stakeholder engagement

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Laurence Lock Lee / Cai Kjaer

February 2011

STAKEHOLDER ENGAGEMENT From ‘top-‐down’ Management to two-‐way Engagement

Stakeholder Engagement is a term that has historically been associated with how organisations deal with “non-‐core” external parties who potentially could have reputational impacts on them. We have a broader view of Stakeholder Engagement than the traditional focus on non-‐core external stakeholders.

In this paper we describe our Stakeholder Engagement Framework and its practical application. The framework covers stakeholder assessment, gap analysis and stakeholder relationship mediation using network analysis techniques.

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www.optimice.com.au 1

STAKEHOLDER

ENGAGEMENT

From ‘top-‐down’ Management to two-‐way Engagement

INTRODUCTION Stakeholder Engagement is a term that has historically been associated with how organisations deal with external parties who potentially could have reputational impacts on them. For example, in resource rich countries like Australia, Africa, Canada and South America, mining and resources companies regularly report as part of their corporate responsibilities, their investments in communities, environmental sustainability and regulatory compliance. These stakeholders however, would typically be viewed separately to their “core” stakeholders such as customers, employees and suppliers. Core stakeholders will be identified by roles and orchestrated within designed mainstream business processes. The “non-‐core” stakeholders will more regularly be managed through corporate functional units and have more of a “public relations” than a “business process” flavour.

Engagement vs Management We have a broader view of Stakeholder Engagement than the traditional focus on non-‐core external stakeholders. Our definition of Stakeholder Engagement stretches to any entity, role or person who can have an impact on your performance. We are therefore extending accountability for stakeholder engagement to all layers of management and not just the Public Relations department.

We resist the tendency to lump it together with “Stakeholder Management”. This term is “Top-‐

Down” organisational thinking, relegating stakeholders to objects to be swayed to meet your objectives. The “Engagement” term is critical. It infers two-‐way value exchanges that builds reciprocity, trust and provides the opportunity to leverage the co-‐operative efforts of fully engaged stakeholder teams. Finally, we take a more realistic view of identifying and engaging stakeholders than say a typical stakeholder management approach might take.

Typical Stakeholder Management approaches are “star’ networks with you at the centre and your identified stakeholders linking into you. We believe this is unrealistic. Stakeholders will have many influences and competitive calls on their time and attention. Unless we understand the influence “network” or “ecosystem” around our stakeholders, we cannot fully appreciate how we can best influence or engage with them.

BUILDING ENGAGEMENT Engagement Framework We start with a framework, which describes the principal steps in our Stakeholder Engagement

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process:

Select Stakeholders and draw Influence Map We start this process by identifying an overall “goal” or “mission” for the stakeholder group. This could be something like “improving community outcomes”, or “reducing the overall cost of maintenance of trains” etc.

We then identify a set of roles that you feel can influence your role’s performance. We then conduct an on-‐line survey of these stakeholders to enable them to nominate who they believe their key stakeholders are.

The surveying may have to be done in rounds as the initial survey results will uncover new stakeholders in the ecosystem.

Using the data collected we are then able to draw a visual map of the stakeholder ecosystem and to also plot where these stakeholders lie on an Influence/Advocacy/Attention map.

The influence network map will show who the key influencers are in your stakeholder network. The number of other roles that nominate them as influencing roles, sizes the nodes. If you have

nominated as your key stakeholders some of the larger nodes, you will quickly appreciate the competition that you will have for their attention.

We can also take this data and show a generic graph of where each stakeholder exists on the Influence/Advocacy space, with the level of attention being denoted by the relative size of the circles.

Promoters In the top right hand quadrant we have the “Promoter” stakeholder roles, which have been nominated as having the most influence and also being the highest advocates of co-‐operating roles, in achieving the nominated goals or mission. In your role you should see that these roles would be important for you to engage with, as they are likely to be the most productive in helping you meet your performance aspirations.

Opponents The top left is labeled the “Opponents” quadrant. They are seen as highly influential, but are generally poor advocates of the other stakeholder roles. This could be because they have received little attention or been overlooked by other stakeholders. The task here is to convert these stakeholders into Promoters, possibly by providing them with more focus and attention.

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Friends The bottom right quadrant is labeled “Friends”. These are roles that advocate highly of other roles in achieving the goals, but unfortunately do not play a very influential role in achieving them. They could however, be used to help with say, turning an Opponent into a Promoter.

Minority Finally the bottom left quadrant is the minorities. These stakeholders have little influence and also don’t advocate highly for those that do. The biggest danger here is giving them too much attention, potentially at the expense of attention that could be placed with the more influential stakeholders.

It’s worth noting here that it is not essential to survey all stakeholders. The first round of surveying can be used to populate an initial Influence/Advocacy/Attention chart. It is only preferable to ensure that those located in the influential quadrants have completed the survey. In the next prioritisation task you can see why.

One and Two-‐way Relationships The influence, advocacy and attention relationships in the survey are one-‐way i.e. you have nominated a level of influence, advocacy and attention to a particular role. They may -‐ or may not -‐ have reciprocated those relationships and therefore the relationship would essentially only be one-‐way. We believe that the strongest most trustful stakeholder relationships exist when attention or focus between roles go both ways, i.e. are reciprocated.

Consequently, where we see that one role is providing significant focus to another role and that attention is not being reciprocated, then this relationship is a strong candidate for improvement. If the relationship involves a high influence stakeholder, then the improvement need is amplified. We therefore assess each of the high influence roles to look for relationship

improvement opportunities by identifying non-‐reciprocated attention relationships:

The stakeholder map above shows identified links to the Social Worker role. The thickness of the lines reflects the relative level of attention or focus. The map shows that the social worker role maintains reciprocal links with Community Engagement and Employment Services. However they have a non-‐reciprocated link with the Customer Service Centre role, suggesting a lack of attention to their needs by that role. It also shows a dependency on the Social Worker by the Multi-‐cultural officer, which is not reciprocated. In this case the Multi-‐cultural officer role may feel a lack of attention from the Social Worker role. It therefore becomes clear that non-‐reciprocated links are the most fertile areas for improving stakeholder engagement. We aim to take these relationships into the Value Flow Analysis step.

Value Flow Analysis The aim of this step is to facilitate the identification and negotiation of viable value exchanges that can both enhance the relationships as well as contribute to the overall goals or mission. We start this process by inviting each role to brainstorm potential value flows, both tangible and intangible, to and from the identified partner role.

For example, we identified a gap in the relationship between the social worker and

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customer service adviser roles. We would ask those representing the social worker role to brainstorm the value flows that they could both provide and/or receive form the customer service adviser role. We would do likewise for the customer service adviser role.

In workshop settings we use these cards to enable the roles to record proposed value flows.

Tangible and Intangible Value We emphasise that value can come in two forms; tangible and intangible. The tangible flows tend to be the expected deliverables that would typically find their way into a business process flow chart. We also however emphasise the need to identify the intangible, informal or non-‐contracted value flows that are typically relationship based.

These are usually volunteered in trusted relationships and could include hints, tips, informal advice, intelligence, feedback, forecasts, moral support, proactive support and the like.

To help identify these critical intangibles we ask the role representatives to think about times when they have had good relationships with fellow workers and those that have been poor, and to then reflect on what relationship aspects might have been missing in the poor ones.

We also ask the roles to identify a “cost or risk” rating for those value flows that they are

providing, and a “value” rating for those that they would like to receive.

Cards on the table Once each role has completed its brainstorming, we then schedule what we call the “Cards on the Table” session. This is simply a session where the roles meet and exchange brainstorming cards. Each role will assimilate the perspectives of their role partners.

Hopefully they will find some common ground, which typically is around the tangible flows. These can be put aside as “quick wins”. The differences however, are fuel for discussion and negotiation. Effective discussion will help articulate a common understanding of each other’s needs and requirements. The stage is completed when a set of agreed value exchanges have been negotiated with an allocated relative cost/risk and value rating on each card.

The quick win cards along with the negotiated cards represent the “promises” that the roles have made to each other, that if met, will lead to a more trustful and engaged stakeholder relationship and a more productive outcome toward the identified goal or mission.

Action Planning At the completion of the value exchange sessions each role will still have some work to do to meet the commitments they have made to their partner role.

The first activity is to communicate the commitments made to others that conduct the role. In our case study the social workers and customer service advisers involved in the value exchange negotiations needed to communicate the results to their fellow social workers and customer service advisers.

Within their roles they will have to discuss and agree on actions they will need to take to meet their promises.

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In our experience it is often the case that intangible flows are less costly to deliver. The actions are often just being aware of how valued they are by the other role. This could be simply something like keeping them appraised of an evolving situation, scheduling a ‘coffee’ session to share insights or intelligence etc..

Tangibles value flows, like the provision of new information, may need more significant effort. That said, it is also our experience that some existing activities that have been routinely done, like the provision of a standard report, are often not valued by the receiver any more and they had just not gone to the trouble of telling you. So it is likely that the new efforts required would be balanced by other wasteful activities that can be dispensed with.

Implementation In the “Top Down” organisation there will invariably be top down business plans that have been created and scorecards implemented to assess the performance of employees in delivering against the targets set. These will articulate outcomes expected of you, but unfortunately provide virtually no assistance on how they are to be achieved.

In many organisations these scorecards can actually put departments in direct competition with each other.

For example, a mine operations department will have targets to maximise production. Their fellow maintenance partners will have a target to minimise machine breakdowns that may require taking machines off-‐line for maintenance, therefore reducing production in the short term.

They clearly need to co-‐operate for the bigger mission, but top down scorecards rarely directly address the peer-‐to-‐peer relationships required to deliver on the overall mission.

In fact it is often left to the senior executive to adjudicate on the arguments and squabbles that inevitably arise.

For effective stakeholder engagement it is the peer-‐to-‐peer commitments that deliver organisational value. Therefore we need a new type of scorecard that is not top down, but facilitates the achievement of stakeholder commitments of which line management are just one. Our Partnership Scorecard™ is simply the collation of the value exchanges negotiated in the previous stage.

It articulates the deliverables that have been agreed to between roles. The assessment of performance against these commitments can be formally requested from the receiving role. Alternatively roles may choose to use the commitments identified in the Partnership Scorecard™ to self-‐assess their performance. Simplistically each stakeholder role may be surveyed to review the value flows that it has nominated to receive, and provides that feedback to the providing role.

The above example shows the ‘SOC’ role being asked to rate the deliverables it has been nominated to receive. The alternative implementation is for each stakeholder role to be provided with the value flows it is responsible for and for them to self-‐assess their performance.

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Either way the Partnership Scorecard™ provides an overview of how effectively the peer-‐to-‐peer stakeholder relationships are performing.

Unlike to top down scorecards, each stakeholder is both a provider and a receiver and therefore will be both assessing and receiving feedback on value exchanges. The intention is not to replace existing scorecards, but to provide an important complementary tool to the traditional top down scorecards.

SUMMARY In summary, what we have described here is a unique approach to Stakeholder Engagement. We have broadened its definition from one that deals with predominantly external agencies, to one where it is central to working relationships across and beyond the enterprise. We have introduced from social networking the ability to visualise the full ecosystem of stakeholder relationships for analysis. We use social network analysis principles to identify relationship gaps, based on the lack of reciprocation. Finally we include concepts from value network analysis, which enables us to provide a mechanism for stakeholder roles to effectively negotiate and sustain productive partnerships.

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ABOUT OPTIMICE Optimice provides specialised consulting services to help organisations map and improve business relationships at multiple levels. Optimice identifies relationship patterns between people, organisations or markets, and we have improved the basic techniques to optimise these relationships in a compelling business-‐focused context.

Our Partnership Scorecard™ helps organisations manage the intangible relationship aspects of outsourcing, smart sourcing, alliances, joint-‐ventures and similar complex business frameworks.

Our specialized survey tool www.onasurveys.com provides consultants and other practitioners the most effective and user friendly tool available on the market to collect data on business relationships.

Optimice Pty Ltd.

23 Loquat Valley Rd Bayview NSW 2104 Phone +612 8002 0035 Fax +612 8213 6274 www.optimice.com.au ABN 92 123 562 854

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