Make or Break
From the Commonwealth Bank’s dramatic turnaround after a royal commission to The Smith Family’s groundbreaking work in education, Australian organisations are proving that stakeholder engagement is no longer optional—it’s the defining factor between success and failure in today’s interconnected world.
In today’s turbulent business landscape, organisations across sectors are experiencing a seismic shift. Non-shareholder stakeholders—employees, customers, communities, and even the environment—have emerged as formidable forces, reshaping organisational outcomes and sustainability.
From Shareholder Primacy to Stakeholder Capitalism
The era of shareholder supremacy is over. In its place, a more inclusive approach is taking root: stakeholder capitalism. This isn’t just a feel-good philosophy—it’s a pragmatic strategy for long-term success. Research shows that creating value for all stakeholders is critical for building resilient, high-performing organisations (Crane et al., 2019).
Meet the New Power Players
Employees: Engaged employees drive innovation, productivity, and superior customer experiences (Macey & Schneider, 2018).
Customers: Customer-centric strategies yield financial rewards and ensure sustainability (Kumar & Pansari, 2016).
Communities: Investing in local communities enhances reputations and secures social licenses to operate (Bowen, Newenham-Kahindi & Herremans, 2015).
Environment: Sustainability initiatives are becoming increasingly table-stakes but there is evidence that they are delivering both financial returns and stakeholder trust (Eccles, Ioannou & Serafeim, 2014).
The Stakeholder Revolution Across Sectors
Public Sector: Policy Powered by People
Stakeholder engagement is now fundamental to effective policy-making. Participatory Governance has been a core aspect of local government for more than two decades and its spread across all levels of Government. The Australian Public Service (APS) is pioneering this approach, leveraging public expertise to shape impactful policies and services (Australian Public Service Commission, 2022).
Private Sector: Engagement Pays Dividends
Corporate Australia has recognised that stakeholder engagement boosts financial performance. Research by Henisz, Dorobantu, and Nartey (2014) underscores the direct correlation between engagement and profitability.
Not-for-Profit Sector: Engagement Fuels Impact
For not-for-profits, stakeholder engagement is mission-critical. Success hinges on building deep connections with communities, donors, and partners (Wellens & Jegers, 2016).
Australian Trailblazers
Commonwealth Bank of Australia (CBA): From Scandal to Superstar
After the Hayne Royal Commission, CBA revamped its approach:
Launched a robust Customer Advocate office.
Enhanced employee training and engagement.
Strengthened environmental and social risk assessments.
Result: Restored reputation, higher customer satisfaction, and an energised workforce (Commonwealth Bank of Australia, 2024).
Australian Institute of Health and Welfare (AIHW): Data-Driven Excellence
The AIHW’s innovative stakeholder framework includes:
Regular stakeholder surveys.
Tailored engagement strategies.
Transparent reporting practices.
This model has bolstered data-driven health policies with real impact (Australian Institute of Health and Welfare, 2023).
The Smith Family: Changing Lives Through Collaboration
The Smith Family excels by:
Building tight-knit partnerships with schools and communities.
Engaging program participants in decision-making.
Offering transparent reporting to donors.
Outcome: Improved education outcomes and increased donor trust (The Smith Family, 2024).
SO WHAT?
The stakeholder revolution is no longer a concept; it’s the key to thriving in today’s interconnected world. To succeed, organisations must:
Rethink governance: Establish dedicated stakeholder roles and advisory boards.
Master communication: Tailor strategies for diverse groups and embrace transparency.
Measure what matters: Develop metrics that capture stakeholder value and integrate them into performance dashboards.
Embrace the revlotion: Stakeholder engagement isn’t just a buzzword—it’s a powerful driver of innovation, reputation, and sustainability.
References
Australian Institute of Health and Welfare 2023, Annual report 2022–23, AIHW, Canberra.
Australian Public Service Commission 2022, Delivering for tomorrow: APS workforce strategy 2025, Commonwealth of Australia, Canberra.
Bowen, F, Newenham-Kahindi, A & Herremans, I 2015, 'When suits meet roots: The antecedents and consequences of community engagement strategy', Journal of Business Ethics, vol. 95, no. 2, pp. 297-318.
Commonwealth Bank of Australia 2024, Annual report 2024, CBA, Sydney.
Crane, A, Matten, D, Glozer, S & Spence, L 2019, Business ethics: Managing corporate citizenship and sustainability in the age of globalization, 5th edn, Oxford University Press, Oxford.
Eccles, RG, Ioannou, I & Serafeim, G 2014, 'The impact of corporate sustainability on organizational processes and performance', Management Science, vol. 60, no. 11, pp. 2835-2857.
Freeman, RE 2010, Strategic management: A stakeholder approach, Cambridge University Press, Cambridge.
Henisz, WJ, Dorobantu, S & Nartey, LJ 2014, 'Spinning gold: The financial returns to stakeholder engagement', Strategic Management Journal, vol. 35, no. 12, pp. 1727-1748.
Kumar, V & Pansari, A 2016, 'Competitive advantage through engagement', Journal of Marketing Research, vol. 53, no. 4, pp. 497-514.
Macey, WH & Schneider, B 2018, 'The meaning of employee engagement', Industrial and Organizational Psychology, vol. 1, no. 1, pp. 3-30.
The Smith Family 2024, Annual report 2023-24, The Smith Family, Sydney.
Wellens, L & Jegers, M 2016, 'Effective governance in nonprofit organizations: A literature based multiple stakeholder approach', European Management Journal, vol. 32, no. 2, pp. 223-243.