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anthony-hodgedoug millerR. Anthony Hodge is President of the International Council of Mining and Metals (ICMM), which brings together 22 global mining and metals companies to address the challenges around sustainable development. Throughout his career in academia, the private sector, and civil society organizations, Anthony has focused on the practical application of sustainability ideas. GlobeScan Chairman Doug Miller recently interviewed Anthony to gain insight on the value ICMM puts on stakeholder intelligence to help build recognized leadership in an uncertain world.

Published 7 August 2014


QHow can companies create more value from stakeholder engagement, and to what extent is stakeholder engagement key to corporate planning and strategy?

AI’d like to tell a story that underscores the importance of this topic, certainly to companies in the mining and metallurgy sector. I had a conversation a few days ago with the CEO of one of my member companies, who expressed real concern about an event that happened in Peru within the last two weeks, where a court order stemming from stakeholder outrage has just brought a joint-venture project of his company to a halt, putting $4 Billion of capital on hold.

This is the third mining project in the last two years in Latin America alone that I’m aware of where there have been fundamental glitches with local populations and authorities resulting in massive investments – something in the order of $15 - $20 billion USD – being frozen by court order. This is hugely significant!

So when you ask me about stakeholder relations and business value, the mining sector knows full well of the huge value destruction that can happen when relationships with communities go sideways. And this is not going to change. If anything it is likely going to become even more of an issue in the future.

So, there is no doubt in my mind that the key success factor for siting mining projects (in addition to finding the mineral deposit in the first place and having the technical competence to develop it) is building relationships with the host communities and countries that are transparent and respectful and marked by integrity; so there is a feeling amongst the hosts – all of them – that these are authentic and caring relationships with long-term partners in development.

What comes to mind when you hear the term “stakeholder intelligence"?

I actually don’t like the term ‘stakeholder intelligence’ because it tends to objectify people as widgets. We’re going to do intelligence on them, and we’re going to line them up like widgets, and we’re going to ‘manage’ them to perform the way we want our widgets to operate. That’s just wrong.

In fact, it’s not about that at all; its about building relationships. Its very different. We need to listen and to understand as partners, not widgets.

We in the mining industry are now seeing what appears to be a paradox. Over the last 20 years, mining industry performance in this area of community relations has improved dramatically. But at the same time, we’re seeing conflict related to mining activities is going up dramatically. It’s a paradox because you’d think improved performance would reduce conflict. In fact, the exponential increase in conflict does parallel the increased number of mines; so this is part of the answer.

For the other part of the answer, you need to look in the bigger system outside of mining. What’s happening in the broader context is that communities are talking to each other like never before. If something’s happening in Kenya, people in Europe and North American know it instantly now. So instant communications is part of it. But communities and NGOs are also gaining access to technical knowledge and they thereby are becoming empowered like never before. This is the real democratic shift that is going on across the world.

When people feel they are unable to shape their own future, that is where hope is lost and that is when people stand up in front of bulldozers, because they have nothing to lose. This parallels a decline in the quality and quantity of governance, which further adds to citizen-based advocacy.

So, given this changed world, what does successful leadership look like today, and how is it practiced in mining?

In my view, the leadership required is not the kind of leadership that tells others what to do but the kind of leadership that convinces others of your good intentions and builds collaborative relationships to get things done. It’s leadership from behind, really. It’s a facilitative role.

So, the real art of leadership today is in creating the quality of relationships and other conditions that will create fair and lasting agreements; and the fairest and most lasting agreements are made between strong parties; so facilitating capacity-building such that engagement among equals is possible, is a key ingredient of today’s effective leader.

In my experience, the vast majority of people in companies want to do this right; they’re scrambling to get it right. And the success that I see is where companies are sensitive to this relationship building in a very strategic way. Those seeing success accept that the societal goalposts have moved, learn to listen – and hear – very well, and in bringing the resulting insights into the decision-making process, reflect a degree of integrity and respect for others that builds trust.

What are some approaches and tools that can help a company be successful in building these relationships with people that matter to their business?

Western biz types are all very analytical and want tools and metrics; and that’s part of it; but it’s too rational, too limited on its own. Its more complex than that. For example, how can we know – or how can a company know - if an authentic, trusting relationship is emerging in a host community or country.

Those pre-occupied with metrics want measurable indicators. In fact, “measurement” is the second of a generic, four-part process that is essential to tracking and understanding change and the success (or not) of actions that are taken.

The first part is always “story.” Story and measurement work together and each has limitations and strengths. For its part, measurement is always backward looking although it is true that sometimes by looking backward you can get hints about what might happen in the future. In contrast, story addresses the past, present and future and effectively captures how people feel. But story is sometimes a trickster and the greatest power of measurement is to re-enforce the parts of story that are to be trusted. Data also can reveal counter-intuitive insights that otherwise would remain hidden. Story and measurement reflect the great cultural divide in our universities and often, scientific/technical bean counters don’t trust the flighty story-tellers found in the faculties of arts and vice versa. But both are needed when it comes to understanding relationships between mining companies and host communities. But there’s more yet – an essential third and fourth part.

Even if story and measurement about relationships between company and host community are effectively compiled, the third step is to assign significance to this evidence, synthesize the result, and judge what it all means in a rigorous way. Doing so requires a special skill set that is rare. It depends on logic which is not commonly taught in our universities to any great extent – and certainly not to engineers and science students.

And lastly, the resulting assessment must be communicated back to the varying interests (community leaders, governments, aboriginal people and their organizations, company management, civil society organizations). This step is essential to confirm that the varying insights and values have been accurately reflected and to share with them the lessons that can be drawn so all can learn.

In my 35 years in business I’ve never, ever seen anyone good at all four of these steps (story, measurement, synthesis and communication). No one person can possibly do it all. It needs a team.

And in my view, the current management emphasis on measurement at the expense of the other three elements in this four-part process, is utterly misguided and will end badly. All four are needed for an organization to be a learning organization.

Companies also need a senior executive who is charged with the responsibility for developing the human relations that matter to a project or initiative. It’s a very difficult position; it’s a bridge-building function, a translation function between the language and values of the company and the language and values of the community. It requires cultural sensitivity training of key personnel and lots of patience.

Thinking now about reputation, are there limitations to the framework of corporate reputation in today’s world?

Everyone is concerned about how others see them. The problem I have with the current preoccupation with corporate reputation, is that it is too self-centred – it’s all about you and your organization. If you’re truly focused on building ‘relationships that matter,’ you are equally concerned about the reputation and needs of other players involved.

An effective leader steps out of the limelight to give the credit to others. What are really good companies doing? They talk about how wonderful the communities are that they work in, because they’ve come to know these people and to see them as partners and in many ways equals. After all, the only people that are experts in the values of the community are the members of the community, not the company.

And when it is due, they go out of their way to give credit to governments, to aboriginal people, to civil society organizations. You see, the effective company sees itself as a small part of a larger whole – not the center of the universe.

How do you see things evolving over the next 10 years?

It will all depend on how another key issue unfolds, that we haven’t yet touched on – the gap between rich and poor. This inequity issue is so central that it has the potential to scupper everything. How goes this issue; so goes the world. Because unfairness is the stuff of revolution; it’s when everything could break down. Everyone knows this from Human history. So, all bets are off until substantive steps are taken to close the income and wealth gap.

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