Stakeholder Engagement and Corporate Responsibility
Professor David Grayson
If Corporate Responsibility is about minimising negative and maximising positive environmental and social impacts, then stakeholder engagement is one of the core skills and key activities which enable this to happen successfully and effectively. Organisations can no longer choose if they want to engage with stakeholders or not; the only decision they need to take is when and how successfully to engage. When organisations don’t engage stakeholders successfully, they can lose out, with consequent negative newspaper headlines.
Stakeholder engagement is relevant to any type of organisation: business, public or civil society. It is particularly important in the context of running an organisation responsibly and is integral to the concept of Corporate Responsibility.
Stakeholder engagement is crucially different from stakeholder management: stakeholder engagement implies a willingness to listen; to discuss issues of interest to stakeholders of the organisation; and, critically, the organisation has to be prepared to consider changing what it aims to achieve and how it operates, as a result of stakeholder engagement.
Some critics of Corporate Responsibility misinterpret the idea, believing that it means that an organisation surrenders to NGOs or community activists; it should mean no such thing. The leadership of the organisation still needs to set the direction for the growth of the organisation, but does so in the knowledge of stakeholders’ wants and needs (SWANS) as well as the organisation’s wants and needs (OWANS).
Successful management thus becomes the art of optimising long term benefits for the organisation based on reconciling sometimes disparate stakeholders’ wants and needs (investors, employees, customers, suppliers etc.).
Organisations are constantly interacting with stakeholders, some of whom will be more or less positively or negatively disposed to the organisation and will have greater or lesser power over the organisation.
Organisations who face hostile communities or unfamiliar NGOs’ campaigns are reminded of the importance of developing stakeholder relationships. To obtain value from NGO and community stakeholder relationships, it is useful to identify, explore the essential elements of meaningful relations and the concomitant internal environment in an organisation.
This applies particularly to senior executives who shape and lead their organisation’s policy towards stakeholders, and operational managers who engage regularly with stakeholders. What are the conditions for meaningful engagement by more effectively recognising, analysing and utilising opportunities and challenges to building relations?
What are the key issues above and beyond the simple identification of stakeholders and immediate ‘unprepared’ initiation of conversations?
An organisation should engage with stakeholders sooner rather than later. It should know the critical success factors in meaningful engagement and how to build the right conditions and capacities for meaningful relations.
Managers should be able to answer:
‘Golden Rules’ for meaningful engagement
- Who are our stakeholders?
- How do we / will we segment our stakeholders?
- What benefits can we expect from meaningful stakeholder engagement?
- What information sources do we already have about our stakeholders and their views?
- What, therefore, do we think are the principal stakeholder wants and needs (SWANS), and the organisation’s wants and needs from stakeholders (OWANS)?
- What are the organisation’s priorities for better understanding SWANS (for example, where are the significant knowledge gaps; where particularly important stakeholders’ wants and needs seem to be changing; where we believe there already is / could be significant and potentially damaging gaps between SWANS and OWANS?)
- Armed with this better information, where is the potential for reducing risks and increasing opportunities from better aligning SWANS and OWANS; and where are the biggest threats from gaps between SWANS and OWANS?
- What is the best methodology for meaningful engagement with key stakeholders?
- What does the organisation need to do to maximise chances of success?
- How does the organisation learn and continuously improve meaningful stakeholder engagement?
Building trust with stakeholders is very important, aided by understanding their viewpoints and motivations. Managers need to gauge the level of trust in relationships but not be too quick to judge.
Understanding and being transparent about the motivation of both stakeholders and your organisation can help overcome differences. Recognise that the fundamental motivation of each side may be very different but understanding and articulating this can help close this gap.
Your organisation needs to recognise the importance of stakeholder views and engagement. It is critical that your organisation as a whole appreciates the contribution stakeholder engagement gives to overall business success and that it is not just an add-on.
An important component of success is internal alignment of Corporate Responsibility (CR) and Business Units in expectations, roles and outcomes. Being flexible will help achieve this, as will appreciating different viewpoints, pressures and business objectives that the CR team and Business Units may have.
How you plan engagement
It is important to consider how you plan engagement so that it encourages viewpoints from across the target group.
- The ‘tone from the top’: the role that leaders play is fundamental in building meaningful engagement. An appropriate role for the CEO may be actively involved in the initiation of the stakeholder engagement strategy and engaging with key global stakeholders.
- Your organisation’s culture will have an impact on how stakeholder engagement occurs (i.e. autonomy for local adaption and local relevance).Therefore assessing culture is important for identifying enablers and barriers to your stakeholder engagement activities. A culture web will help do this.
- Gender can sometimes be critical. In some cultures and in some parts of the world, how women interact may be different to men, and consideration should be given to setting, mode of consultation and fair representation.
- Assessing past non-productive engagement behaviour will help the organisation to learn from past experiences. It is important to collate this information from both the organisation and stakeholder viewpoints.
- Recognise the interplay and, therefore, influences between leadership, organisational behaviour and capabilities in creating strategies, processes and procedures.
In conclusion, when organisations do engage successfully it can be a win-win for business and society.
Professor David Grayson is Director of the Doughty Centre for Corporate Responsibility.