“Of course, we are extremely conscious of our stakeholders”, you say.
Especially if your job title is something like Stakeholder Relations Manager or Stakeholder Engagement Manager or if your role requires ongoing contact with stakeholders.
But, as we all know, there are quite a lot of organisational models out there with identifiable and well-defined corporate cultures. Academics have categorised them ad nauseum, and we are now familiar with terms such as a ‘hierarchical culture’, ‘clan culture’ or ‘customer-focused culture’.
Over the years, management books have championed various styles or working, and we understand quite a lot about their prevalence in various sectors. How the turn-of-the-century Silicon Valley IT boom reflected ‘innovation culture’. And how the excesses of the banking industry pursuing a ‘market-driven culture’ led to the financial crash of 2008.
Many of these labels are shorthand for the values and priorities of a business, and how their incentives reward different forms of behaviours. Public sector bodies tend towards a bureaucratic or rule-based environment, and private sector companies generally thrive when focused on customers or markets. The third sector is often characterised by a strong purpose-led culture. But generalisations are dangerous and there are ample exceptions.
So can there be something called a ‘stakeholder culture’? Or better – a ‘stakeholder-conscious culture. Especially as every organisation has stakeholders, and presumably everybody does it with some degree of competence.
How does one notice if you really embody it? Here are three practical observations:
You have a stakeholder-conscious culture if your business thinks ‘externally’
Some years ago, McKinsey’s published research that showed that the majority of Companies acknowledged that their revenues could be significantly impacted by ‘external issues’. Whether it is war in Ukraine, changes of Government, taxation or just changes in customer behaviour – very few organisations can carry on regardless.
It may be that only a small number of powerful players in your sector can wield much influence on what happens – but smart ones will have invested in anticipating events and understanding their likely impact on the business. They will be considering whether likely change causes them a problem or creates an opportunity. They will recognise that knowing who the stakeholders are and what governs their actions improves your chance of making the right judgement-calls.
Thinking ‘externally’ does not inhibit good ‘internal’ management, but may prevent you taking actions which – while domestically making sense, leaves outsiders scratching their heads and thinking ‘Why did they do that?’ Having a broad perspective helps us all be aware of wider developments; doing this by working with our own stakeholders ensures it remains firmly rooted in our own business interests.
That ‘external perspective’ comes from the top
One of the best analyses of this subject was a 2016 paper by the Institute of Business Ethics and called ‘Stakeholder engagement; values, business culture & society’. Written by the late Peter Montagan, it examines best practice and concludes that “while engagement with external stakeholders is an executive role, it is … an important priority for very senior executives and would normally be a significant part of the Chief Executive Officer’s duties.’
In other words, the boss sets the tone for the organisation’s relations with key stakeholders. Maybe the day-to-day management of those relationships are in competent hands with top-class Directors of Public Affairs/ Directors of Communications and teams of systems-supported relationship-owners busy at work, but the fundamentals of the interface must be set at the very top. If that leader has limited interest in the external role, no amount of excellent staff work can create an equivalent level of credibility. There are dangers.
A Chief Executive or Chairman who focuses exclusively on one set of stakeholders to the exclusion of others may risk unbalancing the complex web of interests that can affect the business. So, talking exclusively to the investor community (private sector), the trades unions (public sector) or regulators (hybrid sector) carries recognisable risks.
Relationships are strategically informed
Stakeholder relationship management is not the same as PR.
Public relations – with which it can sometimes overlap – has very different objectives. Often it is to portray your organisation in the best possible light and convey its side of the story where myth and misinformation can cause you damage. True, it can be audience-specific, but managing stakeholders takes this much further.
A stakeholder-conscious organisation realises how different your stakeholders can be – and how their interests may diverge radically. They will have been mapped so that you know how they matter to your business – and how much or how little you matter to them.
Your engagement goals can be entirely different, ranging from the need to educate them about your industry or activity, the difficulties you face or the exciting prospects you have, through to placating those you have offended or disappointed. Maybe your objective is to help identify areas of potential mutual interest that could be advanced through a trade association or a community group.
Maybe you anticipate issues emerging where you may need people and organisations sympathetic to you. The key point is that truly stakeholder-minded organisations do not adopt a scattergun approach. It is seriously considered and reflects what’s in the true interest of their organisation.
From these, it is clear that the culture of an organisation can only be marginally affected by having a superb, experienced stakeholder relationship team – one equipped with great systems, sound processes and proven dialogue skills. But it can certainly help.
They can promote good practice, encourage Managers to consider stakeholder opinions and to explore ways to deepen relationships with them. They can work with marketing departments or equivalent to broaden the appreciation of customer priorities and preferences. They can also co-operate with HR Managers to monitor the views of employees or sub-contractors. Ditto with Chief executives or policy departments in regulated industries.
In short, a stakeholder-conscious organisation takes a 360 degree view of all that lives and breathes around your organisation. It is an all-embracing philosophy – not a traditional narrow, inward-looking focus less open to new trends, new ideas and new opportunities.
Those who are blessed to work in such places have a great chance to identify and help realise benefits of all kinds. And to those whose organisations are yet to see the value of investing in such a culture, be encouraged by the knowledge that the blueprint exists and that it’s a journey which many Companies and public bodies have found worthwhile.
By thinking and discussing these ideas, we can all help understand what is possible and I trust that the forthcoming Stakeholder Engagement Summit provides an early opportunity to explore some of these great ideas.
Written by Rhion Jones
Rhion Jones was the Founder Director of the Consultation Institute and is an acknowledged authority on all aspects of public and stakeholder engagement and consultation. He advises Tractivity and will be contributing expert analysis and commentaries on current issues.
Rhion now publishes thought leadership articles regularly as the Consultation Guru.