An organization can build support for its actions and avoid social backlash through stakeholder engagement. Interacting with stakeholders enables an organization to identify and address their concerns, which reduces the risks and deadlocks that can result from misunderstandings. By proactively engaging its stakeholders and identifying potential problems before they arise, the organization will operate in a more stable sociopolitical environment.
What is Stakeholder Engagement?
Stakeholder engagement can be defined as interactive activities initiated by an organization with its stakeholders. The organization typically has many stakeholders, and is itself “a stakeholder within the community” (ISO 26000).
There are numerous opportunities to undertake stakeholder engagement, and many ways to initiate a dialogue. An organization should consider carefully the relationships it needs to build, and identify all stakeholders who might be affected by new projects.
Stakeholder engagement can address issues of concern to the stakeholders or issues of concern to the organization. In both cases, stakeholder engagement will consist of two essential practices:
- identification of stakeholders
- dialogue with the stakeholders
How to Identify Stakeholders
A stakeholder is “any group or individual who can affect or is affected by the achievement of the organization’s objectives” (Freeman, 1984). Traditionally, this has included:
- internal stakeholders (shareholders, employees, etc.);
- external stakeholders (suppliers, customers, etc.);
- coordinating authorities (governments, professional associations, etc.).
This concept has expanded to include often neglected stakeholders such as NGOs and local communities.
Managers should recognize all stakeholders, including those that are frequently forgotten but can have a major impact on an organization’s activities and reputation (e.g. activist groups, or aboriginal communities). A responsible organization identifies and interacts proactively with the stakeholders impacted by its activities, particularly if the impact is likely to be negative.
How to Engage in Dialogue with Stakeholders
The purpose of dialogue is twofold:
- Involve stakeholders by providing them opportunities to share views and concerns directly;
- Improve the management and scope of activities carried out by the organization while legitimizing the decisions it makes.
The nature of the dialogue can range from confrontational interactions to avoidance to joint decision-making.
Choosing Your Engagement Strategy
Before implementing a stakeholder engagement process, managers must first consider the type of relationship they wish to pursue. For example, research points to a continuum spanning various levels of engagement (Bowen et al., 2008)