Tagged: Stakeholder Management

Formalising Stakeholder Relationship Management in an Organization

36322_3149I recently had an interesting conversation with a manager that had been tasked to formalise stakeholder management in his organisation (a Bank).

Without being able to do an in depth analysis of the specifics and needs of the bank, I summarised his basic needs as:

1. There is a need to start a strategic conversation process in the Bank about Stakeholder Management

2. Stakeholder Management are currently fragmented and there is a need for a more unified and strategic approach to its management

3. Special Focus needs to be placed on changing social reputation issues and stakeholder actions

This is what I suggested to improve stakeholder relationship management within the Bank.

My approach has always been to marry the discipline of Stakeholder Management with that of Corporate Reputation Management . I believe that that is a sound approach – after all an organization’s most important asset is its reputation, yet it is also its biggest risk.

My approach rests on the fact that an organization’s reputation is derived from the way that an organization is seen, heard about, spoken about and written about by stakeholders.

Reputation Risk emerges when the reasonable expectations of stakeholders are not met when it comes to performance and behaviour. Thus, if an organization wants to optimise its reputation, it has to carefully manage the interplay between and relationships with various stakeholders.

Whatever is done in Stakeholder Management impacts directly on the reputation of the institution. It is much like juggling a number of balls. I believe that my interventions and consulting approach has something powerful and dynamic to add in that respect.

There are some clear benefits from what I suggest. I think that this process will enable you to raise the profile and positioning of the department (I am not suggesting the building of an empire – but more a knowledge management capability – one of influence and real power – not position power per se), raise the department’s level of influence and ultimately make an indelible impact on your own and the department’s reputation.

Here are the Stages of the Development Cycle as I see them:

Stage 1: Create a Common Reference & Framework

Ask any manager or SME in the Bank to define the word Stakeholder Management to you. Ask them what the Universal Clarkson Principles of SRM (Stakeholder Relationship Management) is about. Would I be right to say only a handful will know? Do the staff in CSI and Issues Management know these concepts? Do they know how important it is, to redefine stakeholders based on an issue or project every single time?

So the first objective will need to be to raise levels of awareness and understanding through the development of common definitions and terminologies. That we can do through a number of high-level presentations, workshops and other inclusive interventions.

1.1. Expose the Board and Executive Team to a short intervention (1 hour to 3 Hours max on Stakeholder Reputation) Reason: Waterfalls flow top to bottom

1.2. Expose the Marketing, Corporate Affairs and Communication team members to the concepts and ideas of Stakeholder Reputation Management by getting them to attend 2 day workshops on SRM (Example course outline –  http://stakeholderreputation.invite43.com/). The reason I suggest this is that they are involved in aspects of stakeholder management and can act as catalysts to further the approach in the Bank – like a virus spreading.

1.3. Expose BU Executives, Line management and HOD’s to the concepts and ideas of Stakeholder Reputation Management by getting them to attend 2 day workshops on SRM . To do this will need high-level management commitment and support, liaison with Learning & Development, OD, and Performance Management executives.

1.4. Start a common language process within the Bank by using vehicles such as the internal newsletter and tools such as the Intranet to get the message out there.

1.5. Develop a Series of Management Protocols and Guidelines (The Strategic Rules of Engagement that I call them) that can be used as reference points in the Bank on how to establish relationships, leverage and enhance those relationships with Stakeholders (Please note that I did not say manage – I don’t think you manage a relationship, you can manage the people involved, the processes, the tools but not the relationship – if you differ of the opinion let’s debate it). These guidelines can be used as training, coaching and performance management tools and incorporated into the knowledge management system of the Bank.

The information for these guides will essentially come from the workshops that I run and record as well as literature research and other information, and the on-going communication from delegates as they deal with stakeholders and share that information with us.

Stage 2: Formalise Stakeholder Management

2.1 This stage will include a more standardised approach to measuring stakeholder relationships and will entail the development of measurement criteria and tools – as I suggested a type of dashboard effect. (It is at this stage where I see decisions be taken about the positioning of SSRM in the Bank).

2.2 It will entail the inclusion of Stakeholder Management into the Bank’s existing Performance Management system such as Balanced Scorecards etc.

My reasoning is that you cannot hold an employee accountable for relationships with stakeholders if you have not empowered him or her with specific knowledge on how to do so.

I used the example today of diversity training. Diversity training is a form of stakeholder training as it empowers people to understand their own inherent prejudices, deal with them and move on in ways that can only be positive.

Most important this whole process needs a Champion. Someone that will be prepared to take risk and have the passion to push for this within the Bank. This is a pivotal role. In my 25 years of internal and external consulting any process without a Champion have little chance of succeeding. (As Guy Pinchot wrote years ago: “Change activates the Corporate Immune Response”. You need to deal and push through those boundaries).

These are my immediate thoughts. Based on experience, this is not an overnight or a singular workshop experience. It will need resource application – dedication of effort, time and expertise.

Powerlines Number 90 – The newsletter for Reputation & Stakeholder Managers available for download

The 90th edition of Powerlines is now available for download. This newsletter aims to provide you with timely, accurate and useful information to help you build, sustain and protect your organisation’s reputation.

Powerlines currently serves more than 8500 international and local readers! It is an opt-in newsletter list and comes at one cost – the time to read and share it! Please feel free to forward it to someone that may benefit from the content.

In this Issue

  1. Quotes & Thoughts – Alltop
  2. What Type of Reputation Management Consultant are you?
  3. How to Write and Implement a Media Policy
  4. The Implications of the King Code 3 on Stakeholder Management
  5. What is the Definition of Effective Risk Management?
  6. Manage your Stakeholders…Manage your Reputation Event invitation
  7. The Meanings of Words are in People’s Heads and not in the Words they use
  8. Develop a Breakthrough Marketing Action Plan for 2010
  9. I want to speak at your next event!
  10. Introducing REPUCOMM – The Reputation Management Training Specialists

Access Powerlines by clicking the following link


No organization can state that they have no stakeholders!

Last week I sent out my Powerlines newsletter Number 90 – a newsletter for Reputation Managers and those involved in stakeholder management.

Like any newsletter it always gets its own fair amount of subscriptions and unsubscriptions. However what got me this time was an e-mail from someone that stated the following:’’Your newsletter would be inappropriate for us as our business is not affected by your content”.

Now I don’t mind unsubscriptions and would rather have a targeted list of readers, but if ever I needed to take an exception over a statement it was that one.

The statement that any business would not be affected by the content is wrong. Knowledge, awareness and understanding of stakeholders and the reputation management process can only be beneficial for any organisation, no matter its size or stature.

No organization can state that they have no stakeholders. In fact it is useful to revisit the definition. Stakeholders are anyone, group or individual that can affect or is affected by an organisation’s behaviour, actions and performance. There is thus a fine interplay of factors to manage if an organisation wants an excellent reputation.

An organisation derives its reputation from the way it is perceived by its stakeholders. They will evaluate your actions, performance and behavior, and will in turn act reciprocally by either buying your products, recommending you, using your services or acting towards you in a favourable manner.

It is these actions that are important. You want stakeholders to say good things about you and your organisation, you want them to work for you and be loyal if they are an internal stakeholder, you want to be able to source funding when you need it because you have a good image and reputation in the eyes and minds of the shareholders and financial institutions.

In the world of the interconnected economy, the reputation of an organisation has become its biggest asset and risk. Research clearly shows that these days that reputation is a function of the communication with stakeholders, the understanding and perceptions they have about your business and the levels of relationships that have been fostered.

It makes the management of the stakeholder interface a strategic and vital one for any organisation. In fact, it has become so important that the new King Code 3 of Corporate Governance makes specific reference to it in Section 8. Although the Code is not enforceable it sets forth standards of good practice and provides guidance that will shape dealings with stakeholders in years to come.

Section 8: The Governing of Stakeholder Relationships spells out certain practices, as follows and I quote:

  • Section 8.2. 1 Management should develop a strategy and formulate policies for the management of relationships with each stakeholder grouping. This implies that an organisation has a formalised stakeholder management model or system in place and that due thought has been given to dealing with each relevant stakeholder. A Good example of this is the difference between working with the Government stakeholder versus the Media Stakeholder. Deadlines for these two stakeholders differ. The Media stakeholder is always on deadline, whilst in Government, decisions go through a consultative process that includes strict use of protocol. Thus you cannot manage these different stakeholders appropriately unless you understand the different rules and nuances of the stakeholder game. It is these types of issues that I also address in my Stakeholder Reputation courses.
  • Section 8..2.2. The board should consider whether it is appropriate to publish its stakeholder policies. Some companies like BHP Billiton have this information in their HSE reports and on their websites. They thus demonstrate their commitment to positive relationships based on trust, openness and transparency.
  • Section 8.2.3. The board should oversee the establishment of mechanisms and processes that support stakeholders in constructive engagement with the company. There are many ways to engage. These methods are influenced by timing, decisionmaking resources and other issues. Again, due thought needs to go into deciding which engagement tools are appropriate and under what circumstances. The use of Facebook and other social media technologies are not by the way just a communication or an IT bandwidth or security issue, but falls right into the domain of engagement.
  • Section 8.2.4. The board should encourage shareholders to attend AGM’s and Section 8.2.5. The board should consider not only formal, but also informal, processes for interaction with the company’s stakeholders are dealt with above.
  • 8.2.6. The board should disclose in its integrated report the nature of the company’s dealings with stakeholders and the outcomes of these dealings.

All these specifications implies that a company will need a formalised stakeholder management system*** in place, in order to comply and adhere to these recommended practices. The Code also goes on to say that the board should take account of the legitimate interests and expectations of its stakeholders in its decision-making in the best interests of the company.

This means having a different set of criteria when making decisions – see my blog post called Which Decision-making Model are you using?.

However adhering to these recommended practices will be far from easy. Traditional company models rely on functional layering, whilst the skills and approach needed to manage a Stakeholder system will necessitate a systemic model, one in which a person will be required to work across departmental boundaries.

Company processes and practices will also offer their own set of restrictions. In my blog posting of 26 March 2008 I asked the question: ‘‘How much are you spending on Stakeholder Relations?.

I had few responses, and those who did, could not tell me how much they were spending on each stakeholder group, nor what the ROI was. This will be a problem in the future, because what we try and do in stakeholder reputation work is to influence perceptions and ultimately affect stakeholder behaviour. Spending money on these relationships are not wasted. Spending money on learning how to maximise these relationships will not be a not a waste.

Planning and managing the Stakeholder function will need to be done systematically and with great strategic insight.

So to conclude to the reader who unsubscribed. In my newsletter I try and raise awareness of these type of issues and topics. Whether you like it or not you will affect your stakeholders and they will in turn affect your reputation.

*** Here is a quick test for you. Can your management team answer the following strategic questions:

  • Who are our stakeholders?
  • What are our stakeholders’ stakes?
  • What opportunities and challenges do stakeholders present?
  • What economic, legal, ethical, and social responsibilities does our organisation have towards our various stakeholders?
  • What strategies or actions should we take to best manage stakeholder challenges and opportunities?
  • Do you have a system for managing relationships with stakeholders?
  • How do you measure results? What metrics do you use to assess and gauge stakeholder relationships?
  • In a crisis how quickly can you communicate with your relevant stakeholders?
  • Do you know the various methods to engage with stakeholders and when not to use it?
  • Can you state how much you are spending on each stakeholder group and what your ROI is?
  • Have you developed a set of rules and practices on how best to manage the process of building stakeholder reputation with each stakeholder group?

If you need more help to understand this, take a look at this site: http://stakeholderreputation.invite43.com