Five Attributes of Leading Stakeholder Engagement
The identification and engagement of a company’s stakeholders to build trust, reduce risk and develop effective partnerships have been at the core of our work with business leaders for many years. As the rhetoric grows that no singular business is capable of addressing environmental and social challenges alone, companies must think now more than ever about how they can engage with NGOs, governments and other actors to develop collaborative solutions to system problems.
Over the years, we have seen stakeholder engagement move in this direction. It’s evolved from tactical, compliance and risk-focused to more strategic and solutions-orientated, with stakeholders engaged up and down the value chain—not only as partners on critical issues but also as key players to improve business performance.
In our most recent issue of Radar, we sought to explore the essential attributes for effective and innovative engagement and have identified five key success factors.
The right intent. Focus on a goal for the company and for society, not on engaging for engagement’s sake. Ultimately, the intent should focus on aligning engagements with the achievement of core business goals, to arrive at a clear and desired outcome. For example, one of Walmart’s ambitions is to ensure all US customers have access to recycling facilities. This ambition is not achievable by the company on its own so it is looking to partnerships, using its ambition to drive a number of engagements through the creation of the Closed Loop Fund.
The right stakeholders. Involve the right people both inside and outside the company. While this may seem obvious, it is important to highlight as it is fundamental that companies select both the right external and internal stakeholders. When assessing which internal stakeholders to involve, the intent of the engagement and each employee’s capabilities should be top of mind. Essential, too, is senior level support to ensure that stakeholders believe the engagement is being taken seriously. External stakeholders should include influential representatives who are willing to engage and also those who can help achieve the goal, such as solution providers and experts or business partners from across the value chain. Nestlé has steadily built a public affairs department focused on and capable of earning stakeholder trust. Further to this team, Nestlé’s Chairman regularly attends the company’s Creating Shared Value convening to ensure he understands the concerns of both supporters and critics to help drive company strategy.
The right issues. Concentrate on where the company can make a difference and the issues that make most difference to the company. While the ‘intent’ of the engagement will shape the outcomes, the issues addressed should focus on a ‘big idea’ or the most material issues. Engaging is timely and costly, and companies should ensure that they are pursuing engagements that will yield the most benefits. By focusing on a big idea or material issue, companies can use collective brainpower to better solve problems and create solutions. For example, Brown-Forman, makers of Jack Daniels and other high profile alcohol brands, brought together makers, distributors and retailers to combat irresponsible consumption of alcohol as part of its Global Guide to Alcohol Responsibility.
The right spirit. Be open to challenges and different perspectives. Companies should approach engagements with an understanding of open, two-way communication, encouraging challenging and different perspectives. Top management should champion active listening. In addition to listening, how feedback is used and disclosed is crucial as well. TD Bank incorporates specific recommendations and their response into their annual report as a means of proving that they’ve understood and are addressing stakeholder concerns.
The right processes. Ensure processes are targeted and appropriate to the business. Depending on the intent and the issues being addressed, there are a number of internal processes and tools at a company’s disposal to ensure the successful completion of any stakeholder engagement. These processes include a clearly defined governance mechanism; highlighting who has ownership for the engagement; clarity around the format of the engagement, from tracking communications to long-term partnerships, and potential KPIs to measure the success of the engagement. All of these elements are specific to the situation and the way a company pursues innovation.
While there is an element of surprise to be expected in any engagement, focusing on these key attributes will ensure the continued progression towards achieving corporate ambitions, while also providing the most value for participating stakeholders.
We hope you enjoy the summer issue of Radar. As always, we welcome your feedback.
Please note that Radar is an interactive digital publication and as such not all of the interactive features will work in the PDF version of the magazine.
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