Strategic stakeholder engagement as a concept is not new but its success has been varied as companies have ignored the basic principles that underpin it. Reality is that despite its clear benefits, engaging with stakeholders comes with its own set of challenges, which will need to be managed. The most obvious one is that a company sets unrealistic expectations with the stakeholder regarding either the potential outcomes or the level of influence these groups can have. The best mitigation strategy for this is transparency through out the process.
In this fourth instalment of a 5-part series on strategic stakeholder engagement and how companies can optimally use it, I am looking at five barriers of success I have seen over and over again. Next week I will end the series with a look at some practical reasons why programs fail despite good intentions.
1. Interacting with stakeholders is confused with engagement - Contradictory as it may seem, one of the biggest obstacles for taking a more strategic approach to stakeholder engagement is the mistaken believe that functional interaction with a particular stakeholder (group) as part of the day-to-day work equals engagement. Without diminishing the importance of these interactions for the company, most of these interactions are static, narrowly defined and aimed at full filling a predetermined task:
- Most of these interactions are very transactional. Reciprocity is limited to clearly defined topics and within narrow, functional boundaries.
- The stakeholder set is limited to (A) those identified in the company’s processes, tools and linked to specific internal deliverables, and to (B) the needs of the specific objectives identified in the process
- Company employees are typically not empowered to engage in discussions, exchanges that stray outside their direct area of expertise/control IV. The interactions are siloed function by function and, often, region by region.
2. Stakeholder engagement is not strategically used to support overall company objectives - Stakeholder engagement is delegated to a function within in the corporation and managed with limited direct senior management oversight. The full value of strategic stakeholder engagement can only be unlocked when it is coordinated across the entire company by a member of senior leadership with the authority to make or initiate wide ranging decisions.
3. Stakeholder engagement is initiated as a process to deal with a specific problem rather than as a long-term commitment - This barrier represents the origin of stakeholder engagement. In the 1990’s companies began to realize that in order for them to manage certain risks they needed to reach out to a wider range of stakeholders than before and programs were developed to do just that. Unfortunately we must conclude that a lot of companies have not progressed from this approach. I see a lot of companies ignore the fact that relations are based on reciprocity and need to be carefully maintained. As a result they risk alienating stakeholders who are left feeling used when only engaged in situations when there is a clear benefit for the company. Successful companies have a strategy in place to retain a constant conversation with their stakeholders about what is important to the company and the stakeholders.
4. Stakeholder engagement is aimed at ‘bringing them around to our way of thinking’ - Strategic stakeholder engagement is still seen by many as a defensive strategy aimed at ‘bringing them around to our way of thinking'. Stakeholders in general will consider this arrogant and disrespectful and will feel less inclined to help companies think through solutions and help identify opportunities. A company trying to (re)build trust is well advised to treat stakeholders with the respect they deserve and listen to them as much as talk to them. It is worth noting that this does not mean that a companies and stakeholders can, would or should agree on all topics all the time.
5. Today’s stakeholder might not be a stakeholder tomorrow - The stakeholder groups a company needs to engage with changes over time, can differ by geography and are dependent on the topic. This requires a pro-active approach from companies to ensure they continue to engage with the right groups.
All these barriers I have listed were described from the company’s perspective. I would like to close this blog with an observation from the other side, which is worth paying attention to when designing a stakeholder outreach program. Some stakeholders, most notably NGOs, engage with a very specific agenda. If they feel that there is no base for a dialogue or they believe that there is no movement in a company’s position they might:
- not engage,
- dropout of the engagement, and in the worst case,
- use the perceived lack of accommodation in a campaign against the company
Furthermore, with regards to engaging with NGOs it is worth recognising that engagement on one topic does not mitigate the chances that the same NGO might still campaign against a company on another topic. Having said that from a business perspective there is good reason to re-evaluate the role and value of collaboration with NGOs. As I have argued last year during a webcast hosted by independent research consultancy GlobeScan, there are good reasons why NGOs have lost attractiveness as partners for companies. And, to be clear, this is not driven by a change in the credibility of the NGOs, which remains high. Click on here for a transcript.