Stakeholder voice in decision making

How the voice of influential stakeholder groups is reflected in the decision making by sports organisations will reflect how seriously a stakeholder-inclusive approach is taken. Just because there are statements made by an organisation that stakeholder groups sit on certain committees or are consulted prior to decisions being taken, this does not mean that the input is in any way meaningful when it comes to decision making and governance. You must ensure that stakeholders have a genuine opportunity to contribute. Therefore, the rights of influential stakeholder groups should be entrenched in key constitutional documents.

In 2017, The Chartered Governance Institute UK & Ireland and the Investment Association published a paper titled ‘The stakeholder voice in board decision making’ to help boards think about how to ensure they understand and weigh up the interests of their key stakeholders when taking strategic decisions. The ‘core principles’ of this approach were stated as follows:

1. Boards should identify, and keep under regular review, who they consider their key stakeholders to be and why.
2. Boards should determine which stakeholders they need to engage with directly, as opposed to relying solely on information from management.
3. When evaluating their composition and effectiveness, boards should identify what stakeholder expertise is needed in the boardroom and decide whether they have, or would benefit from, directors with directly relevant experience or understanding.
4. When recruiting any director, the stakeholder perspective should be taken into account when deciding on the recruitment process and the selection criteria.
5. The chair – supported by the company secretary (or governance lead) – should keep under review the adequacy of the training received by all directors on stakeholder related matters and the induction received by new directors, particularly those without previous board experience.
6. The chair – supported by the board, management and the company secretary (or governance lead) – should determine how best to ensure that the board’s decision-making processes give sufficient consideration to key stakeholders.
7. Boards should ensure that appropriate engagement with key stakeholders is taking place and that this is kept under regular review.
8. In designing engagement mechanisms, companies should consider what would be most effective and convenient for the stakeholders, not just the company.
9. The board should report to its shareholders on how it has taken the impact on key stakeholders into account when making decisions.
10. The board should provide feedback to those stakeholders with whom it has engaged, which should be tailored to the different stakeholder groups.

Though the engagement itself will take place at the operational level, the board should satisfy itself that:

• Relevant stakeholders are identified and prioritised, and structures exist to allow the board to consider the input of those which are most important to the organisation or are most affected by its activities.
• The amount of engagement with each group identified is commensurate with its importance.
• Suitable lines of communication are established between the board and those who undertake stakeholder engagement in order to ensure that the board is apprised of pertinent findings. A balance needs to be struck so that the board is sufficiently well informed without being overwhelmed by too much detail.
• Stakeholder engagement plans are kept under review to ensure that they are fit for purpose and reflect any changes in strategy or the operating environment.

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