"Companies that build strong relationships with their constituencies – government, charities, suppliers, customers, employees – are at an advantage."
That was the finding from research conducted earlier this year by the International Finance Corporation (IFC) and think tank SustainAbility. For businesses the message is simple – you must take stakeholder engagement seriously to survive as a business in this increasingly CSR-conscious world.
Recent years have seen PR consultants developing much more sophisticated strategies. PR campaigns are no longer just about generating column inches. They are increasingly about building relationships with organisations that can inform and improve the way they operate to bring real business benefits.
But how do you ensure that you are engaging with your stakeholders – making sure they know what you are doing well? And how do you guarantee you are reaching out to the right stakeholders when you want to tap into their views, expertise or advice?
Simply identifying a list of organisations and picking up the phone is not enough. There needs to be a clearly defined purpose and desired outcome for each organisation that you want to contact. Far too often, companies set up meetings with NGOs without knowing what they want to achieve from them. Setting a clear agenda will help prevent this and ensure that discussions are focused.
Some organisations will simply refuse to see you. Friends of the Earth, for instance, has a strict policy which does not allow it to speak to certain companies. Many find this frustrating as they feel that these organisations might be better placed to change business behaviour by talking to them rather than keeping them at a distance.
Broadly speaking, most NGOs and pressure groups can be put into two categories – those organisations that aim to change business behaviour by campaigning against them, such as Greenpeace, and organisations that look to influence policy by working with them, such as WWF. But while it is tempting to shun bodies that appear to be in constant attack mode, it is important to take an equally committed approach to relations with both types of organisation.
That said, you should tailor your strategy to each type of NGO. When liaising with allies, efforts should be focused on establishing joint positions on relevant policy areas and developing opportunities to work together. Relations with critics should be based on promoting a better understanding between both organisations and establishing some common ground on issues of concern.
The importance of putting such strategies in place becomes obvious as soon as you look at what can happen to companies that fail to interact with NGOs. Some of the biggest companies in the world have suffered intense public criticism in recent years in part because they have not been open to talking to their critics. Those organisations all have a common denominator – they have an insular culture and lack systems for engaging and processing feedback from external stakeholders into business planning.
When reacting to stakeholder criticism, these companies respond through traditional media relations, arguing that the free market should decide the companies’ direction. When this approach fails to defuse the criticism, they tend to come up with home-made solutions that lack substantive external input and therefore fail to mollify critics.
Ultimately, a lack of proactive stakeholder engagement can lead to lawsuits, shareholder resolutions, direct action campaigns and in some cases, regulatory intervention.
Today, many forward-thinking businesses appreciate the competitive benefits of proactive stakeholder engagement. For these companies, stakeholders are barometers who can help the firm anticipate and respond to issues before they reach crisis point while also identifying opportunities for business growth. As investors take more interest in the ethics of business, strategic stakeholder relations can help the business ensure it is dealing with human rights, supply chain, climate change and ethical trading issues in an appropriate manner, reducing risk to brand damage in the process.
A strategic and systematic stakeholder engagement programme will help a company grow in a sustainable fashion. It can equip a business to anticipate and respond to tomorrow's social and environmental problems today, and to avoid the conflicts that can harm brands. Businesses and their PR firms that ignore this are missing out on an opportunity to gather fresh perspectives on important issues, to establish partnerships that will give campaigns credibility and to build relationships that will bring long-term business benefits.
Paul Thomas is a senior consultant in the CSR division at PR consultancy Trimedia
