The art of BALANCING stakeholders' interests

We can see the roots of this disintegration at the family level. For a stark illustration watch Japanese movie “The World of Kanako”, which sheds light on how parents’ actions affect their children. A divorced couple are busy dealing with their own problems and ignore their only daughter. Feeling unloved, Kanako treats others likewise, including friends. She sells them drugs and forces some into prostitution. That sparks a negative chain reaction.

People are also the heart of all organisations. But in our era of “good governance”, not everyone is following best practices. Many of these focus on particular stakeholders.

Who are the stakeholders? For a school, it ranges from students, their parents, teachers and other staff to the local community and education regulators. Parents want good grades for their children, to secure places at prestigious universities. But that can only be achieved when the school’s resources are distributed fairly. Without facilities that nurture learning experiences, such as good reading materials in the library, few students will thrive academically.

In the corporate world, most companies’ top goal is maximise shareholder benefits. But that can be assured in the long term only when all employees are taken a good care of and when the company has built a good reputation among the public. The quality of the board of directors, the management team and employees, plus financial performance, are key indicators, but the social and environmental impact of the company’s activities are also important.

One case that comes to mind is that of Siemens. Years ago an overseas unit of the German firm offered officials bribes to win a contract – something most companies do to maximise profits for shareholders. Competitors who refused to pay the bribes, either for lack of money or out of belief in free and fair competition, lost out. 

When the scandal was uncovered, Siemens lost its place as the No 1 company all graduates wanted to work for. It took years to heal the tarnished image. Today, Siemens is at the forefront of good corporate practice, sponsoring a key sustainability index that measures companies around the world.

It is also worth talking about the copper-mining project in Myanmar that involves China-based Wanbao Mining. Myanmar police were criticised for helping its subsidiary – Myanmar Wanbao Mining Copper – by cracking down on protesters last December, leading to one death. The deadly crackdown sparked protests outside the Chinese Embassy in Yangon. Despite touting itself as socially responsible, the subsidiary has faced strong resistance – enough to convince the world that shareholders’ benefits are its overriding priority.

All business leaders should realise that it takes years to win public recognition and that it also takes years for the public to forget one big mistake. They may be praised by some for opportunistic gains today, but the organisation will likely suffer in the long term. That is something that Electricity Generating Authority of Thailand knows all to well.

Following the environmental disaster caused by its Mae Moh coal-fired power plant, the agency has faced strong public resistance to its new power projects. Nuclear power has been practically ruled out, with little public trust in Egat’s sincerity and capacity to deal with the potentially negative repercussions. In the past two years, Egat has taken a total of some 300 people on nine fact-finding missions to observe “clean-coal” power plants overseas. Yet public resistance to its new coal-fired power plants remains strong, even when the nation realises that without them Thailand’s economic growth cannot be sustained.

At a stakeholder conference last week, Stop Global Warming Association president Srisuwan Janya offered words that Egat’s governor and employees should heed: They cannot just follow orders to build new power plants without taking into account the feelings of local villagers. The governor was advised to talk to locals more often, while Egat’s engineers, “who cannot talk in plain language”, were deemed inadequate go-betweens for the project.

Stakeholders’ interests are diverse. Plus, in an era when information is becoming ever-more accessible, it is impossible to stop questions.

Leaders at the national level should also take that fact into account.

Singapore’s founder Lee Kuan Yew might have offended some who did not share his vision, but most Singaporeans adore him for bringing decades of stability and prosperity. It is obvious that his goal was to strengthen Singapore as a whole, not to benefit particular stakeholders.

In Thailand, late prime minister Chatichai Choonhavan is still remembered for far-sighted vision that developed the Eastern Seaboard and benefited all stakeholders in the country.

Yet his successors have been criticised for associated environmental problems, which were ignored during years of prosperity. In a way, they were busy launching their own projects for votes, and lacked the art of balancing stakeholders’ interests. Hundreds of companies operate in the eastern provinces, but only a few are headquartered there – meaning only a slice of the benefits are returned to the provinces. To date, there is no regulation that requires them to register businesses where they operate.

Today, Thailand is going through a wave of reforms, but not all Thais share the view that these will lead to a more stable and prosperous future, fearing that some stakeholders are and will be deprived of their basic rights. That is plain to see, judging from our experiences that show that claimed national interests are often a mirage. 

People can influence others’ lives. And the more the power one has, the higher the consequences of his actions.