The challenge of... engaging stakeholders

Leaders increasingly realise that success or failure, or achieving business objectives, depends on, and is also defined by, maximising support from (or at least minimising opposition!), or winning the hearts & minds of, a potentially long and varied list of key stakeholders.

Organisations often articulate their approach to this challenge as…

managing stakeholders
stakeholder engagement; engagement of stakeholders
ways to engage with stakeholders
influencing stakeholders
stakeholder management
corporate diplomacy

Definitions
Examples of stakeholders

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A “stakeholder” can be defined as “someone that is both affected by and can affect what you are trying to achieve.” Others might say “parties with a legitimate interest in your initiative”. They are also referred to as “allies”, “constituencies” and “decision-makers”.

Stakeholders can be characterized by their level of engagement or buy in, their level of influence, and their level of power.

Stakeholders can be prefixed in a variety of ways:

key stakeholders; important stakeholders; major stakeholders
affected stakeholders; interested stakeholders; relevant stakeholders; potential stakeholders
internal and external stakeholders

Board members
Business partners
Customers
End users
Government agencies
Industry associations
Legislators
Local communities
Management team
Non-governmental organisations
Senior management
Shareholders
Suppliers
Trade unions

Effective stakeholder engagement
is necessary in many contexts, including:

It is now widely understood that corporations can only create long term shareholder value by creating value for all their key stakeholders: employees, customers, communities, etc. Stakeholder engagement has accordingly become an increasingly important strategic leadership capability.

International mining companies, for example, increasingly understand that they can only develop and operate new projects by securing and maintaining a “social licence to operate”. Winning the hearts and minds of a wide range of local, national and international stakeholders, through effective and transparent stakeholder engagement, has become a critical capability across the natural resource extraction industries especially.

Understanding and quantifying the potential costs of stakeholder opposition, or managing “stakeholder risk” is a key aspect of “Corporate Diplomacy” - the senior-level capability to develop relationships with external stakeholders with the ultimate aim of protecting corporate reputation and shareholder value.

Real world challenges

Prendo’s customers face many challenging situations when engaging stakeholders:

Winning hearts & minds is a critical challenge for us

We are working with an increasing number of stakeholders, over whom we usually have little or no authority

We don’t always know how to prioritise our stakeholders, or how to balance their opposing interests

Stakeholder engagement, both internal & external, is one of the key strategic challenges that our business leaders face

Our leaders work in an increasingly complex world, with environmental, social, ethical and sustainability dimensions to consider

We are much better at planning the technical aspects of our projects compared with the stakeholder (human) aspects

Advanced simulations can help leaders address these real world challenges

At Prendo, we believe that the complex skills and deep understanding that are needed for engaging stakeholders are best developed with advanced simulations that provide accelerated experiential learning and the opportunity to explore the underlying cause and effect models.

Talk to us to understand if our simulations can address your specific challenges

Learning to engage stakeholders

To address the challenge of engaging stakeholders, leaders need a combination of skills (know-how) and understanding (know-that), in the same way that the driving test combines the practical and the theory:

leaders need to be able to…

identify key stakeholders
prioritise and classify key stakeholders
develop detailed stakeholder analyses or maps
balance conflicting stakeholder interests
initiate a stakeholder dialogue
consult and communicate effectively with different stakeholders
work with stakeholders to ensure their involvement
quantify and maximise stakeholder support

as part of an overall approach to or process or strategy or plan for engaging stakeholders

leaders need to understand…

the wide range of interests and motives that can determine stakeholder attitudes
the dynamics and complex nature of ‘social systems’
what stakeholder engagement plans should include
the numerous factors that can be included in a stakeholder analysis
what “success” means in multiple stakeholder contexts