MIT Sloan Management Review Article on How to Reconcile Your Shareholders With Other Stakeholders

Identify which stakeholders will create long-term value for shareholders — and avoid the value-destroying traps associated with others.

How are leaders supposed to manage the trade-offs between conflicting stakeholder interests? Consider, for example, the tension between the interests of short term shareholders and the need to support a robust societal response to pandemics or other crises that can threaten a company’s business model. Those who have pursued long-term growth strategies that benefit a broad set of constituents understand that they must focus rigorously on their companies’ long-term value. Specifically, it’s important to assess which stakeholders create — and which deplete — long term shareholder value. This enables companies to avoid value-destroying traps and develop win-win compacts with value-creating stakeholders.