How Big is that Elephant in the Room?

Posted on February 10, 2017 by Editor

A new piece from Professor Mervyn King SC, the founder of the Integrated Reporting movement, is worth reading. He’s discussing a new book from Relational Analytics called “The Relational Lens”.

King argues that the breakdown in societal trust in corporates and government alike can perhaps be attributed to the failure of those organisations to understand the needs, interests and expectations of their major stakeholders.

Today the strength of relationships between an organisation and its stakeholders – clients, suppliers, shareholders, communities, governments – aren’t measured.  Furthermore, those stakeholders’ requirements aren’t documented in a quantitative fashion. That failure to measure, manage and develop those relationships creates a gulf in understanding. King speculates that the resulting disconnect, in turn, means that the breakdown in trust is almost certain to grow.

If we had clear, understandable and quantifiable ways of measuring these stakeholder interests, and those metrics became widespread, then management and boards would be better able to understand the full consequences of all of their decisions.

Could today’s corporate scandals have been avoided if the people at the centre of these storms had a better understanding of their stakeholders? Perhaps measures like these would be more effective than additional or more granular reporting in changing corporate behaviour?

King asserts that “Restoring confidence in corporate, political and other institutions will require more than clever PR. It requires systematic measurement and reporting on the quality of relationships with all major stakeholders so that companies can take specific steps to address the key issues seriously.”

Read more on the <IR blog>, or read the book — which provides new metrics.

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