Stakeholder engagement: definition and strategies
The rising influence of multiple stakeholders requires forward-looking businesses to not only employ a stakeholder intelligence solution to track stakeholder perceptions, but also develop a stakeholder engagement plan for acting on that intelligence
What is stakeholder engagement?
To optimise its operations, an organisation needs to understand its stakeholders.
Awareness of how investors, employees, customers, suppliers and the wider community perceive the organisation, their priorities and needs, and their potential impact on its activities is a central part of stakeholder management. This understanding is achieved through ongoing stakeholder intelligence and analysis, surfacing and categorising what stakeholders care about and how they are likely to respond to business activities.
Having gained insight into the topics, concerns and expectations taxing stakeholders, the next stage is putting the intelligence garnered to use. This means creating and executing a stakeholder engagement plan to power proactive interaction between the company and its stakeholders.
Stakeholder engagement is not a nice to have, or a one-time project.
In the interconnected world of digital communications, in which everyone has a platform to voice their opinion, focus and sentiment can change rapidly. The shifting priorities of stakeholders makes stakeholder monitoring and engagement an ‘always on’ activity.
One example is the speed with which competitors or industry peers can change the rules of the game. The recent announcement by a group of major banks that they would reach net-zero carbon emissions by 2050 led to a flurry of copycat statements. The growing interest of investors and consumers in ESG (environmental social and governance) issues sparked the move, with peer pressure causing other international finance corporations to follow suit.
Businesses need a stakeholder engagement strategy to understand the full range of issues and content their stakeholders are interested in; explain and answer to stakeholders for their actions; involve stakeholders in activities and decisions; and review how they do business in light of stakeholders’ responses.
Building a stakeholder engagement strategy
One of the key principles of stakeholder engagement is ongoing communication.
Responsibility for outreach should be assigned to whomever has operational ownership of particular stakeholder groups across the business. Customer service, the media office and investor relations have clear-cut roles, but NGO and community engagement might be less easy to allocate.
Effective stakeholder engagement plans will, therefore, be joint projects between departments.
Engagement brings stakeholder perspectives into the business, either directly in focus groups, or via chosen representatives. Following the announcement that Honda will close its Swindon manufacturing plant in 2021, the taskforce for supporting the 3,500 staff affected, the local community and supply chain included council representatives, MPs, the Unite union, and the Wilshire LEP, as well as Honda UK, with discussions chaired by the government minister for business and industry.
Such direct engagement is not always necessary to understand how business decisions will impact stakeholders. Stakeholder intelligence allows organisations to infer how certain groups will respond to the decision, and responses can be modelled on that data. Using this information, a company proxy can act on behalf of stakeholder interests.
In order to influence stakeholders, an engagement strategy needs to outline which communication channels should be employed.
While some groups require face-to-face contact to underline how seriously their interests are being taken, others will prefer to be contacted via channels they are more au fait with.
Press releases, annual reports, executive statements, intranet and social media posts, and customer surveys are all legitimate channels. The forum for connecting with stakeholders will be dictated by the topic and target audience.
Practical implementation of stakeholder engagement
Once stakeholder data has been gathered and analysed through a stakeholder intelligence solution, a stakeholder engagement strategy should provide a real-world plan for taking stakeholder priorities into account when making business decisions.
The elements of a practical stakeholder engagement strategy are:
- A policy of ongoing engagement. This will facilitate understanding of where the business stands with all of its stakeholders. In a hyper-transparent business landscape, perceptions can shift at speed, and topics can become business critical overnight. As a result, stakeholder intelligence needs to be ‘always on’.
- A project, risk or event-specific approach. Alongside ongoing engagement, the strategy needs to incorporate a project perspective. Considering how a change in business policy, or particular action, will potentially change the relationship with a stakeholder group will allow for more informed decision making.
- Knowing when to trigger different channels. If stakeholder intelligence alerts the business that its perception among a particular stakeholder group is significantly negative, this should trigger a review. The review can determine the type of stakeholder communication needed to acquire secondary data, to indicate which factors are driving their viewpoint. This will, in turn, trigger other engagement responses.
Done right, stakeholder engagement will help businesses understand and involve stakeholders. This involvement can help increase transparency, diffuse negative sentiment, improve corporate reputation, build trust and ultimately achieve long-term value for all parties.
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