Why does stakeholder engagement matter?

The first blog in our series on stakeholder engagement starts with the basics – why does stakeholder engagement matter?

We’ve identified three key trends that help answer this question and give direction on how business can gain more value from stakeholder relations.
First, companies are having to manage the rapidly changing dynamics of the relationship between business and society. They are being increasingly compelled to engage in dialogue and collaborate with their stakeholders, rather than simply communicating to them. While there are many factors driving expectations for greater engagement (i.e., transparency, performance, demands, etc.), a great deal of this can be explained by the ongoing low level of trust in business.

In the graphic to the left, findings from our 2013 Radar program show the global public expressing net trust (the percentage of those who trust them minus those who don’t) at +53% for scientists and academic institutions, +31% for NGOs, and just +8% each for national governments and global companies. The gap is much bigger in developed countries, with net trust at -2% for governments and -9% for global companies.

Second, issues facing companies are becoming ever more complex and global, requiring organizations to engage with more stakeholders than ever – both in numbers of individuals and discrete groups. And, while these stakeholders are more dispersed geographically, they are also more connected, particularly through social media, and empowered. This means that business and other organizations can no longer rely on intuition or conversations with a select few or assume they know how stakeholders will respond to a corporate policy or sustainability initiative. There is a need for new, innovative, more proactive engagement of these diverse groups of stakeholders, all with greater rigor and structure.
Third, new technology is making it possible to address some of this complexity, allowing for the monitoring of stakeholder discussions via digital listening, and online forums like the Unilever Sustainable Living Lab, the BT Better Future Forum, and the ABInbev Wellbeing Forum. These online stakeholder collaboration forums tackle the need for transparency and the challenges of crowdsourcing across dispersed groups. We see them as platforms for mass collaboration to help make progress on cross-sector issues. And they can facilitate and complement traditional approaches to stakeholder engagement. While in-person, micro-engagement of stakeholders is still essential and important, new tools are crucial for facing the challenges ahead, and are already being adopted by farsighted companies such as Unilever, BT, ABI and others.
Cracks are appearing in the walls separating businesses from their stakeholders, and engagement is no longer about ‘us and them’. With less control over their external context, companies may need to become more flexible, porous ‘open enterprises’. The good news is that deeper engagement also provides the opportunity for innovation and value generation. We are on the cusp of an exciting era in stakeholder engagement.
Further blogs in this series will explore the history and evolution of stakeholder engagement, how structured stakeholder collaboration helps deliver on corporate goals, and why online engagement platforms are effective.