Here are 3 potential responses to the questions:
Positive outcomes of good stakeholder management by banks:
- Increased customer satisfaction and loyalty leads to more business
- Motivated employees are more productive and innovative
- Strong relationships with regulators helps banks navigate changes smoothly
Negative outcomes of poor stakeholder management by banks:
- Angry customers switch to competitors, hurting revenues
- High employee turnover is costly and impacts service quality
- Conflicts with regulators can result in fines or restrictions
Examples of good stakeholder practices in banks:
- SBI's employee engagement programs that recognize good performance
- HDFC Bank's use of social media as a central customer service channel
- Deutsche Bank's focus on sustainability issues
2. How well do bosses know their stakeholders?
• Does the boss know
what the employees
are experiencing in
their job roles?
• Do the bosses really
care about the impact
the firm’s products and
services has on society
and the environment?
• Does the boss treat the
vendors in a cordial
manner?
3. Stakeholder management – internal
stakeholders
• Shareholders – maintaining harmonious relationship
between the shareholders and the management.
• Disclosing relevant information to shareholders,
• Conserving, protecting and increasing shareholder assets,
• Respecting shareholders’ requests suggestions,
complaints
• Employees – to provide adequate compensation and
provide working conditions that respect each employee’s
health and dignity
• Honest in communication with employees and open
sharing of information, assist them in knowledge and skill
upgradation
4. Stakeholder management– external
stakeholders
• Consumers – Is the consumer getting the right quality,
right quantity, right time, right place, and right price?
• Suppliers – organizations should observe fairness
while dealing with suppliers – foster long term
stability in supplier relationship in return for value,
quality, competitiveness and reliability.
• Competitors - Foster open markets for trade and
investment; Promote competitive behaviour that is
socially and environmentally beneficial
• Environment – impact of a firm’s operations on
society – e.g. carbon footprint; water conservation;
• Society – impact of firm’s operations on society
9. Corporate Governance and Customers
• The protection of the customer’s interests is also a part of the
corporate governance practices of a company.
• The banks/companies need to take proactive steps to ensure that the
customer is well informed about:
a) Risk of usage of products and services (e.g. mutual funds)
b) Noise, odours or other problems associated with usage of a product
c) Life cycle costs of the product usage
d) Possible outcomes of a product / service (e.g. insurance saving
schemes)
10. Consumer Protection Act (COPRA)- 1986
• The rights of consumers as enumerated in the COPRA 1986 are as follows:
• The right to safety: the right to be protected against the marketing of goods
and services which are hazardous to life and property
• The right to be informed: the consumer has the right to be informed about the
quality, quantity, potency, purity, standard and price of goods and services
• The right to choose: the right to be assured of access to a variety of goods and
services at competitive prices
• The right to be heard: the right of a consumer to receive due consideration for
complaints at appropriate forums
• The right to seek redressal: the right against unfair trade practices or
unscrupulous exploitation of consumers
• The right to consumer education: the right to ask for information as required
13. Corporate Governance and Employees
• Employees are probably the most important assets of any enterprise.
Therefore, corporate governance needs to ensure the protection of
the interests of employees. The following are some ways of achieving
this purpose –
a) Trade unions – representing the interests of employees
b) Employee representation on company / bank Boards
c) Profit sharing with employees and / or stock options
d) Promoting the welfare of employees through more employee
friendly policies (e.g. extended maternity leaves, work from home
options, knowledge/skill upgradation programmes, medical aid etc.)
15. SBI’s strategies for employee engagement
• Employee performance appraisal through
Career Development System (CDS) – more
objective and transparent
• Flexible timings for employees and women-
friendly policies – chummery for easy
accommodations
• Awards – Alertness Awards for recognizing
staff that have helped detect/prevent frauds;
Griha Tara campaign for promoting home
loans
• Inclusiveness – Helen Keller Award for
supporting 1000 challenged employees
16. Corporate Governance and the community
• A company is a part of a community and while creating value for
consumers and wealth for shareholders, the company also needs to play
the role of a good corporate citizen. It needs to play its role in the following
aspects:
a) Respect and dignity for all those inside and outside the company
b) Concern for the environment, good business ethics
c) A passion to serve customers well and uphold their rights
d) Fair treatment of suppliers, competitors and channel partners
e) Uncompromising commitment to comply with government laws and
regulations in all the markets where it operates
f) Improve the quality of life of the society/community
22. Corporate Governance and the Government
• The Governmental policies and the legal and regulatory environment
influences managerial decisions in companies
• The political economy produces laws, enforcement mechanisms,
bankruptcy processes, ability of corporate chiefs to influence
legislation – all these have a bearing on corporate governance.
• The Government needs to exert a certain degree of control in order to
ensure that corporates do not become too powerful or end up finding
it difficult to compete in an open market. The major roles of the
Government are – the regulatory role, the promotional role, the
entrepreneurial role, the planning role
27. Role of the Board – Indian perspective
• Optimal mix of executive and non-executive directors (number of
independent directors should be at least one-third if there is a non-
exec Chairman ; and at least half if there is an exec Chairman)
• Audit committee – qualified and independent audit committee to
enhance credibility of financial disclosures and promote transparency
(it should have minimum 3 members – all non-exec Directors)
• Remuneration committee of the board – full disclosure of
remuneration package to all directors covering salary benefits,
bonuses, stock options etc.
28. Role of the board – Indian perspectives
• Board procedures – meeting of the board should be held at least 4
times a year with maximum time gap of 4 months between 2
meetings
• Minimum information on annual operating plans, capital budgets,
quarterly results, audit committee and other information on
recruitment and remuneration, statutory compliances, defaults in
financial obligations need to be placed before the board
• Risk assessment and minimization needs to be done through a risk
management committee
29. Viva question
• Banks need to manage stakeholders
properly…explain positive and negative outcomes
faced by banks
• Study the practices in various banks and give 3
examples of good (or bad) stakeholder
management practices in banks
• What kind of decisions lead to good (or bad)
stakeholder management?
