TREADING THE NARROW PATH OF STAKEHOLDER MANAGEMENT IN OPERATIONAL EFFICIENCY: THE LOVE ANGLE

In an era where corporate sustainability, ethics, and performance are no longer mutually exclusive, stakeholder management has emerged as both a compass and a crucible. Organizations today operate in a dynamic ecosystem of interconnected interests — from investors and regulators to employees, customers, and communities. Navigating these interests requires not just balance but strategic synergy — the very essence of operational efficiency. “One for all, all for one” is no longer a romantic slogan; it is a corporate imperative – a love affair!

As internal auditors and governance consultants, we have often found ourselves as sentinels in the delicate dance between value creation and value protection. Stakeholder management, especially within operational structures, is a “narrow path” because it involves reconciling often competing interests without compromising organizational efficiency. The Institute of Internal Auditors (IIA) in its Three Lines Model (2020) emphasizes the collaborative responsibility of governance, management, and internal audit in ensuring that risk, compliance, and performance are aligned with stakeholder expectations.

The complexity lies in the fact that stakeholders are not a monolith. Each has distinct interests, power dynamics, and risk appetites. Aligning these interests is akin to “herding cats” — chaotic but not impossible.

At the heart of stakeholder management lies engagement — not just communication, but authentic involvement in decision-making. According to Freeman’s Stakeholder Theory (1984), organizations must create value for all stakeholders, not just shareholders. This inclusive view fosters resilience, reputation, and innovation. But how does this translate to operational efficiency?

Let’s cursorily examine the case of Toyota, whose lean manufacturing model incorporates continuous feedback loops from employees and suppliers — both considered critical stakeholders. By empowering stakeholders, Toyota not only enhances productivity but also builds ownership, reduces waste, and boosts morale. As the saying goes, “Many hands make the work lighter.”

However, stakeholder engagement must be strategic. The Global Reporting Initiative (GRI) and ISO 26000 standards guide entities to identify material stakeholders and map their influence versus interest. This ensures that engagement efforts are prioritized and purposeful.

Internal auditors must tread the fine line between assurance and advisory. According to IPPF Standard 2120 – Risk Management, internal auditors must evaluate the effectiveness of risk management systems. In the context of stakeholder dynamics, this includes identifying relational risks: reputational threats, conflict of interest, and governance voids.

Moreover, auditors must act as cultural interpreters — decoding the “unsaid” among stakeholders, especially in multi-national environments. For example, in some cultures, dissent is muted; in others, confrontation is normative. Ignoring such nuances can derail otherwise efficient processes.

The mantra here is: “If you want to go fast, go alone; if you want to go far, go together.” Internal Audit must ensure that operational decisions incorporate a 360-degree stakeholder lens — embedding ethics, transparency, and accountability.

Operational efficiency is not just a function of speed or output; it is the result of cohesion and clarity. In organizations plagued by silo thinking, departments often pull in different directions. Stakeholder management becomes the glue that binds enterprise functions together through shared goals and mutual respect.

The OECD Principles of Corporate Governance (2015) call for the equitable treatment of stakeholders and timely disclosure of material information. Transparency is the currency of trust, and trust is the foundation of efficiency. When stakeholders are kept in the dark, suspicion grows, and friction follows — slowing down decisions and amplifying costs.

Stakeholder management, when done right, becomes a “stitch in time that saves nine.” Early identification of concerns, alignment of expectations, and responsive leadership prevent crises that could cripple operations. Conversely, ignoring stakeholder voices may lead to “penny wise, pound foolish” decisions that erode long-term value.

In practical terms, adopting a stakeholder-inclusive operational strategy enhances:

Risk responsiveness: Early warning systems from stakeholder feedback.

Decision quality: Diverse perspectives enrich strategic thinking.

Resource optimization: Collaboration reduces redundancy.

Employee engagement: A sense of purpose boosts performance.

The narrow path of stakeholder management is indeed challenging, but it is also transformational. It requires courage, competence, and consistency. Internal auditors and corporate governance professionals must serve not as referees but as relationship architects —as experience lovers – facilitating dialogue, mitigating conflict, and championing inclusiveness.

In the end, the love angle becomes more than a humorous amorous affair — it becomes a model for sustainable operational excellence. As we tread this path, let us remember that the strength of an enterprise is not just in its structure, but in the solidarity – the seeming love work – of its stakeholders.

 @Omoniyi Mafikuyomi, –Practices Internal Audit in Nigeria