Methods of stakeholder engagement can include surveys (such as supplier, customer, or worker surveys), focus groups, community panels, corporate advisory panels, written communication, use of union structures and other mechanisms.

Successful engagement depends on understanding why to engage (the purpose), what to engage on (the scope), and who needs to be involved in the engagement (ownership, mandate, stakeholders). The commitment to the AA1000APS (2008) principles and the integration of stakeholder engagement into governance, strategy and operations require stakeholder engagement to be used systematically and regularly across the organisation.

Targets of Stakeholder Management are:

  • Lead to more equitable and sustainable social development by giving those who have a right to be heard the opportunity to be considered in decision-making processes;
  • Enable better management of risk and reputation;
  • Allow for the pooling of resources (knowledge, people, money and technology) to solve problems and reach objectives that cannot be reached by single organisations;
  • Enable understanding of the complex business environment, including market developments and identification of new strategic opportunities;
  • Enable corporations to learn from stakeholders, resulting in product and process improvements;
  • Inform, educate and influence stakeholders and the business environment to improve their decision-making and actions that impact on the company and on society;
  • Build trust between a company and its stakeholders;

Stakeholder engagement must have a purpose. It is essential to first think about why to engage and what needs to be achieved. No stakeholder engagement should be initiated without defining a purpose.

AA1000 SES

The AA1000 AccountAbility Stakeholder Engagement Standard (SES) – the most widely applied stakeholder engagement standard – establishes the global benchmark for conducting high-quality stakeholder engagement projects and programs.

The AA1000 SES:

  • Provides a simple, relevant, and practical framework to implement high-quality stakeholder engagement
  • Outlines how to rethink an organization’s approach to engagement by empowering stakeholders as active contributors to value creation
  • Describes how to integrate stakeholder engagement with an organization’s governance, strategy, and operations

Materiality Matrix

The Stakeholder Engagement is also important in order to set-up the  Materiality Matrix for reporting purposes. In defining material topics, the organization takes into account the following factors:

  • Reasonably estimable sustainability impacts, risks, or opportunities (such as global warming, HIV-AIDS, poverty) identified through sound investigation by people with recognized expertise, or by expert bodies with recognized credentials in the field
  • Main sustainability interests and topics, and Indicators raised by stakeholders (such as vulnerable groups within local communities, civil society)
  • The main topics and future challenges for the sector reported by peers and competitors
  • Relevant laws, regulations, international agreements, or voluntary agreements with strategic significance to the organization and its stakeholders
  • Key organizational values, policies, strategies, operational management systems, goals, and targets
  • The interests and expectations of stakeholders specifically invested in the success of the organization (such as employees, shareholders, and suppliers)
  • Significant risks to the organization
  • Critical factors for enabling organizational success
  • The core competencies of the organization and the manner in which they may or could contribute to sustainable development

As part of the key topics and concerns raised by stakeholders, this disclosure can include the results or key conclusions of customer surveys (based on statistically relevant sample sizes) conducted in the reporting period. 

Stakeholder Groups

Relevant Stakeholder Groups could be:

  • Customers
  • Suppliers
  • Employees
  • Shareholders
  • Communities
  • Regulatory Bodies
  • Animal rights activists
  • Universities
  • Organisations/associations

Stakeholder Profiling

As a first step engagement owners should systematically seek to understand each stakeholder’s knowledge of the issues associated with the purpose and scope of the engagement; expectations of the engagement; existing relationship with the organisation (close or distant; formal or informal; positive or negative); dependence (or otherwise) on the organisation, which would necessitate that the stakeholder group should be able to express its views independently of management in order to contribute freely; willingness to engage; level of influence; geographical scale of operation;

Examples:

Suppliers

  • Engagement Reason: Ensuring our standards
  • Preferred Level of Engagement: high
  • Relevant Aspects: Evaluating suppliers
  • Knowledge of Stakeholder: Medium Knowledge
  • Impact of Stakeholder on Business: Medium Impact
  • Willingness to engage: high
  • Expected claims:
    • Long-term cooperation
    • Respectful treatment
    • Openness to new concepts
    • Clear communication of standards
    • Invest in new capacities if in line with growth of the company

Customers

For many organizations, customers are a relevant stakeholder group. As well as measuring an organization’s sensitivity to its customers’ needs and preferences, customer satisfaction or dissatisfaction can give insight into the degree to which the organization considers the needs of stakeholders.

  • Engagement Reason: Understanding customer interests
  • Preferred Level of Engagement: high
  • Relevant Aspects: Labelling products and services
  • Knowledge of Stakeholder: Leading opinion
  • Impact of Stakeholder on Business: High impact
  • Willingness to engage: Medium
  • Expected claims:
    • High quality products
    • Top-service
    • Good price-performance
    • Avoid negative effects on customer site
    • Realizing better production results

Employees

  • Engagement Reason: Improving employee satisfaction
  • Preferred Level of Engagement: high
  • Relevant Aspects: Employment, diversity and equal opportunities
  • Knowledge of Stakeholder: Good Knowledge
  • Impact of Stakeholder on Business: Strong positive and negative impacts possible
  • Willingness to engage: Medium/high
  • Expected claims:
    • Fair Payment
    • Open and respectful conversation
    • Training and education
    • Work-Life Balance
    • Responsible employer

Wrap Up

If you want to identify your stakeholders and their impact to your business (or your dependence) contact us to set-up stakeholder workshops and to define the processes needed in order to engage successfully with your stakeholders. Our expertise can support your stakeholder engagement journey.

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Georg Tichy

Georg Tichy is a management consultant in Europe, focusing on top-management consultancy, projectmanagement, corporate reporting and fundingsupport. Dr. Georg Tichy is also trainer, lecturer at university and advisor on current economic issues. Contact me or Book a Meeting