Stakeholder Engagement in Three Simple Steps

In an increasingly volatile political and economic environment, stakeholder engagement is the foundation of organisational performance. Why? Because it’s the key to strengthening reputation, and reducing social risks, writes Leeora Black, Managing Director of the Australian Centre for Corporate Social Responsibility.

When big issues hit, we can lose sight of the basics. But at a time when delivering business value is everything, ACCSR’s research finds that every 10 per cent improvement in stakeholder engagement delivers a 4.15 per cent improvement in reputation.

Improving stakeholder relationships is also the highest priority of CSR managers, according to the 2015 Annual Review of the State of CSR in Australia and New Zealand.

Embedding a culture of stakeholder consideration

Stakeholders become “stakeholders” because they have an issue that they share with an organisation.

Perhaps they hold concerns about environmental or social impacts of certain business processes or products? These concerns need to be recognised and addressed thoughtfully by developing high-quality relationships with stakeholders. High-quality stakeholder relationships can then begin to build an organisation’s reputation, as stakeholders are more likely to speak well of an organisation they have genuine and productive relationships with.

Delivering value through stakeholder engagement depends on trust, collaboration and most of all, high-quality relationships.

Building close relationships gives stakeholders a chance to see first hand that your organisation is serious about making a positive social or environmental contribution. People develop a mind-set for stakeholder engagement when your organisation’s culture encourages respectful and open relationships with external stakeholders.

Actions speak louder than words, so an organisation’s behaviour is a more powerful driver of reputation than what it says about itself. This is more important than ever in a fragmented post mass media marketing era.

Step 1 – Listen carefully to your stakeholders

Stakeholders can perceive the same issue differently and emphasise different aspects of an issue in expressing their views.

Listening well is the key to understanding how different stakeholders see the issues. Taking the time to ask questions, even if they prompt difficult conversations, will enable you to pick up on the nuances in the perceptions of your stakeholders.  Questions like “Why is that important?” and “What else is linked to that issue?” can help you get under the skin of what matters to which stakeholders, and why.

Stakeholders’ direct experiences of working with organisations on shared issues are likely to shape their perceptions of that organisation, which is why stakeholder engagement contributes so strongly to reputation.

Step 2 – Demonstrate you understand your stakeholder’s concerns

Avoid dismissing perspectives that are different from yours. While perspectives may be contrary to your organisation, demonstrating that you truly understand the concerns and views of your stakeholders is more important. This can mitigate any misunderstanding that might lead to conflict, and help establish a good relationship even if your stakeholders don’t agree with everything your organisation does.

Often stakeholders have knowledge that can benefit companies. For example, when BHP Billiton’s Cannington mine was being developed in Queensland, stakeholder engagement helped the company identify the best route for an access road, saving $25 million on its original plan.

Step 3- Prioritisation

Gone are the days of “one size fits all.” It’s no longer acceptable to apply the same level of effort and resources across the board, treating all stakeholders the same. Now, particular issues, audiences, knowledge, and circumstances call for a more tailored approach, allocating and involving stakeholder;s specific to the issue or opportunity at hand. The prioritisation process will help to manage internal and external expectations by balancing the needs of those who are interested against those who are influential.

As we don’t operate in static environments, pay attention to stakeholders who may become more interested or more influential over time, and adjust your prioritisation of them accordingly. This may warrant shifting your approach from a more re-active one or basic monitoring through to active, high-level engagement of effort, resources and investment.

Delivering value through stakeholder engagement depends on trust, collaboration and most of all, high-quality relationships.

About the author: Dr Leeora Black is the Founder and Managing Director of the Australian Centre for Corporate Social Responsibility and a globally recognised CSR and sustainability expert with more than 30 years’ experience in helping organisations adapt to their changing environments. She is holding upcoming “stakeholder engagement” workshops in Brisbane and Sydney where attendees will develop tailored strategies.