporate communication continues to be seen primarily as an enabling function for other management functions, it leaves a bad aftertaste.

To change this, the discipline needs to evolve and its methods for building, maintaining, and evaluating relationships with critical stakeholders in particular need to be enhanced. Reputation is no longer enough as the key currency for communication management. In stakeholder capitalism, corporate communications must cultivate a set of relationships that goes beyond the organization’s own reputation. This is a challenge we all need to take on with self-confidence and dedication.

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