Effective and Ineffective Stakeholder Management

Effective Stakeholder Management

A great place to start looking for examples would be on the B Corp website (bcorporation.net). Companies with this designation have gone through extensive vetting in shareholder categories such as environment, community, workers, customers, and governance, proving themselves to be a company that uses “business as a force for good.” The company we choose to highlight is Patagonia. Examples of effective stakeholder management include:

Environment

• Pledge 1% of sales to the preservation and restoration of the planet

• Established a marketplace to buy and trade in used gear (i.e., Worn Wear)

• Clothing is made using less energy and water while generating less trash

Community

• Updated rock-climbing gear to not create any more holes in natural land structures - preserving the environment and the sport of rock climbing for future generations.

Workers

• Ethically sourced products that pay a fair wage to manufacturing labor

• Employees at the corporate office have free daycare to mitigate the burden of childcare

Customers

• Lifetime guarantees on all products - theoretically, after fully grown, you could purchase an entire wardrobe once through Patagonia and never again

incur a cost again.

Ineffective Stakeholder Management

While Johnson & Johnson’s reaction to the Tylenol poisoning dilemma in the early 1980s has been touted as the “benchmark for how organizations should react to a crisis” (Trevino & Nelson), the company abused primary stakeholders in less than two decades later. DePuy Orthopedics, a Johnson and Johnson subsidiary, manufactured and marketed metal-on-metal hip implants. These implants left many patients immobile and fighting cognitive impairments due to metal toxicity (roughly 1 in 20 patients). After evidence of its potential danger to patients became known, the company denied the validity of the claims and continued selling the product. There were 16,800 reported issues with the implant from 2000 to 2010, of which 14,000 implants were replaced and 11,000 lawsuits filed.

Submitted 4/1/22