Companies around the world are rapidly moving towards meaningful consultation with stakeholders for a variety of reasons – and the benefits are worth the effort. The underlying driver is that collaboration between industry and stakeholders will lead to more sustainable development that takes into account societal and environmental needs and issues, along with those of the shareholders.
It’s crucial to have a thoroughly mapped-out stakeholder engagement policy in place, as stakeholders can have significant influence on company decisions. With that in mind, it’s essential to maintain their trust through consistent and transparent communication. This will certainly benefit the way your company operates, as well as its reputation.
In fact, even companies that have been slow to this process now realize how vital a consultation tool is to improving their overall performance. In far too many examples, we see how detrimental it can be not to engage in meaningful dialogue with stakeholders.
At the centre of stakeholder engagement is a well-defined and measurable stakeholder engagement policy.
There may not be an exact formula for this practice, but there are several key benefits that arise from a properly executed engagement process. Some of these are as follows:
1/ Social responsibility
Identifying and engaging with stakeholders is key for socially responsible investors and result in improved relationships. With social responsibility at the core of their values, it’s vital that you keep this in mind and engage accordingly.
2/ Risk management
An active relationship with stakeholders that involves ongoing dialogue allows companies to anticipate any potential problems or issues. If an issue can be detected early, it can be mitigated perhaps before it even becomes a problem.
3/ Solution orientation
Dialogue also allows companies to be part of the solution in terms of any issues that may arise, and reduces the risk of negative exposure.
Sustainable business practices are increasingly in demand by consumers—being ahead of this trend is beneficial to public image and could potentially open new markets. By being ahead of the curve and generating a solid stakeholder engagement policy, your company will position itself as a thought leader and will have influence in your industry.
5/ Proven results
Measurable results and testimonials can not only lead to good exposure for your company, but you’ll also be able to present to your stakeholders how you’ve engaged with them and the good that has come out of it.
6/ Positive exposure
Practicing sustainable business often leads to praise from stakeholders (who have often changed their perspective on the proponent of a project and the company), which can lead to enhanced employee morale.
Some of the barriers to stakeholder engagement include lack of skill, strategy, focus and/or process. To avoid some of these common pitfalls, a well-defined stakeholder consultation process is key. It’s not sufficient simply to have a policy in place—you must back it up with a process unique to your business.
In order to be effective, a consultation process should be a number of things:
- Issue-based: well-defined parameters addressing specific questions. Ensure that all bases are covered and that all issues are addressed.
- Pro-active: have solutions in place for potential issues that may arise.
- Results oriented: includes a learning component for both sides in order to achieve tangible results.
- Measurable to the company: based on internal targets and the goals of the stakeholders.
- Following a process: based on a thorough methodology and tactics with proven success.
Some common tools used to begin the consultation planning process include drawing a stakeholder map, identifying key issues, and defining engagement objectives. Once the stakeholder consultation process has been defined, it is vital to track all aspects of the process, including communication, discussion, input on specific projects, etc.
Software solutions such as StakeTracker, which allows for the recording, documentation, tracking and reporting of stakeholder input; and Engagement HQ, an online forum platform designed to engage stakeholders in discussions regarding projects and policies that affect them, can assist in this process.
Both software solutions allow companies to track engagement, report on it, and measure the response of stakeholders against their own goals. Responding to engagement also means you can shift direction early in the process if necessary, avoiding wasted time and money.
Having a policy to engage stakeholders is a good place for companies to start, but implementing a consultation plan requires planning and the ability to track input over time. A system must be in place that holds companies to account for their policies, so that they can then be accountable to the public and to their shareholders. Stakeholder engagement is not going to be effective if you are simply going through the motions.
Download your Stakeholder Relationship Management Software Guide here.