Risk management and stakeholder engagement

11th June 2015

Risk management and stakeholder engagement

11th June 2015
woman in front of laptop with "ideas" on screen

Risk management and stakeholder engagement

Much has been said and written about best practice or effective stakeholder engagement. There are standards, guidelines and frameworks that govern stakeholder processes, and many consultants have advised on developing stakeholder management strategies and processes. However, very little is said or advice provided on what to do when absolutely everything goes wrong during the stakeholder engagement process. What follows are valuable lessons we learned while conducting stakeholder engagement across Africa, in various geographical contexts and industry sectors.

  • It is all about the database, identification, segmentation, and prioritisation and differentiation process: Many companies want to report on the outcomes of their engagement processes.  But before reporting on the process one actually has to conduct the engagement.  More often than not companies have no idea who their stakeholders actually are.  And this is not said lightly – just look at the broad stakeholder categories in sustainability and integrated reports, as if stakeholders can be classified in broad homogenous groups.  This is because, in general, the owners of the stakeholder information reside across departments and divisions within companies and it is very seldom shared, much less captured.

Just imagine “the media” as a stakeholder group. Various media owners, writers, influencers and opinion shapers such as journalists engage with a company on so many levels and these contacts can be contained in various lists across the organisation. For instance by the investor relations department (financial journalists) to environmental journalists (engaged by the environmental or health, safety departments), or industry experts and freelance journalists that write about specific and specialised industry issues (i.e. community relations). Therefore having a complete and updated list of media stakeholders is a challenge.

Other issues that have to be considered apart from personalisation and prioritisation, are issues such as local vs. national vs. international media, depending on where a company operates.  For instance, is the local free community paper included and engaged with on the same level on the same issues as an international media networks such as CNBC or BBC? Companies that do not make the effort, dedicate the resources and assign specific responsibility of stakeholder management to specific functions, will find that engaging stakeholders is not as easy as it may seem at first glance.  Because in order to engage you have to have the contact details of stakeholders.

  • It is all about culture and diversity: Many companies arrange and initiate engagement from corporate head offices and expect regional operations to follow suit. So very diligently a single questionnaire is designed, signed off by the appropriate internal authorities and sent off to various stakeholders in the operations. At no time is attention paid to language and interpretation, gender or cultural diversification, age and other demographic differences.  For example: Internet accessibility is an issue in Africa so you will be excluding a large influential stakeholder base from developing markets if the only form of engagement is electronic questionnaires.

Additionally, culture and values play a dominant role on the African continent, for instance men and women don’t feel comfortable in combined stakeholder groups, or in some cultures it is not custom for younger people to speak before or have different opinions than older people.  Literacy also plays a role in the engagement methodology and completion of engagement tools. Indigenous and tribal influences should also not be underestimated. For example, in one province one may find as many as 40 tribes and values, customs, gender, hierarchy and competition between tribes play a very influential role. Therefore a standard, one-size-fits-all approach to engagement may not be suitable.

  • It’s all about the engagement methodology:Many companies try to save time by using shotgun approaches because it makes so much sense to. Mistakes include:
    • Having town hall meetings. That many people in one place definitely boosts attendance numbers but provides little opportunity for actual dialogue and engagement.
    • Engaging by completing questionnaires, as it standardises both qualitative and quantitative feedback from a global perspective but provides very little opportunity for local nuances, differentiation, diversification or deep and meaningful discussion and interpretation of controversial issues.
    • Focus groups allow for topical discussions with specific groups, but if one group dominates the discussion, few varied opinions can be obtained, rendering the dialogue null and void.
  • It is about actual engagement: Many companies confuse engagement with communication.  Communication is a one-sided information-sharing process while engagement implies two-way, meaningful dialogue processes.  Engagement does not assume a preconceived agenda where the outcomes are pre-empted.  Therefore having a long agenda with predetermined discussion points is risking the outcomes of the engagement process.

Proactive stakeholder engagement also requires a risk management strategy that looks at all possible factors that could go wrong in order to plan for every case or scenario.  Based on our experience, consideration has to be given to:

  • Developing a master database of all stakeholders which includes and considers a detailed identification, prioritisation and segmentation process.Not all stakeholders are equal and from year to year or quarter to quarter stakeholders/groups and their importance varies.  This is influenced and impacted by the focus of the engagement, the time of the engagement and specifically the engagement methodologies and topics.
  • Engagement methodologies must take into consideration the different cultures, races, genders and general communication aspects,such as language proficiency, literacy and a capacity to actually engage. This also requires a deep sociological understanding that people are first and foremost individuals, so when asked to provide perceptions, opinions or feedback on a specific subject, people’s current world view which influences their input and views must be considered.  Also, there is an underlying assumption that people represent similar other individuals, therefore 20% of the stakeholder base represents 80% of the perceptions.  For instance, companies think consumers/customers are all the same and the only thing they have in common is their buying or consumption patterns.  Similarly, all suppliers are the same because all they have in common is providing products, services or resources to the company. This is not true and companies should have the courage to report and act on competing and different stakeholder views with consistency and persistency.
  • Every stakeholder, whether an individual or group, must be assessed for appropriateness of the engagement methodology. Personal interviews may be required when a controversial topic is discussed.  Focus groups may be required where group support, various differentiating perspectives or buy-in is required. Questionnaires may be required where quantitative data is more important than in-depth qualitative data. Therefore consideration must be given to a range of stakeholder engagement methodologies that are suited to stakeholders – not the company.
  • Who conducts the engagement is as important as the actual engagement process. In some cases an internal person may influence the outcomes because they feel compelled to justify or defend specific company actions. Or when an external person is used to facilitate an engagement process to ensure impartiality they may not have specialist or specific subject expertise.

In our experience, stakeholder engagement is a complex but very rewarding experience. And companies that have considered everything that could possibly go wrong before the start of the engagement process have testified that a cautious approach to engagement provided the board and management with valuable insights. Additionally, engagement helped to deepen stakeholder relationships and added additional social value and capital to the organisation.

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