Engage your stakeholders

Engage your stakeholders

Stakeholder engagement is now growing as one of the key tenets of good corporate governance. Many companies have either ignored it completely or underestimated it to their peril. Leaders should be aware of the importance of engaging with their organisations’ stakeholders and also be aware of the expectations of these stakeholders to avoid having the organisation’s strategy scuttled. One should view stakeholders as those individuals or a group of individuals whose interests are directly affected by the activities of a firm, an organisation or even a project. They therefore have an interest in what the firm or organisation does.

They want their expectations met or addressed. In effect stakeholders have a “stake” in your business or project, so it is wise to know who your particular stakeholders are and you need to constantly engage them. They can affect an organisation’s mission, strategy or project positively or negatively. It is therefore very critical that you should identify them early, work out which ones that need more engagement and then start engaging and managing them. The process towards engaging your stakeholders is to firstly identify them, secondly understand them and thirdly manage them.

The identification process requires you to ask questions like: who will be affected by the organisation’s decisions, who is likely to want to influence the organisation’s decision, mission or strategy and lastly who will be interested in a successful or unsuccessful outcome of the project, strategy or decision. This process will identify a number of stakeholders who will include your employees, customers, suppliers, bankers and the community. These stakeholders will impact or influence your organisation differently since each has its own expectations and wield different levels of power. You therefore need to determine how much interest they have in the organisation and what type of power they really have.

Ascertain the power the stakeholders have and whether they have the ability to influence any decision you take. This process would need you to dig deeper to get more information about the stakeholder. Since stakeholders have a “stake” in the organisation they therefore have certain expectations that the organisation should fulfil. As a business you need know what these expectations are so that you build them into your decision making. You can’t be expected to attend to every wish of your stakeholder hence you need to identify those stakeholders who have the interest in your project, mission or strategy and can impact them positively or negatively.

You should classify stakeholders into groups that will enable you to put the appropriate attention commensurate with the risk of ignoring that group. The first group will be those that you need to manage actively. This group has a lot of power and can use the power to influence any decision. They are keenly interested in the happenings of the company. Whatever you do should be acceptable to this group or else your strategy is off the window. Such stakeholders like employees, major customers and major suppliers would fall into this category.

The second group is very powerful but is a bit passive although they can scuttle some major decision. Institutional investors like pension funds, would fall into this groups. You therefore need to keep such a group satisfied through constant communication and keep an eye on how they respond to any decision. The third group is one that is very interested in the goings on of the organisation but unfortunately can’t wield the required power. Pressure groups are usually the ones to consider in this category.

They don’t have power but however they can influence other key stakeholders through lobbying or having some bad publicity to attract attention. The best strategy to adopt is to keep this group informed of what you are doing concerning their area of interest. The last group from the analysis will be the one which has neither the interest nor the power to affect any decision. It’s important to have general communication with this group. When you have identified your stakeholders and also understood their expectations and have classified them into the four categories above you need to come up with a strategy to manage each of the group.

Some of the stakeholders will be very difficult to deal with so you need to devise ways to win them over. View your stakeholders not as opponents or enemies but as key players in the successful implementation of your mission, strategy or project. There are two tiers of stakeholder engagement. The first one, which is very important, is your day to day engagement with employees, suppliers, customers and distributors. These are the stakeholders companies engage with on a daily basis. The second tier is the wider community, NGOs, labour organizations, governmental institutions, industry organizations and financial bodies. It’s important then to draw up this distinction so that you know to deal with each tier.

“As the recent global financial crisis has taught us, the 21st Century is one of “Managing for Stakeholders.” The task of executives is to create as much value as possible for stakeholders without resorting to trade-offs. Great companies endure because they manage to get stakeholder interests aligned in the same direction.” said R. Edward Freeman, a professor at the Darden School of the University of Virginia and a thought leader in the fields of Stakeholder Management, Business Ethics and Executive Leadership.

Stewart Jakarasi is a business and financial strategist and a lecturer in business strategy (ACCA P3), advanced performance management (P5) and entrepreneurship. He provides advisory and guidance on leadership, strategy and execution, corporate governance, preparation of business plans and on how to build and sustain high-performing organisations.

For assistance in implementing some of the concepts discussed in these articles please contact him on the following contacts: sjakarasi@gmail.com, call on +266 58881062 or WhatsApp +266 62110062.

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