Managing stakeholder relationships

10 Nov, 2016 - 00:11 0 Views

The Herald

ZimCode Secretariat

One of the main drivers of success for a company is the way it builds and manages relationships with its stakeholders. The company should regularly engage in a stakeholder mapping exercise were it identifies its stakeholders and their various interests so that they can continue to effectively engage with them in their business.

It is important for the company to develop a stakeholder engagement plan that is well structured to accommodate diversity among its stakeholders. Transparency, accountability and respect for stakeholders are among the key principles that a company has to uphold in its stakeholder engagement process. The ZimCode advices that stakeholders are an important aspect of every business and failure to recognise this can cost a company its business.

A stakeholder is any person, group or organisation who can place a claim on a company’s attention, resources or output, or is affected by that output. The ZimCode highlights that a company’s stakeholders are its allies and partners for success.

Therefore, it is necessary for a company to first identify the various stakeholders and then engage them in a respectful manner without discriminating against the minor ones. Stakeholders can include shareholders, institutional investors, potential investors, creditors, lenders, suppliers, auditors, customers, regulators, employees, trade unions, the media, consumers, society in general and communities in which the business operates.

These stakeholders can be further classified into two groups. There are those stakeholders who have power to influence and shape decisions and there are others who are not key decision makers but who need to be kept informed about progress.

Considering this diversity among the stakeholders there is need to use different strategies and approaches for different people as this is definitely not a case of “one size fits all”. With limited resources, a company should actively deal with the most important stakeholders while providing adequate information, minimal engagement and recognition of the other stakeholders. There should never be a point whereby a company completely ignores its minor stakeholders because that can be risky.

The ZimCode highlights that, the Board should give guidance concerning stakeholder engagements but should delegate to management the task of pro-actively dealing with stakeholder relationships. The management should establish a formal stakeholder engagement process that is monitored on a regular basis. Stakeholder engagement must be well thought to ensure that it gives stakeholders adequate information in order for them to be accountable to the people and the businesses that will be impacted by any change.

In essence, a company should provide its stakeholders with relevant information necessary for protecting their rights. Their views and opinions should be taken on board when the company formulates and implements its strategy. They should also be encouraged to attend annual general meetings and other company meetings were decisions are made by giving them timely notice and relevant documents.

Pro-active engagement with stakeholders is beyond listing their names and understanding their roles. It is about investing in relationships, cultivating trust and genuinely expressing appreciation for their role. It involves talking directly to them and asking questions tactfully to get their views on certain issues. This is often the first step in building a successful relationship with them.

In this era successful companies are those that have established strong networks and personal relationships that can come in handy at every stage of the company’s development. Some stakeholders can play a central role in bailing out the company when it goes through tough times. This can only be done by stakeholders who strongly believe in what the company stands for and are completely sold to its values such that they believe it deserves another chance.

Poor stakeholder management can easily cause a business to fail. When a company fails to establish a well structured stakeholder engagement and implementation plan it has already planned to fail.

When a company engages with its stakeholders haphazardly and as an afterthought it is easily noticeable. For instance, when the Board and management are simply tasked to identify their key stakeholders and explain their role and they respond by scratching their heads then you know there is no formal stakeholder engagement structure.

In such cases one is rest assured that the stakeholders’ appraisal report does not exist. Consequently, when stakeholders recognise that they are not valued they can easily disengage to focus on other businesses were their rights are guaranteed or they can decide to regroup and fight for recognition. Either way, a company would have invited risk to its business.

Today’s globalised world is characterised by increasing interconnectedness, social networking, and fast-paced technologies. Information spreads like veldt fire reaching even the shareholders that are geographically dispersed in no time.

Considering that bad news travels faster, a company is at risk of losing its market share once stakeholders express discontent over the way the company conducts its business.

Of late the news has been dominated by Indigenous communities in the Amazon fighting against the encroachment of oil and mining companies who are destroying their environment. These companies supported by the Government, a key stakeholder, might have considered these Indigenous communities as insignificant stakeholders but they are learning the hard way. The noble thing for every company to do is to engage its stakeholders at every stage and use their views to inform company policy and strategy.

For more information on the ZimCode contact: [email protected]

Share This:

Sponsored Links