Step 3: Identify key stakeholders
(click to view practical examples)
Business principles set out what companies see as their responsibilities to employees, shareholders, customers, business partners and other groups in society. Finding out from stakeholders what issues are important to them is therefore essential. Stakeholders – defined as those constituencies that have a direct stake in a company – typically can include shareholders and investors, company employees and trade unions, client companies and consumers, and local communities directly affected by a company’s operations. A company may also wish to broaden its consultations to include other participants in the production chain, as well as government authorities, the media and non-governmental organizations. Companies should be mindful of the differences that may exist within stakeholder groups, such as local communities who are becoming increasingly emphatic about their concerns and with whom it may be useful to establish a dialogue.
Stakeholder engagement is possibly one of the most challenging aspects of corporate responsibility. ICC suggests that companies choose carefully those stakeholders they wish to consult and engage them in a structured way on specific issues and projects.
ICC proposes a precise definition of stakeholders as constituencies that have a direct stake in the company, which includes shareholders and investors, company employees and trade unions, client companies and consumers, and local communities directly affected by a company’s operations. Companies’ efforts to engage stakeholders should focus primarily on these groups.
In addition to these stakeholders, over time and as a company becomes more experienced in stakeholder engagement, it may wish to broaden its consultations to include other participants in the production chain, as well as government authorities, the media and non-governmental organizations. These participants, although not directly involved in a company, may be worth considering because they may be affected by what a company does and can in turn affect the company’s projects.
Shell and the Environment Council have produced a best practice guide entitled “Guidelines for stakeholder dialogue” addressed to company external affairs professionals, line management and others involved in building good relationships with key stakeholders.
Dialogue is defined as finding ways to involve stakeholders in some of what a company does. This usually involves providing an opportunity for people first to understand the choices faced by a company, and then help companies shape those choices to accommodate other factors. Such processes can supplement established stakeholder dialogue mechanisms such as for example annual general meetings, or workers’ councils that exist in some countries.
Stakeholder dialogue can make the following contributions to project management:
Prevent – by involving stakeholders from the start of a project, potential problems can be identified and anticipated before they arise. In some cases, it may be appropriate to build working relationships through a “partnering” process.
Resolve – systematic dialogue facilitated by an independent third party can establish effective communication, clarify disputed issues and may help to resolve them.
Manage – sometimes the best outcome may be an agreement to disagree about basic principles, together with some managed collaboration to mitigate sources of particular dispute.
What sorts of project can benefit from stakeholder dialogue?
Local projects – these are projects in a specific area, concerned mainly with practical issues, and of significance to people in that immediate area, for example the establishment of a company facility. Key stakeholders in such projects will include local communities directly affected by the particular project.
Strategic projects – these are much bigger decisions with possibly national or international impact. The stakeholders in strategic projects tend to be correspondingly broad, and interested in political, social, ethical and environmental questions, as well as practical ones.
The guidelines propose the following “ten principles of stakeholder dialogue”:
- focus on specific interests and values, away from generalized public positions
- acknowledge genuine differences
- identify and reduce uncertainty as early as possible through sharing information and clear objectives and policy
- address all the dimensions of a situation
- be as open as possible at all times
- ensure the process is inclusive
- acknowledge past mistakes and accept responsibility where appropriate and legally possible
- resolve internal negotiations first
- allow enough time
- use genuine, informed two-way communication
Stages of a stakeholder dialogue process
- create a core team within the company to advise and inform those managing the stakeholder dialogue
- build understanding and confidence internally in the idea of stakeholder dialogue
- identify primary stakeholders
- scope and analyze issues, possibly with some key stakeholders
- plan overall dialogue process and key events, checking viability with selected stakeholders
- detailed design and preparation work
- research and preparation of any accompanying documentation
- plan logistics of meeting
- explore ideas to resolve differences
- commission joint research and fact finding
- generally improve communications and relationships
- turn ideas into solutions
- agree unavoidable trade-offs
- put commitments into action
- maintain communications with and commitments to stakeholders.
Examples of stakeholder dialogue processes:
- direct meetings or telephone calls
Stakeholder dialogues will typically use a mixture of the above. The difficulty is how to use which technique at what moment with which group of people.
Companies should carefully weigh the resource implications of establishing a stakeholder dialogue depending on factors such as: the number of stakeholders, the complexity of the issues, the amount of prior consultation and preparation required, and the number of meetings needed. In some cases, it may be useful to consider the use of professional mediators with a wide range of experience. Another issue for companies is whether to mention the names of consulted non-governmental organizations in public documentation such as annual reports. Such a decision can only be made with the explicit consent of all stakeholders taking part in the dialogue.
Every stakeholder dialogue is different and so there is no single blueprint. What is most important is to be open, consistent and honest in dealing with stakeholders. Stakeholder engagement is about long-term commitment and dialogue. Engaging with stakeholders must be carefully planned and managed. A badly managed stakeholder dialogue can, in some cases, have a counter-productive effect. If the process is rushed or cramped by time constraints, stakeholders are likely to feel that their participation is undervalued and their contributions not taken seriously. This could lead to antagonism and mistrust, and could damage the legitimacy of the process.
Every stakeholder dialogue process needs its own concrete goals and deliverables, but there are some more general measures of success by with the process can be judged.
A successful process:
- produces result which are better than could have been achieved by other means
- involves all stakeholders whose non-involvement would invalidate the outcome
- enables all stakeholders to voice their needs
- satisfies at least some of the needs and interests of all stakeholders
- produces agreed, timed and costed action plans
- produces results which feel legitimate to and owned by all stakeholders
- generates commitments which are realistic and practical
- establishes contingency plan in case important decisions turn out to be wrong
- builds trust and creates a good relationship for the future
- makes the next stakeholder dialogue process easier
ICC has national committees in over 80 countries that are the focal point for ICC member companies in their country. Companies are encouraged to refer to national committees as their “first port of call” when confronted with questions about how to organize a stakeholder dialogue. ICC national committees can provide member companies with a forum to share experience on corporate responsibility issues in the context of national societal expectations, for example by establishing a “commission on business in society” at national level.
(click to view practical examples)