In earlier days, corporate sustainability was an add-on. Companies were often motivated by risk-aversion and the need to improve public relations. A rare few were motivated by genuine sustainability aspirations.
Stakeholder engagement is one of the more recent fruits of sustainability practice. Stakeholder engagement has evolved to a point where it can now move from the periphery to contribute as a core business process, supporting a strong culture and informing strategy.
Edgar Schein’s definition of culture illustrates how stakeholder engagement can make to cultural development. Culture is:
a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.
Let’s look at how two important elements of culture – external adaptation and internal integration are supported by stakeholder engagement. We know the pace of change seems to be ever increasing. We will continue to witness massive changes over the next few decades as we move to a low-carbon future and grapple with the complex economic and social problems of our global community. Those companies that lack adaptive capacity will simply not survive. If the thinking of those at the helm remains grounded in decades past, and they continue with succession practices that essentially clone themselves, they will struggle.
Engagement processes aspire to create dialogue with stakeholders – those affected by a company’s operations, or who can affect that company. When engagement processes work well, the company and its stakeholders will enjoy greater mutual understanding and get closer to shared meaning – where both parties have deeper understanding and empathy of each other’s perspective. This in turn, becomes a platform for external adaptation – as the company sees the world more through the eyes of its stakeholders, rather than its own filters.
To engage effectively, ideally all staff become the eyes, ears and voice of the company. Engaged staff, who understand the importance of engagement, are primed to spot threats or opportunities in the environment. And if the company’s learning processes are effective, the information from those staff members becomes useful knowledge.
Thus internal integration is closely linked to in external adaptation. These processes support each other. Both require transparent communication, clear vision and the explicit expression of the values that underpin a culture of engagement.
Unfortunately, surveys from around the globe indicate that typically 60% of staff are disengaged. The good news is, that improving engagement with any group of stakeholders is likely to embed better engagement practices, potentially supporting better engagement with all stakeholders.
Of course these days, it is difficult to define a clear boundary between the internal and external. For example many companies have sub-contractors delivering core services. Others have suppliers manage the goods they provide. Some of the more successful companies are expanding the zone where internals and externals overlap.
By now you will see the link with strategy. Recall how a component of strategy was environmental scanning. The inference here is of a captain scanning the horizon from the bridge of the ship as it sails through dangerous seas. Engaging is a totally different way of informing strategy – it seeks to work with the “environment” in a more dynamic way, relying on shared understanding, rather than detached observation.
How does your company establish stakeholder engagement as a core business process? A first step is to establish a stakeholder engagement plan. This may mean simply formalising and intensifying what you already do. AccountAbility’s Stakeholder Engagement Standard is a great tool to use. As you draft your first plan, you will find that elements of strategy start to emerge. And as you intensify the process through engagement with stakeholders, more knowledge to inform strategy will surface. You will also see more clearly how the dynamics of leadership, organisational learning, communication and adaptive capacity (change) are critical to engagement, while also strongly supporting an adaptive culture.