The Problem of Stakeholders

Understanding how an important process can undermine important legislation, and how to fix it

Empty Boardroom | Credit:

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:

  1. Stakeholders are often limited to established organizations and individuals that have existing access to power
  2. Among stakeholders, the ones with more power are going to have a larger say than those without power

Limiting Stakeholders

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 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.

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.

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.

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.

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.

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.


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.



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