The importance of stakeholder engagement con't
Companies have about as much ability to choose their stakeholders as children have to choose their parents, so the best any firm can do is to identify their stakeholders. The location, scale and nature of operations will determine who sees themselves as stakeholders. Stakeholders will expect to be recognized when the firm's effect on them, for better or worse, is direct or immediate -- employees, for example. Even people who seem to have no direct connection to the business may consider themselves stakeholders, such as the families of the employees and those who live in the communities in which the business is located.
A useful technique at this stage is stakeholder mapping. This is a way of visually representing the variety of stakeholder relationships the firm has and their relative proximity or strength. Some businesses use grid diagrams while others use circles. Regardless, it is important to include all the relationships in which the firm affects people or they affect the firm.
Thinking broadly about stakeholders often results in a list that is much too long to be of any practical use. To avoid engagement burnout (trying to talk to too many stakeholders) consider setting priorities, using the following criteria as a start:
- the significance of the effect of the firm in the view of the stakeholder (for example, layoffs at the only plant in town will be very significant to workers, their families and other residents)
- the importance of the stakeholder group to operations (for example, customers and key suppliers)
- the risk of getting incomplete information by excluding a group (for example, when a foreign subsidiary's only contacts are with government officials, it will be difficult to learn the concerns of local workers or residents)
- the opportunity to access new ideas (for example, engaging a group that is likely to challenge current practices may provide fresh insight into a difficult problem -- but the firm had better be prepared to actually change its approach)
- the requirements of regulators or permit-issuing bodies (for example, to get an operating licence in certain areas in Canada, a firm may be required to engage Aboriginal peoples).
Understand the Reasons for Stakeholder Engagement
The firm may be contemplating stakeholder engagement to better understand its impacts, to help articulate its values, mission, strategy, commitments and implementation, to facilitate a regulatory approvals process, to participate in measurement and reporting, to avert or solve a crisis, or to proactively improve relationships. The reason for engaging stakeholders will determine the style of engagement and stakeholders' expectations, all of which could change over time.
It is important to be clear about where each engagement fits into the big picture. Will the role of stakeholders be advisory or participatory? Is the firm prepared to change its plans significantly based on what it learns? The demands on some stakeholder groups to participate in consultation processes have become so great that sophisticated stakeholders are not willing to contribute much energy to processes in which they have little influence.
Without committing any resources, becoming aware of stakeholders and their significance will benefit future business planning.
Plan the Engagement Process
Determine the engagement objectives. What do the firm and the stakeholders want and need to get from the engagement?
The engagement plan should describe each stakeholder group and any subgroups, to ensure that the participants are representative of the group. It should also describe existing engagement processes, since many of these can be used as the foundation to develop a more systemic approach. For example, some engagement may already exist under the auspices of the current management approach (e.g. ISO 9000, ISO 14000). When engagement is planned in the context of a regulatory process or a crisis, it is crucial to ensure that the participants have the legal and/or moral authority to speak for their group. For engagement related to performance measurement or organizational learning, having representative participants is also important to ensure reliable results.
The engagement plan should note the capacity of the group to engage with the firm on specific issues. Communities, Aboriginal peoples and other stakeholders may need resources to participate, including credible information, compensation or childcare (so individuals can participate in meetings or engagement activities). Whenever possible, use the language of the stakeholder group. At a minimum, provide interpreters. Separate engagement processes for Aboriginal peoples should be considered. Ensure that vulnerable groups, such as employees and their representatives in some situations, can speak openly, without fear of reprisal. This may require holding engagement processes off-site. Be sensitive to gender issues. Providing a facilitator of the same gender as the participants may make the group more comfortable about sharing information.
Select the appropriate engagement approach. This may be focus groups, individual or small group interviews, surveys, formal referrals, key-person meetings, advisory councils or some other. The approach chosen should reflect the engagement objectives, stakeholder capacity, cost and time constraints, and whether qualitative or quantitative information is required.
Consider getting outside help. A professional facilitator or consultant can help with the details of the engagement plan.
Expertise in stakeholder engagement
Simon Fraser University's Centre for Sustainable Community Development provides research, advice and support to firms interested in stakeholder engagement, and designs stakeholder dialogue processes. The centre is one of Canada's leading sources of expertise on stakeholder engagement.
Start the Dialogue
Entering into engagement in a spirit of respect and openness will increase the opportunities for mutual benefit. When inviting stakeholders to participate, be clear about the degree of influence they will have and commit to it. Nothing is more likely to destroy trust and discourage future engagement than revealing part way into an engagement process that the key decisions have already been made.
Remember that dialogue means two parties conversing. Cultivate the capacity for listening.
Maintain the Dialogue and Deliver on Commitments
As noted, there can be a wide range of engagement approaches. There is no “one size fits all.” After the dialogue and engagement process have commenced and there is agreement by both the company and the stakeholders on the approach and deliverables, it is important for the participating parties to deliver on their engagement commitments. The dialogue should be maintained in accordance with the process that has been endorsed.
Stakeholder engagement resources and examples
Engagement for performance measurement and accountability
An important development in stakeholder engagement since the early 1990s has been the rapid growth in reporting to stakeholders on environmental performance, then social performance and now sustainability performance. Companies such as Newmont Mining have found that one of the benefits of good reporting is that sharing credible performance information provides a foundation for future dialogue. The value of stakeholder engagement to reporting is also recognized under the principle of inclusivity in the Global Reporting Initiative's sustainability reporting guidelines.
The AA1000 series of standards developed by AccountAbility (see Appendix 4) builds the benefits of stakeholder engagement right into the measurement, reporting and assurance process. Under the AA1000 framework, stakeholder engagement ensures that sustainability reporting is complete and relevant. Stakeholders may be engaged in identifying issues, selecting performance indicators and providing feedback on finished reports. Vancity Savings Credit Union was one of the first Canadian organizations to adopt the AA1000 framework for its social and environmental reporting. Canadian-based training in the use of the AA1000 series is available through The Accountability Project.
Engagement for social capital creation
Over the last five years, Placer Dome International has used the Stakeholder 360, a management tool developed by the Centre for Sustainable Community Development at Simon Fraser University, to monitor and increase levels of social capital in communities and improve the relationship between the company and its stakeholders as it closed a gold mine on Misima Island in Papua New Guinea.
Engagement with Aboriginal peoples
Building mutually supportive relationships with Aboriginal peoples requires genuine respect for their perspective and position. Building on years of engagement, Hydro-Québec and the Cree Nation signed nine agreements in 2002 to ensure that Cree people benefit from the development of hydroelectric opportunities in the James Bay area. On a much smaller scale, Eagle Rock Materials Ltd. credits the active participation of two Nuu-chah-nulth communities for much of what it has learned as it has developed new gravel ventures in British Columbia.
A common problem area is Aboriginal imagery. There have been occasions when companies have used Aboriginal images to promote or market their company or product -- sometimes without the consent of affected Aboriginal communities. Out of respect for the owners of this intellectual property, companies need to consult with and obtain the permission of the owners of these images prior to using them. The consultation could include elders, women and other leaders within an Aboriginal community. Note that such consultation could take a long time, because often there is little consensus in a community about how such images should be used -- if at all.
Engagement with non-governmental organizations
Partnerships with non-governmental organizations are becoming a valued CSR strategy. One Canadian example is the partnership between Tembec and the World Wildlife Fund. Business for Social Responsibility has published a guide to understanding and forging partnerships with non-governmental organizations, which is available at www.bsr.org
Internationally, Gap Inc. is engaging with ethical investment groups, non-governmental organizations, unions and campaign groups, including the Maquila Solidarity Network, on the development of its CSR reports. Gap Inc. is also involving local non-governmental organizations in training workers and management personnel in labour rights (in Cambodia, for instance). In Central America, Gap Inc. is involving local non-governmental organizations in the actual monitoring process. In Canada, Mountain Equipment Co-op is engaging with a number of stakeholders on its environmental and labour standards, and community policies.
Engagement for innovation
A new release in AccountAbility's Innovation Through Partnership series, Community Enabled Innovation: Companies, Communities and Innovation documents “how companies learn from engagement and can produce demonstrable and significant sources of Community-enabled Innovation, which benefit companies and their significant communities.” The report looks at the actual practice of a number of U.K. companies, including leading retailer Tesco.
The Corporate Engagement Project is a collaborative effort involving multinational corporations that operate in areas of conflict or socio-political tension. Its purpose is to help corporate managers better understand the impact of activities on the context in which they work and to help companies respond to local challenges and to address stakeholder issues by helping them to develop a range of practical options and management tools.
Aboriginal engagement and sustainability case studies: CSR leadership practices
In July 2005, Canadian Business for Social Responsibility released Building Sustainable Relationships: 15 Case Studies From the Aboriginal Engagement and Sustainability Conference. This is a compendium of the most recent case studies addressing leadership practices and partnerships between natural resource companies and Aboriginal communities from across Canada, as well as two cases from New Zealand and Australia. For this and other resources, go to www.cbsr.ca
- Prioritize which stakeholders to engage with in terms of their ability to impact positively or negatively on the firm.
- Make sure you know in advance why it is you are engaging with your stakeholders and how you are going to engage with them.
- Consider using professional facilitators or consultants to assist in constructing an effective engagement process.
sure to do this
Done properly, stakeholder engagement is an excellent way for a business to tell its story and explain its goals and plans, while also affording the firm an opportunity to learn about stakeholders' views and incorporate these into business planning.
“We've tried engaging stakeholders and all we do is listen to a torrent of criticism, often from people who don't understand our business at all or, worse yet, just want to shut us down. I don't know why we would do this, given that our competition doesn't bother and their share price isn't doing any worse that ours in the market today.”
Listening to the sometimes critical views of stakeholders may not be very pleasant, but it does provide firms with an opportunity to learn more about perceived problems, and can be the basis for constructive action. There are many examples of companies who have done this, and gained a competitive advantage over other firms as a result. This section of the guide reviews how to identify stakeholders, and firms need to think about whom to invite to the table. It is often the loudest ones that are invited. It is also important to think about who can add value to the way the firm thinks about and conducts its business. Formal stakeholder engagement sessions are good, as are one-on-one conversations with people who understand the points of intersection the company has with society and ecosystems. These stakeholders may not always agree with the firm’s view and may offer information that is hard to act on. Knowing this early on can save the firm from being side-swiped and derailed later. The more open and transparent a company is, the more intelligent and stable it is.
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