The Problem of Stakeholders
Understanding how an important process can undermine important legislation, and how to fix it
In the world of legislative politics, there is one term that pops up again and again: stakeholders. Essentially, if you are drafting a bill or creating a program, one of the crucial first steps is to reach out and work with the people and organizations that have a stake in what you’re doing.
The idea of stakeholders is uncontroversial. In fact, it is actually quite important. When you are doing legislative work, there are benefits for both benevolent and selfish reasons. On the benevolent side, if you are doing something that will make a change in peoples’ lives, you want to give them a say in how that change will be made. On the more selfish side, when you are trying to get your bill through or program approved, you don’t want a bunch of angry people to show up unexpectedly and ruin all your hard work. The process theoretically helps everyone.
While this is an important concept across the country, it holds a special place in the small world of Delaware. In a state where we pride ourselves on being able to get a group of people around the table and hash things out, the stakeholder process is its own rite of passage. If you are not able to get the right group and the right process, then nothing that you put out will be taken seriously. Only when someone is able to complete this process are they given the go-ahead to get things done.
Up to this point, there is no real problem. At its best, the stakeholder process is a sign of a democratic system with deeply held norms that prevent people from moving ahead with bold and potentially dangerous reforms without checking in with those affected. In a perfect world, that might be all that it was. But to see how this really affects the way policy is made, we have to look beyond intent and into how the process works in practice.
Who Gets to Be a Stakeholder
Stakeholder is such a wonderful political word because, like “compromise” or “innovative” or “common-sense”, it can mean just about anything that you want it to. The scope of who constitutes a stakeholder for an issue can essentially be as broad or narrow as it needs to be. In practice, that means two things:
- Stakeholders are often limited to established organizations and individuals that have existing access to power
- Among stakeholders, the ones with more power are going to have a larger say than those without power
These are both fairly banal points by themselves, so it is important to understand what they both look like in practice.
If you are a legislator or government official looking to pass a bill or create a program, there is not a universal rolodex of everyone affected by that issue that you get to use for outreach. Instead, you have to look for the usual suspects.
The search for stakeholders often starts with the government agency or agencies that would have to either be reformed or enforce the reform being made. If you want to change the way health care works, you might reach out to the Department of Health. If you want to reform the police, you might reach out to the state police department. If you’re reforming the state government, you might reach out to the governor’s office.
Beyond that, the next step is to usually look for organizations that are involved with the issue or represent a lot of affected people. This can be a union, it can be an industry group, it can be an issue-advocacy group, or it could simply be a large business or institution that might want to have a say. Sometimes there will be an individual that can fill a similar role, especially if they’ve worked on a subject before in an official capacity.
If you are not in either of those categories, you often fall into a broad category called “the community” or “the public”. This is a polite way of saying that you do not get a seat at the negotiating table. If you are lucky, maybe there will be a listening session or a space for public comment. But usually, once those events are happening, decisions are being presented at you, not made along with you. At that point, you might be able raise enough of a stink to kill a bill or project altogether, but the nuances and details are going to be above your pay grade.
I do not mean to imply ill intent for everyone who chooses their stakeholders like this. Lots of people will try to pick groups that they think truly represent all sides, and there are plenty of government agencies and groups that will legitimately fight for the disempowered and underprivileged. There are some people who will try to make the community more than a talking point in the process.
Unfortunately, those meticulous legislators and renegade bureaucrats are the exception rather than the rule, and it leads to an inherent imbalance. Conversations about police violence will often exclude its victims; conversations about a big industrial project will often exclude the residents affected; and conversations about health care prices will often exclude the people who actually have to pay the bill.
The Imbalance of Power
Despite all this, there are actually many cases where good people can get a seat at the table. Whether it be a feisty government official, a respected organization, or a lucky community member, there will often be someone who actually does really care for the people beyond their own narrow interests. However, not all seats at the table are created equally. Even if you are a recognized stakeholder, your voice is generally proportional to the amount of power you have. That power will generally show up in three different forms: economic resources, political access, and information.
Perhaps the most important of these is economic resources, as they allow you to get more of everything else. An organization or individual that has money wields a lot more negotiating power than one that does not. They can hire lobbyists, they can run ads, and they can do polling. Even more importantly, if the stakeholder is a business or institution, they can (usually implicitly) threaten a capital strike: moving jobs elsewhere, firing people, or refusing to invest in something. All of these are threats that can be made only by someone with more economic resources, and they limit the bargaining hand of anyone else at the table that cannot do the same.
Similarly important when it comes to passing things through government is political access. Being able to access and influence key decision makers outside of the negotiating room allows another external block to any decisions that a certain stakeholder does not like. Sometimes this is as simple as former police officer legislators being more friendly with the police lobby, or a realtor always listening to what the real estate lobby has to say. Other times, the pressure is less friendly: hiring a lobbyist or even threatening electoral or legal challenges to legislators or agencies that want to go another way.
Lastly, having information and withholding information can be a surprisingly potent way to guide negotiations. One of the main reasons that you gather stakeholders in the first place is so you can understand the nuances of what you are trying to do and get information from experts. Of course, that is great if the stakeholder agrees with what you are trying to do. But if you have a stakeholder that you are trying to regulate or restrict in some way, they have no incentive to help you. Having exclusive knowledge of a process or budget allows a stakeholder to hide, obfuscate, or straight-up lie about information to give the impression that a change is impossible, horribly taxing, or already happening. If you do not have your own information to fight back, there is not much you can do beyond follow a hunch.
The Results of the Status Quo
When the people around the table are limited and the power at the table is distributed unevenly, the ability to make real change quickly fades. Even the best intentioned decision maker will often be forced to go forward with a compromised, or even harmful, proposal because a stakeholder refused to work in good faith. The fact of the matter is that, if you are going to try to challenge power, the people with power will never work in good faith. Whether it be the police, corporations, or corrupt agencies, people and institutions will always look out for their bottom line. If we want to make bold change at every level of government, there needs to be a different way.
Building a Better Stakeholder Process
The fact that the standard stakeholder process is deeply flawed does not mean that the alternative is to scrap the idea of stakeholders all together. That has the potential to create even worse outcomes. Unintended consequences and clerical errors have doomed many well-intentioned programs in the past.
However, a well-designed stakeholder process has the potential to actually strengthen and expand our democratic system and create better, more-informed legislation and proposals that could help more people. Here are a few suggestions, ordered by effort and feasibility.
Choose Stakeholders Wisely
A lot of the problems mentioned in the above section are actually quite solvable if you spend a bit more time choosing stakeholders. There is no law saying that stakeholders have to be established organizations, so a committed policymaker can create a much more robust list of stakeholders if they are willing to put in the effort.
The first step is knowing who not to include. If you are trying to regulate a corporation or misbehaving agency, they are probably not the ones you want at the table. Between former employees, other regulators, community activists, and academics, there are ways to learn the details you will need without risking a bad faith actor scuttling your process.
It is also important to weed out people who mean well but will ultimately disrupt the process. People who dominate meetings, who negotiate in bad faith, and who feel the need to control everything might legitimately want change to happen, but can ultimately harm the process and crush the voices of other community members. That brings us to the final point.
Bringing more community members to the stakeholders table is often the most difficult part of a proper stakeholder process. The easiest way to accomplish this is to elect policymakers with deep connections to their communities. But if that connection is not already present, it can help to connect with a local activist or activist group already doing work around an issue. If none exists, simply going into neighborhoods and workplaces affected by an issue is a high-labor but potentially high-reward way to find people otherwise not involved in politics.
Use the Process as a Teaching Tool
Even once a policymaker gets a good group of stakeholders together, they may still be at a disadvantage. People who have historically been left out of the governing process are generally less likely to understand how it works. That gives the opponents of reform a big leg up. That is why it is important to make sure that the policy development process educates the stakeholders along the way.
At the start, policymakers should let their stakeholders know what to expect from the policy development process: steps, timeline, barriers, opportunities, and anything that could be useful for them to know. This not only allows community members to better understand the process, but also bring their knowledge and backgrounds to the table more effectively to develop a policy. Throughout the process, there should be room for reflection and further education.
Once the policy is developed and the process to pass it is underway, community members should be kept in the loop. It is important to give people an understanding of who supports and opposes a policy and why. This gives them a more realistic sense of the obstacles that stand in the way while also giving them the opportunity to put pressure where it is more needed.
Change Who is in Office
At the end of the day, neither of the previous two steps make any difference if (a) the policymaker does not follow them, or (b) other decision makers are standing in the way. If someone has been sabotaging good changes with a compromised process, intentionally or unintentionally, sometimes the only way to change the process is to change the person.
When it comes to the legislature, this is relatively straightforward. Legislators are up every 2–6 years, and it is a relatively simple (although not always easy) process to find another candidate, talk to voters, and get them to the number they need to win an election. Even the very threat of electoral challenge can be enough to push an incumbent to support a measure they might otherwise scoff at.
For decision-makers in the executive branch, or in a non-governmental institution, replacement can be more difficult. If the chief executive is sympathetic, they might be willing to fire someone and replace them in an appointed position. If the chief executive isn’t sympathetic, you might have to wait and try to replace the executive themselves and hope they replace the person who is being challenging. If the decision maker is in a non-appointed position, good luck.
Build Outside Power
All of the steps above can help develop good policy, but the problem of outside economic, political, and information power is still going to limit the choices of the best stakeholders. Unfortunately there is no adequate way to address these challenges solely within the policy-making system — it requires building power in the broader society.
Of all the potential solutions, this is the most difficult and least defined. It can mean something as small as organizing a workplace to something as large as a shift in the economic base of an area. At the end of the day, a lot of this will be outside the control of any individual legislator.
However, the policy process should also be used as a springboard for the organizing that can build this power. By empowering community members around a particular issue, legislators can create the space for people to agitate, educate, and organize their friends and neighbors. Done well, this can be the first step towards a more enduring change in a community.
Policymakers should also consider the impact that their policies might have on the ability to pass future policies. A law making it easier to organize a union, for example, will make it easier to pass pro-labor policies in the future. A law enfranchising a large group of people will make it easier for them to replace legislators that restrict their rights. A law taxing corporations reduces their ability to lobby for legislation in the future.
The legislative process often has an inherently moderating effect on any policies that go through it. As it stands, the stakeholder process is a big part of that. However, by following the steps above and increasing the scope of what it means to include the community in government, the stakeholder process can have a more radically democratic goal.
Our society and the conditions governing it are constantly shifting, and decision makers in government ultimately need to accept the responsibility of being a part of that change. Otherwise, we leave it all up to the wealthy, the corporations, and other power brokers that will try to keep moving everything further towards them, as they have done for decades. Power concedes nothing without a demand, and there’s no better place to make that demand than in the halls of government.