During Tractivity’s 2025 Stakeholder Engagement Day, I gave a presentation on Next-generation stakeholder management - how a changing world demands so much more.
This is the third and last of three articles exploring the themes I raised in that session. You can find the first one here and the second here.
The need to focus on 'function'
In anticipating the very real changes to stakeholder management, I have considered the move towards a more strategic view of relationships, and also the different communications dynamics that are emerging.
The third trend I discern is to stop looking exclusively at the form that dialogues take, and instead to tailor their relationship management to the function that’s being fulfilled.
For most organisations, their stakeholders become involved in dialogues using a wide variety of methods. They discuss developments that affect them, attend conferences, respond to consultations or maybe research impacts and implications.
Using the best systems and leveraging the experience of those who have conducted such relations for years, these exercises take a familiar form. Stakeholders are approached using well-established methods, and they will have a shrewd idea of what the organisation is seeking to achieve.
Those objectives can vary considerably, as companies or public bodies work through their priority concerns. There are substantive aims - reflecting issues and behaviours that are relevant, and procedural aims - such as the need to develop or maybe consolidate a relationship.
The dialogue techniques themselves may actually be similar, but not necessarily so – for the reality is that to get the best from a stakeholder relationship, the trick is to act in line with the function you are trying to fulfil.
Whilst recently trying to disentangle the confusion and mistrust often found with public consultations, I developed the FOUR FUNCTIONS FRAMEWORK, which identifies the very different roles played by various consultations.
It was then interesting to observe that the four functions, in general, ALSO applied to many stakeholder relationships. Maybe it will be more appropriate to call them the FOUR AGENDAS?
Let’s consider them in turn:
1. NAVIGATION or "Where are we going?"
The really big debates are always about the direction of travel and the determination of priorities.
Historically, large organisations, whether in the public or private sectors, have often been led by charismatic leaders – usually men – who defined a vision and built the corporate mission around it. With much less turnover of executives, there were those who remained at the helm for twenty years or more, but the results were not always brilliant.
We now live in a more consensual age, and the diktat of a Top dog, or a Top team, is questioned… unless they can show that they have considered the views of their stakeholders.
Whether it amounts to a consultation or not, there are strategic conversations which form part of a NAVIGATION dialogue. They are characterised by the seniority of the active participants, the time-horizon of the issue and the wide scope of the debate. Where there is a formal consultation, there will be a requirement to offer a degree of equivalent access to all relevant stakeholders.
But where there is no such requirement, it is possible to initiate an informal programme of engagement with selected stakeholders, but the risks of ‘talking only to those who agree with you’ are obvious.
These kinds of dialogues often boil down to values and principles and can be among the most challenging and thought-provoking that an organisation can ever experience. Handle with extreme care!
2. EXPLORATION or “What are the options?”
This is the practical end of the business. If the strategists worry about the overall direction of a business or service, it is the professional backroom men and women who figure out how best to get things done.
In a sense, they are the technicians of a stakeholder relationship. The role is to identify different ways of achieving given ends, in the knowledge that ultimate decisions will be taken by others – “above our pay grades” as the jargon describes it.
Traditionally, these conversations were always confidential, but they became a problem when opponents of major decisions started questioning the provenance and wisdom of the alternatives considered. The cry for transparency in cherished public services such as the NHS led to statutory provisions for stakeholder involvement in developing proposals for change.
Simultaneously, the rise of the public participation movement and also demands for co-production meant that few organisations now propose major changes without an adequate process of EXPLORATION – if only to defend against allegations of poor judgement in making proposals.
The consequence is that many stakeholders will find themselves invited to consider different ways of doing things – through a wide variety of methods ranging from published calls for evidence to informal stakeholder sign-offs.
Many will focus on technical feasibility studies, commercial cost/revenue modelling, logistics and operational details. Not headline-grabbing, but essential preparatory work to assist the process of change and institutional evolution.
3. DETERMINATION or “What decision should we make?”
Not all organisations have to make decisions in the glare of publicity or hold a public consultation. For those who do, the strict rules of the Gunning Principles will apply, and the Courts will enforce them if the process is challenged.
Despite the prominence given to the dozen or so judicial reviews that are considered by the High Court each year, the truth is that most key decisions made by most public bodies - and almost all decisions taken by private companies - are unchallenged. There are other checks and balances to guard against corporate mistakes, including Non-Executive Directors, Advisory Boards, or, as in local authorities, Scrutiny Committees.
Few large organisations overlook the views of stakeholders. Modern management theory has long accepted that customer satisfaction can be as important as investor confidence, and the pitfalls of reputational damage are considerable if those at the top are indifferent to the impact of their decisions on others.
Unlike the ‘regulated’ economy or public services, the dialogue with stakeholders can be less formal, but it can be intense. There is scope for negotiation and for mediation between conflicting interests.
What decision-makers most need is certainty that they understand the consequences of the choices they make. It makes these kinds of dialogues sensitive and time-consuming.
4. IMPLEMENTATION or “How do we support this programme/project?”
Far away from the point of decision, and in cases, years after the event, situations arise where relations between organisations and their stakeholders are affected by the way those decisions are put into effect.
Most typically, it may be the building of major infrastructure. Construction of a major road or rail project, a power station or even a new town will take years and may well adversely impact local residents and communities. They are stakeholders with whom regular contact is inevitable, with daily attempts to mitigate or minimise the worst repercussions.
It can equally apply to the implementation of policy decisions. Government programmes or Regulators’ rule changes can have profound impacts on citizens, businesses and behaviours, and wise Managers will keep a close eye on potential unforeseen consequences; they may well institute detailed measurements and possibly create consultative machinery giving stakeholders a formal mechanism to maintain the dialogue.
Because of timescales and the inevitability that, over time, those most affected are likely to be different from those engaged with at the time of the original decision, the nature of the relationships also differs. They are more transactional, prone to unexpected developments and need an escalation path for unresolved issues.
Understanding the scope and value of the framework
The Framework does not claim to cover all possible situations, and the definitions are not mutually exclusive.
Issues between the parties may cover more than one function at a particular time, and for complex relationships, there could be several different topics where the agenda function could be different.
Its main value may lie in helping organisations understand the skills and information needed to support these different forms of dialogue.
The more complex, inter-dependent world of stakeholder management offers the prospect of more deliberative and well-informed decision-making.
But it also means that companies, public bodies and all those institutions in between have to rely more than ever before on having management resources who are well-informed on the fundamentals of best practice and with communications skills and systems to support these new ways of working.
