"Engagement of the stakeholder, regardless of who they are, should be your first move. When we are not engaging, we don't know that stakeholders are thinking."
Ray Kerins of Bayer made this comment during a recent interview with PR Week about his role as the German pharmaceutical giant's head of communications. However, the statement rings true for just about any organisation, in both the public and private sector.
The profile of stakeholder engagement is rising in 2015. The issue has been high on the agenda across public sector departments for years, but private firms are starting to catch up. In perhaps the most prominent example, many companies are now under pressure to move beyond the box-ticking model of compliance and make their sustainability/CSR programmes meaningful. This makes it essential to foster balanced dialogues and productive relationships with stakeholders.
So they might be late to the party, but a growing number of firms have recognised that engaging stakeholders on the ground is not an optional activity. Companies are dealing with a relatively new kind of stakeholder in the modern business environment. Fuelled by the 24-hour news cycle and the immediacy of social media, today's stakeholders are more informed, engaged and willing to participate in the conversation than ever before.
So private sector organisations must face up to the challenge of improving their stakeholder engagement strategy, and they can learn a lot from the public sector. As Petra Kuenkel of the Collective Leadership Institute observed in a Guardian article back in 2013: "There is an increasing tendency for companies to do what good governments already do: become better by engaging their stakeholders."
Of course, there is also scope for public sector organisations to extract lessons in engaging and managing stakeholders from their private sector counterparts. A common obstacle for businesses, as Kuenkel identified, is the sheer volume of stakeholders and the associated uncertainty about where engagement efforts should be focused. Customers, suppliers, employees, local communities and investors are all stakeholders with the potential to engage with their organisation - but each group has different expectations and levels of interest.
The stakeholder engagement process
This is one area where companies can perhaps learn from public sector organisations, while members of the latter group have an opportunity to revisit and refine their own strategies based on experiences in the private sector. Although Kerins' advice is to engage the shareholder "regardless of who they are", Kuenkel noted that lack of focus is likely to derail sudden attempts to reach out. "Stakeholders are often involved inappropriately, without focus and without the adequate processes," she commented.
One solution is to identify all stakeholders and group them in one of four categories, defined by their level of interest in the project and the extent of their influence. The example below is based on the stakeholder engagement priorities of an NHS Commissioning Group (explored in greater detail in our Transforming Public Sector Stakeholder Engagement guide). However, the process can also be applied by private sector organisations.
This exercise makes it clear that different types of stakeholders need to be engaged for different purposes. Some need to be informed of developments but will rarely engage directly with the organisation's activities, others need to be consulted and will provide regular feedback, while others will actively collaborate with the organisation to achieve its objectives.
To succeed, organisations need a stakeholder management tool with the capacity to support each of these purposes and build relationships with each stakeholder group.