Stakeholder engagement is now an accepted part of running any organisation. Its value lies in its ability to build relationships that enable organisations to more completely understand and evaluate risks and opportunities, to make the best decisions in light of these risks and opportunities, and to act with confidence that the market is receptive and has granted them a license to operate.
Stakeholder engagement is not new. It has long been recognised as crucial to an organisation’s performance and success. Traditional forms of engagement such as customer surveys and focus groups, open houses, investor road shows and employee suggestion boxes, are well known and used across organisations. Smart organisations have always found ways to engage stakeholders in ways that have contributed to their success. This is true for public bodies and civil society as well as for commercial enterprises.
Engagement has been used to help develop better strategy and to design better products and services; it has been used to understand and develop acceptable responses to issues arising from new infrastructure projects; and it has been used to develop better public policy and service offerings. And while the imperatives of sustainable development reinforce the need to engage with stakeholders to better understand and respond to broader social, environmental and economic challenges, it is understood that responses to these challenges must also result in organisational success.
Stakeholder engagement is now recognised as a fundamental accountability mechanism. Accountability is acknowledging, assuming responsibility for and being transparent about the impacts of your policies, decisions, actions, products and associated performance. It obliges an organisation to involve stakeholders in identifying, understanding and responding to sustainability issues and concerns, and to report, explain and be answerable to stakeholders for decisions, actions and performance. It includes the way in which an organisation governs, sets strategy and manages performance. The basic premise is that an accountable organisation will take action to:
Engaging with the people and organisations that are affected by or can affect an organisation’s activities, and responding to their concerns makes organisations perform better. It increases their knowledge and their legitimacy. The values that are affirmed or created through engagement enhance reputation and trust. Effective and strategically aligned stakeholder engagement can:
For these benefits to be realised, stakeholder engagement needs to be designed and implemented in a credible manner. The AA1000 Stakeholder Engagement Standard (AA1000SES) provides a basis for this. It is a generally applicable, open-source framework for designing, implementing, assessing, and communicating the quality of stakeholder engagement. It builds on, and is consistent with, AccountAbility’s AA1000 Series, particularly the AA1000 AccountAbility Principles Standard, launched in October, 2008.
Stakeholder engagement is a journey. As the figure below indicates, the starting point is often pain alleviation and not the search for innovation, improved performance and sustainable competitiveness. Something bad has happened and there is significant external pressure that needs to be addressed urgently. The organisation finds that it needs to engage, it needs to be more transparent, its needs to respond directly to stakeholder concerns.
Organisations that find that engagement has led to a successful resolution to a problem when they were under pressure then look for ways to use engagement as a preventive rather than reactionary mechanism. They begin to use it systematically as part of risk identification and management. They discover that a better understanding of their stakeholders results in an easier and more receptive operating environment. Performance improves.
They then discover that it can contribute just as much to strategic as to operational improvement. Engagement can be a tremendous source of innovation and new partnerships. Leading companies are discovering that a growing percentage of innovation is coming from outside the organisation and not from within. They realise that stakeholders are a resource and not simply an irritant to be ‘managed’. At this level, stakeholder engagement drives strategic direction as well as operational excellence.
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INTRODUCTION
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“Accountability is acknowledging, assuming responsibility for and being transparent about the impacts of your policies, decisions, actions, products and associated performance.”
If people feel this first sentence is too long, “impacts of your policies, decisions, actions, products and associated performance” could become simply “impacts of your organization.”
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“• establish goals and standards against which the strategy and associated
• performance can be managed and judged, and”
Just a formatting problem.
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“disclose credible information”
Why not “accurate and credible”? Credibility and accuracy tend to support each other, but you can have one without the other.
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“Stakeholder engagement is required to achieve each of these actions accountably.”
Do we need the word “accountably” here? It seems a bit circular to me: an accountable organization is one that achieves the actions described (establishes “a strategy based on a comprehensive and balanced” etc.), not one that achieves them “accountably.”
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“The value of stakeholder engagement lies in its ability to build relationships that enable an organisation to more completely understand and evaluate risks and market drivers, to make the best decisions in light of these risks and drivers, and to implement effectively with confidence in the license to operate and a receptive market.”
This seems basically fine to me. For discussion purposes, I want to suggest that, so far, the case for stakeholder engagement has been made in two different ways. Before this paragraph, stakeholder engagement is portrayed as an important step towards accountability. Accountability is understood as an intrinsic social good. We don’t need to justify why organizations should be honest about, and responsible for, what they do – it just makes good ethical sense.
But with this paragraph, there is a subtle shift to the “business case” for stakeholder engagement. The implication is now that, without stakeholder engagement, a business is unlikely to be profitable in the long term. To stay viable, businesses must proactively manage regulatory and reputational risks, in the face of increasing state and consumer expectations.
I don’t think it’s a bad thing that the Standard contains a mixed emphasis on the business perspective, and the perspective of society as a whole. Different people can have slightly different motives for supporting accountability and stakeholder engagement. It’s probably useful to let these motives mix and cross-fertilize. But it is something to keep an eye on. If motives diverge too much, the consensus can be undermined. There must be limits - this Standard must not be compatible with Enron-style superficial public relations exercises.
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“When linked to the central mission and objectives of the organisation it increases the probability of getting right and thereby reduces the probability of getting it wrong.”
I think there’s just a missing “it” in “getting it right.”
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“It is a string indicator of management quality.”
Probably just me, but I hadn’t come across the term “string indicator” before.
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“prove to highlight”
Should this be either “prove” or “serve to highlight”?
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“Stakeholder engagement, is now recognised as a fundamental accountability mechanism.”
No comma after “engagement”.
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“Effective and strategically aligned stakeholder engagement can: […] Lead to more equitable” etc.
There’s a case for rephrasing this: ““Effective and strategically aligned stakeholder engagement: […] Leads to more equitable […] Enables better […] Allows for better” etc. If stakeholder engagement is not doing these things, then it’s not effective and strategically aligned.
>> “corporations”
Do we need constancy in referring to “corporations” “companies” “organizations”? Or perhaps it’s not important?
>> Diagram: “sustainable competitiveness”
Is this the same idea as Responsible Competitiveness? If so, let’s make it consistent.
1. Purpose of the AA1000SES 2010
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“is a generally applicable, framework”
No comma necessary.
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“It provides a defined process of engagement and participation that that will enable comprehensive and balanced involvement that will result in strategies, plans, actions and outcomes that address and respond to issues and impacts in an accountable way.”
Style: way too many dependent clauses, and even a “that that”. Confusing.
2. Commitment to Inclusivity
>> “commitment to inclusivity”
Perhaps this should be capitalized throughout the section?
>> “Inclusivity is the participation of stakeholders in developing and achieving an accountable and strategic response to sustainability”
Is this sentence necessary? The rest of the paragraph seems to give a pretty good definition of inclusivity. It might be better simply to leave out the reference to sustainability (especially since in some corners sustainability is still interpreted as an exclusively environmental concept). The paragraph could run something like, “An inclusive organisation is accountable to those on whom it has an impact and who have an impact on it, and enables their participation in identifying issues and finding solutions. Inclusivity is about collaborating at all levels, including governance, to achieve better outcomes.”
3. Purpose of Engagement
>> “Stakeholder engagement is driven by a purpose.”
Posted by Jow Lindsay on 27 Dec 2009I appreciate the need to formulate precise objectives early in the process. There is a danger though that expectations will be generated which are impermeable to stakeholder input. What happens when people from the local community, engaged with on the issue of factory noise levels, want to talk about something else? What if they feel they can’t even bring other concerns to the table because the agenda obviously centres around noise pollution?
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