Most companies today regard stakeholder engagement as a vital part of their business strategy, their journey towards sustainability and building a sustainable business.
Who are your stakeholders and what is stakeholder engagement?
Most companies and organizations, are mature enough to identify their stakeholders. Identification and mapping is a demanding process where stakeholders are distinguished between Primary and Secondary, Internal and External and further broken down to subgroups. Stakeholders are those groups and individuals that are affected and affect your business existence, activities and decisions directly or indirectly.
Why such differentiation is important? Mainly because no organization has the resources or the capacity to engage with all its stakeholders equally. Priority needs to be given based on the impact the stakeholders have over the company and the impact the company has over them.
This is the first step for most companies. They then move into preparing a plan to engage with their stakeholders. Such a plan signifies a more formal process by which a company communicates with its stakeholders in order to build trust and understanding on issues of mutual interest. This can vary from local community issues, to product innovation and supply chain. This is where most companies fail. In order to engage meaningfully with stakeholders a company needs to have clearly identified and articulated desired outcomes and goals, related to business strategy and corporate objectives.
Mature companies are in a constant and open dialogue with their stakeholders, seeking and welcoming their feedback in an attempt to make informed business planning decisions and manage risk, build on brand equity and reputation and identify possible new market and product opportunities.
A good example of product innovation, is BMW’s i series of electric cars, are entirely new concepts with the goal of being uncompromisingly sustainable for the next age of mobility. The company has been collecting feedback from its customers through an impressive 16-million-kilometer e-mobility field trial for its ActiveE vehicle released in 2012.
The next step in the stakeholder engagement process requires the evaluation of the engagement methodology and the actions to be taken. In many cases, this requires redefining strategy and approach, including initiatives. This is an exercise to be completed every year, as market dynamics influence the relation between existing stakeholders and the entrance on new.
A strategic approach to stakeholder engagement has a few distinct steps which include 1) identification of the desired outcome and its relation to business strategy and objectives, 2) the definition of scope of engagement and stakeholder identification 3) preparation of engagement plan and 4) evaluation of the process and outcomes.
Continue to Meaningful CSR? Engage your stakeholders (Part 2).