stakeholder engagement and management

Stakeholder Engagement & ManagementAndré Knipe072 417 [email protected]

©AKnipe 20152

Pause… Set… Engage!

©AKnipe 20153

Agenda

1. What is a stakeholder?2. What is stakeholder engagement?3. Stakeholder identification4. Stakeholder management

©AKnipe 20154

1. What is a stakeholder?

Individuals and groups with a multitude of interests, expectations, and demands as to what business should provide to society

©AKnipe 20155


"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…

©AKnipe 20156


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)

©AKnipe 20157


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 companies still live within the first paradigm...

©AKnipe 20158

Origins of the stakeholder conceptWhat is a stake?An interest or a share in an undertaking and can be categorized as:

©AKnipe 20159

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 201510

Why engage and what are the benefits? Effective and strategically aligned

stakeholder engagement can:Lead to more equitable and sustainable

social developmentGive those who have a right to be heard Allow for the pooling of resources to

solve problems Inform, educate, and influence

stakeholders

©AKnipe 201511

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

©AKnipe 201512

The key principles of stakeholder engagement Information disclosure Communication Consultation and participation Involvement Cooperation and partnerships

©AKnipe 201513

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

©AKnipe 201514

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

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 201515

©AKnipe 201516

Who are business stakeholders?

Government Employees

Business

Community

Consumers

Owners

©AKnipe 201517

Evolution and development of the stakeholder concept Views of the organization

©AKnipe 201518

Production view

Environment

©AKnipe 201519

Managerial view

Environment

©AKnipe 201520

Stakeholder view of the business

Business

Owners

Consumers

Community

Government

NationalProvincial

Local

General PublicEnvironmental

GroupsCivic Groups

Average Consumers

Product LiabilitiesSocial Activists

Environment:PoliticalEconomicSocialTechnological

Employees

MinoritiesWomen

Older EmployeesUnions

Private CitizensInstitutional Groups

Board Members

Business

Owners

Consumers

Community

Government

NationalProvincial

Local

General PublicEnvironmental

GroupsCivic Groups

Average Consumers

Product LiabilitiesSocial Activists

Environment:PoliticalEconomicSocialTechnological

©AKnipe 201521

Who are business stakeholders? 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

©AKnipe 201522

Who are business stakeholders? 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

Stakeholder identification: A simple four step plan1. Develop a categorised list of the

members of the stakeholder community

2. When a list is relatively complete (not perfect: it's a moving target) assign priorities based on…

©AKnipe 201523

©AKnipe 201524

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

©AKnipe 201525

A typology of stakeholder attributes

Power

Legitimacy

Urgency

5.DangerousStakeholder 7.

DefinitiveStakeholder

4.Dominant

Stakeholder

6. DependantStakeholder

Stakeholder identification: A simple four step plan Step three: Focus on the ‘right

stakeholders’ who are currently importantCreate a tool to visualise this critical sub-

set of the total community Step four: Benchmark this against

Freeman's model of primary and secondary stakeholder to check relevance

©AKnipe 201526

Freeman’s model

Primary stakeholders: Those without whose participation a company cannot survive

Secondary stakeholders: Those that influence the company or are affected by it but who are not essential to survival

©AKnipe 201527

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

©AKnipe 201528

©AKnipe 201529

4. Stakeholder Management

Key questions: Who are our stakeholders? What are our stakeholders’ stakes? What opportunities and challenges do the

stakes and stakeholders present? What economic, legal, ethical, and

philanthropic responsibilities does our firm have?

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

©AKnipe 201530

Who are our stakeholders?

Management must identify generic stakeholder groups and specific subgroups

©AKnipe 201531

What are our stakeholders’ stakes? Determine the nature/legitimacy of a

group’s stakes Determine the power of a group’s

stakes Determine specific groups within

generic groups

©AKnipe 201532

What opportunities and 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

©AKnipe 201533

What economic, legal, ethical, and philanthropic responsibilities does our business have to its stakeholders?

Philanthropic Philanthropic ResponsibilitiesResponsibilities

Be a good corporate citizen.

Ethical ResponsibilitiesEthical ResponsibilitiesBe ethical.

Legal ResponsibilitiesLegal ResponsibilitiesObey the law.

Economic ResponsibilitiesEconomic ResponsibilitiesBe profitable.

©AKnipe 201534

Stakeholder/Responsibility Matrix - example

Stakeholders Economic Legal Ethical Philanthropic

Owners

Customers

Employees

Community

General public

Social Activists

Etc.

©AKnipe 201535

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

Should we employ a combination of the above strategies or pursue a singular course of action?

©AKnipe 201536

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

©AKnipe 201537

Principles of stakeholder management Acknowledge Monitor Listen Communicate Adopt Recognize Work Avoid Acknowledge conflict

©AKnipe 201538

Principles of stakeholder management1. Managers should acknowledge and actively monitor the

concerns of all legitimate stakeholders2. 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

©AKnipe 201539

Principles of stakeholder management5. 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

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.

©AKnipe 201541

©AKnipe 201542

Interest alignment

Constantly search for alignment betweencompany/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.

©AKnipe 201543

Realistic timeframes and budgets are vitalMake sure your CFO understands and approves a realistic budget. Help them to understand the cost of your failure.

©AKnipe 201544

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.

©AKnipe 201546

Understand before understoodCommunication 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.

©AKnipe 201547

Everyone is the face of the businessThey 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, yourreports and others across the company.

©AKnipe 201548

Simplicity is goodComplexity will cost youSimple guidelines beat complex prescriptive procedures every day of the week. Be realistic. If your stakeholder engagement plan, process, procedureis 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 201549

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.

©AKnipe 201550

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.

So… pause, set, ENGAGE!

André Knipe072 417 [email protected]

stakeholder engagement and management

Leadership & Management