stakeholder engagement and management

Stakeholder Engagement & Management

André Knipe072 417 4084

[email protected]

Agenda

1. What is a stakeholder?

2. What is stakeholder engagement?

3. Stakeholder identification

4. The link between stakeholder engagement

and operational integration

5. Stakeholder management – integrating

expectations and priorities

6. Principles of stakeholder management

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Individuals and groups with a

multitude of interests, expectations,

and demands as to what business

should provide to society

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"A stakeholder is any person or

organization affected by or with the

power to influence a company's

decisions and actions" (Blowfield and

Murray, “Corporate Responsibility”)

Stakeholders are evolving…

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A stakeholder in an organisation is...

“any group or individual who can

affect or is affected by the

achievement of the organisation’s

objectives” (European Business Ethics Network)

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From a business perspective, we’ve gone from:

"A stakeholder is anyone that can screw up my business" (2002)

to:

"Stakeholders are source of innovation and risk management for my company" (2015)

But most organizations still live within the first paradigm...

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Origins of the stakeholder

concept

What is a stake?

An interest or a share in an undertaking

and can be categorized as:

Interest

Right – legal/moral

Ownership©AKnipe 20168

2. What is stakeholder

engagement?

Series of activities that seek to inform,

consult and ensure the participation of

stakeholders.

Allows stakeholders to have an

influence on the outcome of plans and

projects.

Ranges from informing stakeholders

to actively consulting them in

cooperative decision making.©AKnipe 20169

Why engage and what are the

benefits?

Effective and strategically aligned

stakeholder engagement can:

Lead to more equitable and sustainable

social development

Give those who have a right to be heard

Allow for the pooling of resources to

solve problems

Inform, educate, and influence

stakeholders

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Why engage and what are the

benefits?

Build trust among and between stakeholders

Enhances cooperation and provides the

potential to build consensus and avoid conflict

among stakeholders

Increases transparency in project activities

and legitimacy of decisions

Enhances accountability in decision-making

related to the issues in stake

Creates a greater sense of empowerment

and social responsibility

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The key principles of

stakeholder engagement

Information disclosure

Communication

Consultation and participation

Involvement

Cooperation and partnerships

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Why is stakeholder

engagement important?

Helps to determine and prioritise the

policy/strategic issues at stake

Assists in the framing of strategy/plan

Facilitates the identification of which

stakeholders should participate

Avoid conflicts between those making

and those being affected by decisions

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Why is stakeholder

engagement important?

Makes use of local/specific knowledge

Promotes and encourages effective

implementation

Ensures for continual engagement

throughout the whole process

Cultivates good governance ethics from

the outset

Encourages fairness and equity when

making decisions©AKnipe 201614

3. Stakeholder Identification

The “obvious” ones

Primary

• Employees

• Business partners & suppliers

• Investors

• The government

• Consumers

• Communities

Secondary

• NGOs (but very important)

• Institutions

• Lobby groups

• Academics and business schools

• The media

• Non-human stakeholders: Natural environment/climate change©AKnipe 201615

Evolution and development of

the stakeholder concept

Views of the organization

Production

Managerial

Stakeholder

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Production view

Suppliers Organisation Customers

Environment

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Managerial view

Organisation & it’s Management

Owners

Customers

Employees

Suppliers

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Stakeholder view of the organization

Business

Owners

Consumers

Community

Government

National

Provincial

Local

General Public

Environmental

Groups

Civic Groups

Average

Consumers

Product Liabilities

Social Activists

Environment:

Political

Economic

Social

Technological

Employees

Minorities

Women

Older Employees

Unions

Private Citizens

Institutional Groups

Board Members

Organization

Owners

Consumers

Community

Government

National

Provincial

Local

General Public

Environmental

Groups

Civic Groups

Average

Consumers

Product Liabilities

Social Activists

Environment:

Political

Economic

Social

Technological

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Stakeholder identification in 5

simple steps

5. Analyse influence

and interest

4. Associate stakeholders

with roles

3. Select stakeholders

2. Specify stakeholders

roles

1. Specify stakeholder

types

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Step 1. Specify stakeholder

types

Primary stakeholders are those

stakeholders that have a direct stake

in the organization and its success

Secondary stakeholders are those

that have a public or special interest

stake in the organization

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types

Core stakeholders are essential to the

survival of the firm

Strategic stakeholders are vital to the

organization and the threats and

opportunities the organization faces

Environmental stakeholders are all

others in the organization's

environment

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Stakeholder Type 4Mixed Blessing

Strategy:Collaborate

Stakeholder Type 3Non-supportive

Strategy:Defend

Stakeholder Type 1Supportive

Strategy:Involve

Stakeholder Type 2Marginal

Strategy:Monitor

High

Low

Stakeholder’sPotential forCooperationWith Organization

High LowStakeholder’s Potential for Threat to Organization

Types of stakeholders

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roles

Would depend on the nature of the

business

Could include:

Influencer

Contributor

Reviewer

Approver

…or

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Step 3. Select stakeholders

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Step 4. Associate

stakeholders with roles

Stakeholder A

Stakeholder C

Stakeholder D

Stakeholder G

Stakeholder B

Stakeholder E

Stakeholder F

Stakeholder X

Stakeholder Z

Stakeholder J

Stakeholder K

Stakeholder P

Stakeholder H

Stakeholder M

Stakeholder N

Stakeholder S

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Step 5. Analyse influence and

interest

A typology of stakeholder attributes

Legitimacy refers to the perceived validity of

the stakeholder’s claim to a stake

Power refers to the ability or capacity of a

stakeholder to produce an effect

Urgency refers to the degree to which the

stakeholder’s claim demands immediate

attention

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A typology of stakeholder

attributes

1. Dormant Stakeholder

2. Discretionary Stakeholder

3. Demanding Stakeholder

Power

Legitimacy

Urgency

5.

Dangerous

Stakeholder 7.

Definitive

Stakeholder

4.

Dominant

Stakeholder

6.

Dependant

Stakeholder

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Analyse influence & interest

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How do you justify this kind of

work?

Stakeholder analysis helps identification of the

following:

Stakeholders' interests

Their mechanisms to influence other stakeholders

Potential risks: Which groups may be affected by our

work?

Potential opportunities: Who can help us solve

problems?

Key people to be informed about the project during

execution phase

Negative stakeholders as well as their adverse effects

on the project

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4. The link between stakeholder

engagement & operational integration

Materiality

is judged in terms of its inherent

nature, impact (influence)

value, use value, and the

circumstances (context) in

which it occurs

Completeness

the organization should identify

its stakeholders, and explain

how it has responded to their

reasonable expectations and

interests

Responsiveness

characterise the set of values

and beliefs that perceive certain

stakeholders as more

representative than others

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5. Stakeholder management –

integrating expectations & priorities

Key questions:

Who are our stakeholders?

What are our stakeholders’ expectations?

What opportunities and challenges do the stakes and stakeholders present?

What economic, legal, ethical, and philanthropic responsibilities does our organization have?

What strategies or actions should our organization take to best manage stakeholder challenges and opportunities?

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Who are our stakeholders?

Management must identify generic

stakeholder groups and specific

subgroups

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What are our stakeholders’

expectations?

Determine the nature/legitimacy of a

group’s expectations

Determine the power of a group’s

interests

Determine specific groups within

generic groups

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What opportunities & challenges

do stakeholders present?

Opportunities are to build good

productive working relationships with

the stakeholders

Challenges are representative of how

the business handles the stakeholders

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What economic, legal, ethical, and

philanthropic responsibilities does our

organization have to its stakeholders?

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What strategies or actions should our

organization take to best manage

stakeholder challenges & opportunities?

Should we deal directly or indirectly with

stakeholders?

Should we take the offense or the defense

in dealing with stakeholders?

Should we accommodate, negotiate,

manipulate or resist stakeholder overtures

(presentations/proposals)?

Should we employ a combination of the

above strategies or pursue a singular

course of action?©AKnipe 201638

6. Principles of stakeholder

management

Key words:

Acknowledge

Monitor

Listen

Communicate

Adopt

Recognize

Work

Avoid

Acknowledge conflict

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Principles of stakeholder

management

1. Managers should acknowledge and actively monitor the

concerns of all legitimate stakeholders

2. Managers should listen to and openly communicate with

stakeholders about their respective concerns and

contributions, and about risks that they assume

3. Managers should adopt processes and models of behaviour

that are sensitive to the concerns and capabilities of each

stakeholder

4. Managers should recognise the interdependence of efforts

and rewards among stakeholders, and should attempt to

achieve a fair distribution of the benefits and burdens of

corporate activity among them, taking into account their

respective risks and vulnerabilities

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Principles of stakeholder

management

5. Managers should work cooperatively with other entities to

ensure that risks from corporate activities are minimized, and

where they cannot be avoided, appropriately compensated

6. Managers should avoid altogether activities that might

jeopardise inalienable human rights or give rise to risks which,

if clearly understood, would be unacceptable to relevant

stakeholders

7. Managers should acknowledge the potential conflicts between

(a) their own role as corporate stakeholders, and (b) their legal

and moral responsibilities for the interests of stakeholders,

and should address such conflicts through open

communication, appropriate reporting, incentive systems, and,

where necessary, third-party review

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1. There are no secrets

Resist the urge to compartmentalize

information. Treat all communications as if

they were going to be posted on the

internet for all to see (because, that may

just happen).

Act authentically but remember everything

can and often will, end up on the record.

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2. Interest alignment

Constantly search for alignment between

company/project interests and stakeholder

interests.

Be creative – sometimes real opportunities

lie outside the box. Interest intersections,

where your interests and stakeholder

interests align are valuable gems.

Think inside and outside the box to find

them.

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3. Realistic timeframes and

budgets are vital

Make sure your CFO understands and

approves a realistic budget. Help them to

understand the cost of your failure.

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4. Share credit – it will

multiply

Credit shared is goodwill created.

Acknowledge, recognize, praise and

promote partners and collaborators

(government, NGOs, communities,

organizations, etc.).

Do it every chance you can. You gain

much and lose nothing.

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6. Understand before

understood

Communication is critical.

Listening is key. Seek to understand

before you try to be understood.

Think about how you say things: Use soft

language, not hard, emotion generating

terms.

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7. Everyone is the face of the

business

They should be trained in stakeholder

engagement.

Right person to right position: If you

delegate, train and build capacity.

Make sure your people know how do it

right, never assume.

This means your bosses, your

reports and others across the company.

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8. Simplicity is good -

Complexity will cost you

Simple guidelines beat complex

prescriptive procedures every day of the

week. Be realistic. If your stakeholder

engagement plan, process, procedure

is too complex who is going to follow it.

Don't turn stakeholder engagement into

box ticking! Train and trust your people.

Give them room to be creative and

responsive but let them now where the

boundaries are.©AKnipe 201650

9. All is not the same

The importance of taking note of culture

cannot be underestimated. Things change

from country to country and project to

project. Rigidity will often crack and break.

Allow room for adaptation to culture and

use it when necessary.

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10. Stay in touch

Ongoing communications even when there

is no obvious demand – Be open and

transparent, it builds trust. Think about

being counter intuitive with regular

communications about the good and bad.

Get the balance right. Communicate

frequently enough that you are not

forgotten but not so frequently that you are

ignored. Don’t always wait for a big win, or

failure.©AKnipe 201652

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