Stakeholder management - the power of shared value & trust
Over the last 10 months, COVID-19 has had an exponential impact on industries and organisations, regardless of size or location. As a result stakeholder management has never been more important or come with greater challenges. The business and economic uncertainty that has come with COVID-19, has increased the need for organisations to develop robust, defensible and flexible stakeholder management strategies and tools in order to be effective. “Stakeholder engagement is - and will remain - a core element of the sustainability toolkit,” comments BSR in its Five Step Approach to Stakeholder Management report.
BSR defines stakeholder management as “a fundamental component of materiality assessments, which are then used to inform sustainability strategy, reporting, and disclosure. Corporations need strategies in order to understand and respond to existing and emerging societal concerns. Without input from key stakeholder groups, any approach to sustainability will be limited by an organisation’s self-interest and inward focus.” While stakeholder management is an essential part of an organisation's operations, engaging with stakeholders is not an easy operation. With this in mind, Business Chief North America gains insight from BSR on why adopting a strategy that creates shared value and develops trust is the best approach to drive effective stakeholder engagement.
Developing an engagement strategy
Prior to engaging in any form of strategy development, it is important for organisations to develop an understanding of what stakeholder engagement means to them, as well as what the desired achievements are for the operations. While often used to describe public relations or reputation management, it is also important for organisations to understand that these types of communication are not the same as stakeholder engagement.
In order to be successful when it comes to engaging with stakeholders, BSR highlights that the corporate mindset needs to shift from seeing stakeholder concerns as external risks to manage, to being serious topics that require transparent dialogue and a strategic response. “Stakeholders that choose to engage with companies generally expect this interaction to generate change, which is why it is a mistake to treat engagement as a one-way information dissemination process, rather than as a dialogue,” adds BSR.
When done well, the value of stakeholder engagement is expected to add up over time, providing support during times of difficulty, whether it be reputational or economical. “Companies that are more aware of stakeholder interests are more likely to avoid crises because they are better able to anticipate risks and opportunities,” comments BSR. “A number of compelling studies on the impacts of good community and stakeholder relations across industries and countries, have concluded that companies that intentionally build stakeholder trust are more financially resilient over time, across multiple indicators of value.”
An important element of stakeholder engagement is the understanding of who the key stakeholders are and where they came from, as well as what their relationship is to the company. This process allows organisations to map their stakeholder landscape and determine the correct method and approach for effective communications.
Once determined, in order to deliver clear, flexible and trusted communication, BSR identifies six core principles that should govern engagement: focused and relevant engagement goals; timely engagement that can inform outcomes and business decisions; providing diverse and inclusive perspectives as well as being culturally sensitive and accessible; not just sharing but ensuring that the stakeholder is listened to too; and ensuring transparent communication and sharing information.
It is important to ensure that once an engagement with stakeholders is made, that the original purpose and aims; the methods used; the participants; a summary of any concerns, expectations, and perceptions; a summary of discussions; and a robust list of outputs are documented in order to measure the success and build upon the efforts made for future engagements. “Companies often conduct engagements and then fail to document the results and act transparently on the information gained through the exchanges,” comments BSR, who explains that adopting this approach will “help hone your message for the appropriate audience.”
Ultimately, BSR states that, “the art of stakeholder engagement does not actually lie in which format you choose, but in how well you match a format to the issue, stakeholder(s), and situation. The scale, scope, and span of the engagement will vary, depending on these specifics.”
To develop a strategic vision for stakeholder engagement there are four core elements to consider: The company’s history and past efforts Determining and understanding the motivations behind the engagement, setting a vision with objectives to achieve Defining the boundaries of the stakeholder landscape, which may require full stakeholder mapping Whether the engagements will be a one-off or an ongoing relationship
The impact of COVID-19 on stakeholder management
"The companies we work with all say that, if anything, the COVID-19 crisis has amplified stakeholder management. Companies are getting more questions from stakeholders, not less. This includes questions from investors, clients, and consumers.
In terms of topics, the spotlight has shifted to the social agenda, in the midst of job losses and the economic crisis impacting people’s livelihoods worldwide. Marginalized populations and women are disproportionately impacted by the COVID crisis. Executive compensation and tax practices are coming under increased scrutiny in the US, although this has been a topic for stakeholders in Europe for a while now.
Back in April, we looked at what stakeholders were talking about online and on social media, leveraging our partnership with Polecat, which provides a big data tool to analyse global discourse. We found that online media focused on some of the topics you would expect – procurement of medical supplies and the labor market. The social media conversation on the other hand was paying acute attention to issues of diversity, equity, and inclusion and how not all are equal in the face of this crisis. One month later, the killing of George Floyd sparked the global Black Lives Matter movement.
Of course COVID-19 has affected the way we engage as well, shifting from in-person to virtual and leveraging technology to do so," comments Charlotte Bancilhon, Associate Director, BSR.