-by Wayne Dunn

Helping business toserve shareholders AND society

SIMULTANEOUSLY

Stakeholder EngagementSix best practices

Six best practices in stakeholder engagement

I recently wrote a piece on five mistakes companies make in stakeholder engagement and many of you asked me to flip the other side of the coin and give a list of best practices. So, here are six.

This list, like the last one, comes from a couple decades of rubber meets the road experience (remember, experience mostly comes from making mistakes or from great mentors or, in my case, both). And underlying the list is the critical principle of …

Honesty, Trust & Integrity…… And if you don’t get this right the rest won’t matter. You may have some short term results but I’m going to be shorting your stock because it’ll blow up sooner or later. And, if it doesn’t, it should.

In no particular order here are 6 best practices in stakeholder engagement.

Remember, you are engaging with the stakeholders because you believe it is in your interest and that it will help you to create value. Guess what? They are engaging with you for the same reason.

Maybe they value a pollution free world or a reduced carbon world or a child labour free supply chain, or maybe it is better schools or hospitals or something else.

Don’t judge what stakeholders value and what their interests are. Accept it and, as much as possible, try to figure out how your business, your activity and your work might further those interests for your stakeholders.

Be creative in discovering the value propositions that can align your value and interests with those of your stakeholders.

And be transparent about what your value and interests are. Your stakeholders have it figured out anyway!

1. Think Value and Interests – and do it

transparently

Six best practices in stakeholder engagement

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You will disagree with stakeholders, and sometimes with most of them. That doesn’t make them – or you - wrong. But there’s no need to be disagreeable. Stay open, stay engaged, and (so important) to stay curious.

One of the biggest and possibly most unexpected social license wins that I’ve ever been part of happened because the geologist who ‘got stuck’ with community relations stayed open, engaged and curious.

This was an exploration project 15 years ago with what, at the time, was a very small gold producer.

Just down the road was a shuttered mine that had lost its social license, so the company knew they might face difficulties.

The opposition that had successfully shut down the other mine were now trying to stop this new one from becoming the first modern

producing mine in the country. And they had won over some of the local communities.

The engineer spent many, many months in the community, getting to know the residents, including those who were in vehement disagreement. Trust began to develop.

Transparency happened. Shared interests emerged and were built on.

Not everyone agreed, but the mine got built. And disagreements remained, but people were not disagreeable. And the company’s share price went from 70 cents to over $20!! And the local agricultural economy flourished.

Probably none of this would have happened without a patient, engaged, curious and agreeable geologist and management and a company that allowed him to be just that.

Bonus for me on this example – my consultancy was providing advice and support and we ended up with some credit for all the great work the geologist did! :)

2. It’s OK to disagree – but, disagree without being

disagreeable. And stay curious

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Six best practices in stakeholder engagement

There seems to be an exponentially increasing list of standards, norms and regulatory requirements for stakeholder engagement and all things CSR [Corporate Social Responsibility].

They are important (some of them anyway) so you can’t ignore them. But, don’t be consumed by them. If you want stakeholder engagement to add value to your operation and meet your stakeholder’s interests and needs, then mere compliance is just the foundation.

Figure out what you want to be compliant with, and why.

But beware; compliance is seductive. There is a comfort and certainty to compliance. There are boundaries and a sense of completeness when you know you are compliant with yet another standard. It is audit able and defensible.

You need to resist the urge to embrace more and more standards and norms, to check more and more boxes just to stay in this comfort zone.

3. Do compliance but think and act

strategically – check the boxes yes, but

that is just the foundation

By comparison, strategic stakeholder engagement is often ambiguous, uncertain and sometimes even downright scary. There is no certainty of success.

Getting out there and engaging around value and interests, accepting disagreements and continuing to search for mutually beneficial common ground and shared value is not for the faint of heart. But, it is often where the breakthroughs occur, where value is created and strong relationships developed.

Compliance focus / strategic focus. It’s not one OR the other. It’s BOTH.

Spend time thinking about the blend and mixture that is right for your business. It’s an investment that will pay dividends.

How NOT to do it, but alas still a common approach!

Actually, the foundation of this best practice was set out in #1 Think Value and Interests – and do it transparently. But it is so important that I decided it had to be listed separately.

This mostly focuses on your initiatives and collaboration with stakeholders, the activity focused on creating value and meeting interests for you and the stakeholders.

If that initiative is successful who else or what else benefits? Are there other people or organizations with objectives that would be furthered by success of your collaboration with stakeholders? If so, they could be potential partners and may well bring financial, organizational, reputational and other resources to the table.

4. Share the credit, multiply the

resources. Find partners!

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Six best practices in stakeholder engagement

This all sounds a bit academic and theoretical. What does it really mean in real life?

Imagine this (and these are all real world projects):

You are a consumer goods company operating in a frontier market and want to increase your local supply chain because it will reduce your costs, add unique marketing pitches to your product, and build reputational capital and social license. Or you are a mining company operating in a remote community and want to improve local educational capacity. Your value and interest is that a better educational system makes it easier to attract and retain employees, helps create a more qualified and engage-able local labour force, helps expand local livelihood potential, etc. Or you are a petroleum company and want to enhance local skills training capacity so you are able to recruit and advance more local workers.

In all of these, the value and interests of local stakeholders are self-evident. And there are many other examples in health care, environment, agricultural development, etc.

The opportunity is in thinking about who or what else shares an interest in this. Local economic, social, educational and health issues are of interest to national governments, international agencies, multi-laterals such as the United Nations, World Bank, etc., NGOs, National Development Agencies such as USAID, DfID, DFATD, GIZ*, etc.

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Six best practices in stakeholder engagement

These organizations are also stakeholders in the success of your efforts.

Your company’s investment and support in these areas can help these stakeholders to meet and further their objectives. And they can bring resources and expertise to support your efforts.

Spend time thinking about who else benefits if you succeed. Be creative. Be strategic and remember – broad and inclusive value propositions can create a lot of value for you and for stakeholders (this is a fundamental tenant of Silicon Value entrepreneurship but that is another story…)

One of the great things about finding partners and sharing the credit in stakeholder engagement and CSR is that it is seldom a zero sum game. By sharing the credit you often get more credit yourself, and more resources to contribute to success.

Communication strategies, methods and tactics will vary from group to group and area to area.

It is more than just words and message. It is about communicating so you are heard and in ways that connect to the capacities, values and interests of the audience.

Beware of simply meeting narrow, regulatory definitions of who your stakeholders are.

Think outside the box to identify other groups and interests that would benefit from your success.

A good example of this is a real estate project that I am advising. The project is situated in an area of large, sprawling estates in a valley on a large island. It aims to create a ‘pocket neighbourhood’ of smaller homes, more community and less environmental footprint.

Regulatory requirements for permitting demand consultation and engagement with local landowners/stakeholders. There is likely to be significant resistance from this group as they would see a change from the existing large, sprawling estates as potentially reducing the value of their properties.

5. Communicate so you are heard and

understood.

6. Define stakeholders broadly and strategically – go

beyond compliance

Meanwhile there are many other groups in the valley that are advocating for and supportive of the general development concept, one of increased density and softer environmental footprint.

As they are not required by regulation to be consulted, their input would be minimal unless it was stimulated.

The developer is embarking on an education campaign to help these stakeholders (who are likely to be supportive) better understand the specific type of development he is promoting and to help them to better educate the broader public on the Island and in the valley.

The developer is helping these people and groups to meet their interests and objectives of softer environmental footprints and at the same time he is engaging with a group of stakeholders that have an interest in the success of his permitting and can be motivated to provide support at public meetings and consultations. Hopefully avoiding the situation where the only engaged group is local residents who are likely to oppose the development.

By going beyond compliance and thinking broadly about stakeholders the developer is able to engage a broader and more supportive constituency and enhance the chances of regulatory approval.

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Six best practices in stakeholder engagement

Don’t Forget Internal Stakeholders

The previous points dealt with external stakeholders but you can use many of them for internal stakeholder engagement, including especially the part about focusing on their interest and value.

What is critical is that you and your company don’t just embed best practices like these BUT also embed a process where you are constantly revisiting and driving this throughout the organization, permeating the organization from top to bottom and across all departments and divisions.

If stakeholder engagement is not seen as everyone’s responsibility at some level you will never achieve the success or value that is possible. Ghettoize it in some corner or department and you will seldom get it right and often get it wrong, at a cost to you and to your company.

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Six best practices in stakeholder engagement

Successfully engage your internal stakeholders and you will have easier and more consistent success with your external stakeholders.

*USAID, DfID, DFATD, GIZ are official development agencies of USA, UK, Canada and Germany. They are examples only. There are too many others to list them all.

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Wayne Dunn is President & Founder of the CSR Training Institute and Professor of Practice in CSR at McGill. He’s a Stanford Sloan Fellow with a M.Sc. in Management from Stanford Business School. He is a veteran of 20+ years of award winning global CSR and sustainability work spanning the globe and covering many industries and sectors including extensive work with Indigenous Peoples in Canada and globally. His work has won major international awards and has been used extensively as ‘best-practice’ by industry and academia.

He’s also worked oil rigs, prospecting, diamond drilling, logging, commercial fishing, heavy equipment operator, truck driver and underwater logging, done a couple of start-ups and too many other things to mention. Wayne’s career includes big successes, and spectacular failures. He hopes he’s learned equally from both.

Wayne Dunn

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