How do we explain to the CEO that stakeholder engagement is of value?

22 july 2014

5 answers to the most frequent criticisms
How do we explain to the CEO that stakeholder engagement is of value?

The G4 on sustainability reporting places many CSR Managers in an overwhelming position with the need to convince their CEOs, or communication team, to undertake external engagement processes. It is a challenge that sometimes ends before it begins because the engagement is quickly categorized as a loss of time and therefore money, because it is not appropriate for the company to speak directly with stakeholders when there are bodies to do so, risky because the stakeholders do not understand the technical aspects, dangerous to the risks of political manipulation, not applicable to the Italian context, etc..

After more than twenty years hearing these responses, I would like to put together some useful information that I have gathered over time to counter these claims because in fact they are not supported by empirical data or scientific evidence.


1. Involving stakeholders is a waste of time and money.


This poses the question the other way regarding a situation far more common: how much does not involve stakeholders? Assume a conflict that is delaying the process authorization and, in particular, begins to deal with what is costing the company. Direct costs may include lawyers, engineering firms for design adjustments and the updates of the authorization processes, media relations, senior management time diverted to the business but, more importantly, costs related to delay in completion of the work and therefore increase borrowing costs and delay in revenue generation. We often speak of millions of euro also for medium-size projects. I omit the indirect costs associated with the effects on reputation. For a more structured reference one can utilize authoritative sources such as Harvard, Gallup, Wharton School, etc.


2. It is not the company’s place to talk with stakeholders when there are intermediaries in place to communicate.


We are faced with thinking about the complexity of the relationships in which a company is immersed. The famous Italian story of “Peppone and Don Camillo”, who were able to converge conflicting ideas and therefore represent the expectations of an entire community and the interests are many. There are also countless facets that offer an infinite number of channels of communication and discussion on media both traditional and social. Is there hope that all of this complexity is in a state of rebuilding existing institutional settings that generally have a narrow level of credibility and authority?


3. Stakeholders may not enter into a discussion of technical aspects.


This statement often reveals that our party has never witnessed a process of involvement. To describe the miracles of learning processes we think of the doctor speaking with a patient especially if the disease is imported by gravity or healing time. As time went on, after a learning process, the patient with the doctor converses with a much lower level of skills but enough to decide whether to trust or change doctor. In other words, in the processes of decision support, such as those of engagement, it is not necessary that the parties have the same level of competence to interject in a productive way.  Otherwise, how would policy makers be able to make decisions?


4. Dangers of political manipulation.


And it is strange to think that exclusive relationships with the policy-maker generate less risk of manipulation with respect to the alternative to maintain relations with a wide audience of stakeholders of associations and the public, university, etc., at least by virtue of a process of differentiation of the risk that, with good sense, doesn't put all eggs in same basket (that of the politicians).


5. On the applicability to the Italian reality.


But is it really scientifically or at least empirically possible to think that Italians are so different from inhabitants of the whole rest of the world where stakeholder engagement is practiced? In cases in Italy there are many. HeraLab is a demonstration of the productivity of these processes also exhibited in Italy.


Ultimately  - is stakeholder engagement worthwhile? Yes, except to those organizations that have thus far too much to hide and should continue to do so to ensure future viability.


By C. Cici