Integrated reporting is about more than the production of a report; it is a tool to help organizations think about how they create value and articulate that value to all their stakeholders. Equally, understanding and engaging all stakeholders is about more than just marketing and communication; it helps an organization build trust and make informed decisions which ensure that the senior leadership – the executive team and governing body – remain transparent and focussed on purpose and strategic oversight.
Of course, the senior leadership still has to navigate the licence that they will create through their engagement with stakeholders; for example, there may be competing views – but to ignore stakeholders is at best foolhardy and at worst a dereliction of duty.
The case for senior leadership – boards and senior management – to take account of the legitimate and reasonable ‘needs, interests and expectations’ (NIEs) of its primary stakeholders has been evidenced and articulated by many thought leaders, and underpins the paradigm shifts in the corporate world identified in King IV:
“…the CSRO (corporate stakeholder relationship officer) informs management of the stakeholders’ NIE’s and does a written report to the board on the quality of the relationships. At every board meeting there should be an agenda item “Stakeholder relationships.” This will result in the board having an oversight which is informed in regard to managements’ proposals on strategy.”
Measuring Relationships: a route to competitive advantage and reduced risk, Professor Mervyn King, IIRC, 2017
Most Corporate Governance codes already include, or are moving towards requirements for Boards to have responsibilities around stakeholder/shareholder assurance in relation to understanding and engagement. Integrated reporting is enabling that by encouraging a better articulation of materiality in the context of stakeholders and risk, and we can see great examples both within higher education and outside higher education.
The CUC Code of Governance, used primarily in UK HE, requires that ‘Governing bodies understand the various stakeholders of the institution (globally, nationally and locally) and are assured that appropriate and meaningful engagement takes place to allow stakeholder views to be considered and reflected in relevant decision-making processes’.
I had the great pleasure of interviewing Professor John Stanhope, Chancellor and the Chair of the board of Deakin University Australia, and Co-Deputy Chair of the IIRC Council, about governance in HE and the board’s role in stakeholder assurance/engagement, particularly in the context of strategic organizational transformation.
The power of listening
John emphasized the importance of getting the basics right, and that includes listening and reflecting on what you hear.
In his book 7 habits of highly effective people’, Steven R Covey suggests that “people usually listen with the intent to reply, not to understand”. He recommends, “seek first to understand, then to be understood”. This can be key in understanding whether the organization is clearly articulating its value to stakeholders.
The challenge for governing bodies
John also challenged HE governing bodies to question their own understanding and to be able to recognize whether there were gaps in their understanding of stakeholders, and furthermore to recognize where there might be shortcomings in the assurance that they are getting from the executive team.
You can listen to our discussion here.
Reflections from the HE sector
Discussing John’s insights with a group of university secretaries and governors from UK HE governing bodies in a ‘virtual sandpit event’, they reflected on:
If we are to meet the expectations of good governance which Prof. Judge Mervyn King and John Stanhope allude to, we must put in place a robust and transparent way to assure that we can listen, reflect and respond with purpose to our stakeholders, whoever they are.
John Stanhope’s podcast was a great provocation for the Advance HE event, and I hope that you find it useful.