Part II- The Second Tenet of Conscious Capitalism: Stakeholder Integration

SD 2012-PCP(5x7)-1005In a previous post (see The Role of Public Relations in Conscious Capitalism), I introduced the four tenets of conscious capitalism as outlined by Whole Foods Co-CEO John Mackey and Conscious Capitalism, Inc. co-founder Raj Sisodia in their 2013 book, Conscious Capitalism.  There, I discussed the role of public relations in helping organizations enact the first tenet of conscious capitalism: a higher purpose.  Here, I delve into the relevancy of public relations for the second tenet of conscious capitalism: stakeholder integration.

Edward Freeman’s stakeholder model motivates the second tenet of conscious capitalism as well as the practice of public relations.  Mackey and Sisodia take a holistic approach to stakeholder relationships and debunk the notion that certain stakeholders, namely investors, should have precedence over others.  They state, “Conscious businesses understand that if we look for trade-offs, we always will find them.  If we look for synergies across stakeholders, we can usually find those too” (p. 70).  The most successful businesses, in their opinion, take a systems approach to stakeholders. That is, a company’s higher purpose guides the tone and intent of interactions with stakeholders, and decisions are based on how well expected outcomes would support the broader, interdependent system of relationships.  Any favoritism toward a particular stakeholder “sets in motion a dynamic that can destroy the harmony and sense of oneness in the system” (p. 70).  A systems perspective recognizes that interactions with one stakeholder group have the natural potential to affect interactions with other groups, for better or worse. 

The role of public relations in stakeholder integration is in cultivating and stewarding relationships with key publics, not in isolation, but with mindfulness about effects on the broader system.  Mackey and Sisodia offer interesting insights on a variety of stakeholders, as follows.  I relate each to the role of public relations in conscious capitalism.

Customers.  In Mackey and Sisodia’s view, a business that only listens and responds to its customers’ wants is neither conscious nor driven by a higher purpose.  Organizations have as much duty to honor and respond to customers as people as they do to educate and serve their best interests.  But, the authors explain, education is impossible without first establishing trust.  There is no “one right answer” for how to address inevitable conflicts between customer wants and the responsibilities organizations relate to their higher purpose, but an absolute must is “never-ending dialogue” both internally and with customers.  Public relations practitioners have ample opportunities to gather feedback from customers, but that feedback is useful only when it is appropriately shared, directed, and applied internally.  Practitioners strengthen customer relationships (and their value to organizations) when they help businesses turn feedback into responsive action. 

Employees.  Mackey and Sisodia stress that conscious businesses hire only those people who personally connect with their higher purpose.  Internal communication programs, whether focused on teamwork, benefits, or policies, reflect the higher purpose and draw employees to a calling rather than a job or a career.  As a result, turnover rates at conscious firms are significantly lower than industry averages.  Employees are often the forgotten public in public relations, but practitioners can do much to ensure the vision, values, and purpose portions of the brand platform (for additional information, see The Role of Public Relations in Conscious Capitalism) are not only shared, but also demonstrated, internally.

Investors.  Mackey and Sisodia insist businesses should focus on long-term investors more so than speculators.  Quarterly analyst predictions drive expectations of financial performance, affect stock prices, and pressure some companies to resort to short-term measures to “beat the street” rather than focus on the long-term health and vitality of the company.  Conscious businesses resist this temptation.  The authors note that since the mid-20th century, the average shareholding period has steadily declined from twelve years, to eight years, to well less than one year.  This trend has direct implications for investor relations, a highly specialized practice in public relations.  As Mackey states, “It is a waste of time to try to develop a relationship with somebody who’s not going to be there [for the long term].  This is true not only in personal relationships, but in business relationships as well” (p. 104).  Guiding investor relations with a long-term, purpose-driven, relational view will at times conflict with Wall Street perspectives, but the authors make a convincing, evidence-based case that conscious businesses are more profitable businesses.

Suppliers.  I’ve yet to hear of “supplier relations” as a public relations practice, but the concept makes sense as Mackey and Sisodia describe these stakeholders as “an integral part of the foundation for a strong and competitive business” (p. 112) and refer to them as “the most neglected of the major stakeholders at most companies” (p. 113).  Practitioners have an important role in B2B communications, which primarily is to preserve these essential relationships, and, just as with customers, to gather and direct supplier feedback internally so businesses can effectively respond to changing market conditions, expectations, and concerns.  In both education and practice, B2B public relations is worthy of additional attention.

Communities.  Mackey and Sisodia are quick to identify community stakeholders as “one of the core constituents for a conscious business” (p. 123).  Community relations has received ample attention in public relations literature and practice, but most often in the context of highly regulated, high risk industries and frequently limited to corporate philanthropic practices.  Dean Kruckeberg and Kenneth Starck’s proposal that public relations should have as its primary aim restoration and maintenance of a sense of community ties nicely with Mackey and Sisodia’s assertion that businesses are citizens and should actively partake in improving quality of life in ways that are driven by their higher purpose.  In their book, Public Relations and Community, Kruckeberg and Starck write, “We maintain that public relations practitioners do not understand their most important role in society.  That role is to serve not only their clients but society at large” (p. xii).  Mackey and Sisodia make clear that serving society is mutually beneficial for businesses and complementary to conscious capitalism.  Community relations, in my experience, is the most impactful and fulfilling area of public relations practice because of its ability to affect lives far beyond those initially involved in any outreach program.  Public relations is a natural fit for community building on behalf of conscious businesses.

Environment and the outer circle of stakeholders.  Mackey and Sisodia consider the environment to be a primary stakeholder and likewise address the importance of what they refer to as “outer circle” stakeholders, or those who “don’t routinely engage in voluntary exchange with the organization for mutual benefit” (p. 153), including media, activists, unions, competitors, and government.  I find it ironic, and admittedly disheartening, that the practice of public relations is so frequently (and narrowly) associated with media relations.  Given that Mackey and other CEOs view media as a secondary public, is it any wonder practitioners struggle for a seat at the executive decision-making table?  How can we better demonstrate public relations as making a valuable contribution to those stakeholders considered most important in conscious C-suites, including employees, suppliers, customers, communities, and investors?  In our quest to be effective change agents and trusted advisors, we must align our communication expertise with an applied knowledge of how businesses operate financially, socially, and strategically.  Only then can we take an active role in helping companies become more conscious and, ultimately, more trusted.

Sandra Duhé, Ph.D., APR, Southern Methodist University

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