How to embed stakeholders into your board’s decision-making

This article is part of our series unpacking findings from our latest Board Report on stakeholder governance. You’ll find the full series, including the research, at the end of this post.

Did you know that stakeholders are literally worth their weight in gold?

Research from Wharton found that,  considering all extraction costs, the average listed gold-mining company trades at a 72% discount compared to the gold in the mine. Why? A lack of stakeholder support.

“The value of a gold mine [used to be] based on the amount of gold in the ground, the cost of extraction and the world price of gold. Today, I can show you two mines identical on these three variables that differ in their valuation by an order of magnitude. Why? One has local support and the other doesn’t.”

~ Gold mine COO

And it’s not just mining. Research continues to show what common sense already tells us: considering your stakeholders is simply good business, and it pays off long term.

But doing it well takes more than the occasional board paper on suppliers or sustainability. It means embedding stakeholder thinking into every part of decision-making—a step most boards haven’t taken yet, according to our latest research and others' findings.

“The majority of companies have not set up formal frameworks for ensuring the board is able to consider the interests of stakeholders within its decision-making process.”

~ Deloitte

So, how do you make it happen? These four questions can help your board get started.

Four questions to embed stakeholders into your board’s decision-making

1. Are stakeholders an integral part of our strategy?

Decisions don’t exist in a vacuum. Every decision follows your strategy, so your strategy must include stakeholder priorities if you want real impact.

Start by identifying key stakeholder issues that already exist or that are still emerging — “the large-scale societal and environmental trends that may present risks and opportunities," as Harvard Business Review puts it. Ask: How does your strategy relate to these trends? Does it rely on any of them?

If not, stakeholders may fade into the background as competing priorities take over.

“Dialogue with stakeholders can help boards understand significant changes in the landscape, predict future developments and trends, and re-align strategy.”

~ FRC

Not all stakeholders will carry the same weight. Use a prioritization exercise to determine which groups should shape your strategy and which are less central to success. This will vary between organizations.

“External drivers come first when we do strategic planning, then we look at how it impacts our six stakeholders. Are we missing any co-dependencies? Has everyone that’s going to be impacted been reflected in our thinking?”

~ Chair, Global Derivatives Trading House

Need a tool to start? Try the stakeholder matrix from RBS, shared by the Chartered Governance Institute UK & Ireland.

Source: RBS’s annual report, via CGIUKI.

2. Do all decisions (not just the board’s) consider stakeholders?

The board is responsible for decisions across the entire business. But most decisions are made outside the boardroom, by managers, teams, and individuals.

That’s why the board’s commitment to stakeholders must filter throughout the company. Without it, daily decisions can undermine the board’s goals.

“Responsibility sits with the board, but the bulk of decision-making at the coalface is within management — there’s a disconnect.”

~ Chair, UK Pension Fund

Yet, 62% of the boards we surveyed said their organizational strategy doesn’t give teams a useful decision-making framework that can be used throughout the business.

That framework doesn’t need to be complex. Even a basic checklist can help. Here are sample questions from the FRC that you could adapt company-wide:

Source: FRC.

Because software excels at scaling up, use technology to ensure adoption throughout the business. Platforms like Board Intelligence can give you easy-to-use, automated tools to align discussions across all committees, monitor how much time is spent discussing specific stakeholders overall, and standardize the reports used to guide your decisions.

3. Are we recording how we reach decisions, and making use of these records?

Boards don’t need to please every stakeholder all the time, and trade-offs are inevitable. What matters is that the process was thoughtful, sound, clear, and transparent.

Identify stakeholder contact points—like union reps, regulators, or nonprofits—and speak with them early and frequently about the calls you’ve made. Then, explain the “what,” “how,” and “why” behind key decisions. This builds trust and reduces misunderstandings.

“Stakeholders want to know how their interests have been taken into account. It is important companies establish feedback loops to show stakeholders how their views inform decisions.”

~ CGIUKI

Keep those channels of communication open. Let stakeholders speak back unfiltered. Use their feedback to reflect on your assumptions about them. If not, where did the process fall short?

“Established and formalized communication channels, as enjoyed by shareholders and regulators, can help embed the consideration of key stakeholder interests in board discussion and decision-making, and broaden directors’ understanding of stakeholder perspectives.”

~ FRC

4. Beyond representation at board level, is there understanding?

At its core, stakeholder governance is a matter of stakeholder awareness. In other words, it’s about answering a simple question: “Is the board equipped to understand the impacts of a particular decision in relation to all its stakeholders?”

Boards don’t need to reflect every stakeholder group perfectly. But they must know how to engage with and understand those they affect.

That comes through experience, including what directors bring with them and what they seek out.

“The obvious answer is to make your board more diverse and representative. But that approach can only take you so far: Short of adding hundreds of directors, you can’t be a perfect mirror of society. So, in addition to bringing external knowledge onto the board, it’s up to boards to expand their thinking and find ways of broadening their experience.”

~ Alison Munro, Chair, National College for Advanced Transport and Infrastructure

Look at the past experience and the other roles held by your board members — such as sitting on the board of a charity, or holding an executive position at another organization — and map these to your stakeholder groups. Are there gaps, with some groups not benefiting from the same level of expertise within the boardroom? If so, make it an important criterion for the next appointment at board or committee level, and find ways to upskill your directors. For example, if the executives have customer engagement sessions, why not have non-executives attend so they can get face-to-face experience with the customers?

Of course, skills and experience can only go so far if the data provided to the board members isn’t painting an accurate picture of your stakeholders. So, to find out what you should be monitoring and including in your board reporting, read our tips on how to identify the stakeholder metrics that matter.