Does one need a stakeholder strategy?
Indeed, does such a concept exist? Or is it just the plan that drops down from one’s business strategy? Is it perhaps just a mirror-image of your aspirations for the business you are running? Or the services you are providing?
The term ‘strategy’ is almost certainly over-used anyway.
Lurking precariously between one’s top-level mission and the day-to-day activities that constitute the operational part of your organisation, a strategy is usually the route-map we follow to ensure that your overall objectives are achieved.
If the mission is to make money by selling and servicing motor cars, then the strategy will probably determine whether one invests more in the pre-sales or the after-sales. If you are in public service and the overall requirement is providing world-class treatment in an aspect of health /wellbeing, your strategy will no doubt be about getting the best possible outcomes from the available investment, be it in people, skills or technology.
In short, strategies are usually about choices, and ways to optimise the use of scarce resources. In the military context - or in a competitive commercial world, they may be about identifying the enemy/competitor’s weaknesses and leveraging one’s own assets and resources to gain maximum advantage.
If the term is compatible with your organisation’s culture, then by all means have a stakeholder strategy; if it’s counter-intuitive, we just talk about the approach you take to managing your stakeholder relationships.
This is often where organisations begin to introduce more formal stakeholder mapping and tracking, (ideally) supported by dedicated stakeholder management systems, to bring consistency to what would otherwise remain an informal process.
Strategic appraisal
The starting-point has to be an assessment of the importance of your stakeholders. Which ones are likely to be critical for your success. And how vital is it to get them on board?
At one extreme, if you are a determined entrepreneur with a brilliant idea, your start-up venture may just need energetic marketing… and you are away! Your most important stakeholder may be your single investor!
At the other extreme, if you are operating in a highly-regulated environment, you may be constrained by all manner of rules and regulations and confronted by gatekeepers at every turn. There, you face a complex set of multiple stakeholders – all of which can stop you in your tracks.
Most organisations are somewhere in between. It’s one reason why stakeholder mapping is a such a key element in any serious stakeholder management.
Such an exercise should identify whether you have a handful of stakeholders. Or thousands of them? And whether they are ‘generic’ – a ‘type’ of individual or a ‘type’ of organisation, or specific. For example, it is a strategic choice whether to engage with Members of Parliament or local Councillors collectively or individually. There are substantial resource implications according to which is chosen.
Aligning objectives
One of the perils of the age is that private Companies and public bodies pursue far too many different objectives. Often conflicting ones!
I once met an NHS Chief Executive who had studied all the Ministerial diktats, guidance notes and other instructions and calculated that she had been given over 50 ‘top’ priorities. Even leaving aside such absurdities, core objectives are now often overlaid with supplementary ones, pursuing social or environmental goals. All no doubt worthy, but adding complexity, and often requiring difficult trade-offs.
This is where a comprehensive understanding of your stakeholder base can help. Some of your interfaces may be indispensably critical to one of your objectives, but quite irrelevant to another. A stakeholder strategy, therefore, has to acknowledge the different roles they might play in your business mission.
In practical terms, you need a separate stakeholder mapping for every significant strategic business objective. Armed with this analysis, you can align each strategic objective with an appropriate way to engage with the relevant stakeholders.
Making choices
All other things being equal, you will expect to devote more resources to stakeholders that will most help you reach the most important objectives of all.
If your organisation is vulnerable to being amalgamated with another, and your Board decree that its most important objective is to maintain its independence, then it would be expected to focus almost entirely on those whose opinions might help avert the unwanted change! Similarly, a company facing difficult trading in its home market might choose to put its international operations ‘on the back-burner’ and place some of its overseas relationships on a ‘care and maintenance’ basis.
The trouble is that one cannot switch stakeholder engagement on and off as when turning a tap. Sales managers are accustomed to switching focus from one product to another or one market sector to another, but managing stakeholders is unlike this.
Developing and nurturing the right level of relationship is a different Investment profile - subtly different skills, specific domain knowledge and longer timescales.
As the ROI (return on investment) is quite disconnected from the recruitment/retention cost - and relies upon achieving those overarching strategic objectives - the process becomes time-sensitive.
How damaging it can be to neglect a stakeholder who may be less critical for this year’s business objectives, if, in two or three years’ time, their support might become pivotal, and you have lost the intimate links you once had.
The long-term
This is why successful stakeholder strategies should always be set against a long-term context, and why they need to be insulated from the day-to-day switchbacks of an ever-changing commercial or regulatory environment. This is why governance matters.
An overseeing mechanism such as a sub-committee of the Main Board or a special group with strong non-executive representation could prove effective in underwriting a Stakeholder Strategy. It should also determine how performance should be measured.
This is far from easy, as the effort/reward formula is so tenuous. But if we are to motivate your stakeholder management teams to provide the best possible relationship platform for successful business outcomes, there must be effective, measurable targets.
There is no shortage of operational metrics, including the number and nature of interactions, attendance at meetings, sentiment measures and of course perception surveys of the stakeholders themselves.
Advanced stakeholder management systems such as Tractivity are adept at supporting client-specific scorecards or dashboards so that organisations can routinely monitor their activities. But in a good strategy, the emphasis should seldom be on the ‘here and now’ but more on the pursuit of outcomes in the long-run.
Strategy ownership
Here is the ultimate issue. A strategy can be useful as an internal, voluntary statement of direction, just a little broader than an annual plan. But to make a real difference, it should not be owned by the stakeholder relationship manager - no matter how senior. It is a corporate asset. Possibly one of its most important ones. It should be the articulation of how the organisation relates to its world. Not ‘the’ world, but ’its’ world, as characterised by its stakeholder profile.
This goes to the heart of an organisation’s raison d'être. The stakeholder strategy, therefore, should not belong to the public relations department, or even a director of communications or a head of public affairs. It sits firmly on the desk - or on the screen - of the board chair and/or the chief executive.
One hesitates to describe it as a ‘top priority’, but it ranks as one of the most valuable and potentially most flexible mechanism that can make a difference. Whether it is called a ‘strategy’ or goes by some other name matters less. What counts is the ability to invest appropriately in stakeholder support, and to do so over a longer-term.
