Presentation on Stakeholder Engagement & Management delivered during an Africa Corporate Governance event, Johannesburg 24Nov2015

1. Stakeholder Engagement
& Management
André Knipe
072 417 4084
knipeandre@gmail.com

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Pause… Set… Engage!

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Agenda
1. What is a stakeholder?
2. What is stakeholder engagement?
3. Stakeholder identification
4. Stakeholder management

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1. What is a stakeholder?
 Individuals and groups with a
multitude of interests, expectations,
and demands as to what business
should provide to society

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1. What is a stakeholder?
 "A stakeholder is any person or
organization affected by or with the
power to influence a company's
decisions and actions" (Blowfield and
Murray, “Corporate Responsibility”)
Stakeholders are evolving…

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1. What is a stakeholder?
 A stakeholder in an organisation is...
“any group or individual who can
affect or is affected by the
achievement of the organisation’s
objectives” (European Business Ethics Network)

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1. What is a stakeholder?
 From a business perspective, we’ve gone
from:
"A stakeholder is anyone that can screw up my
business" (2002)
 to:
"Stakeholders are source of innovation and
risk management for my company" (2015)
 But most companies still live within the first
paradigm...

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Origins of the stakeholder
concept
What is a stake?
An interest or a share in an undertaking
and can be categorized as:

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2. What is stakeholder
engagement?
 Series of activities that seek to inform,
consult and ensure the participation of
stakeholders.
 Allows stakeholders to have an
influence on the outcome of plans and
projects.
 Ranges from informing stakeholders
to actively consulting them in
cooperative decision making.

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Why engage and what are
the benefits?
 Effective and strategically aligned
stakeholder engagement can:
 Lead to more equitable and sustainable
social development
 Give those who have a right to be heard
 Allow for the pooling of resources to
solve problems
 Inform, educate, and influence
stakeholders

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Why engage and what are
the benefits?
 Build trust among and between stakeholders
 Enhances cooperation and provides the
potential to build consensus and avoid conflict
among stakeholders
 Increases transparency in project activities
and legitimacy of decisions
 Enhances accountability in decision-making
related to the issues in stake
 Creates a greater sense of empowerment
and social responsibility

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The key principles of
stakeholder engagement
 Information disclosure
 Communication
 Consultation and participation
 Involvement
 Cooperation and partnerships

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Why is stakeholder
engagement important?
 Helps to determine and prioritise the
policy/strategic issues at stake
 Assists in the framing of strategy/plan
 Facilitates the identification of which
stakeholders should participate
 Avoid conflicts between those making
and those being affected by decisions

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Why is stakeholder
engagement important?
 Makes use of local/specific knowledge
 Promotes and encourages effective
implementation
 Ensures for continual engagement
throughout the whole process
 Cultivates good governance ethics from
the outset
 Encourages fairness and equity when
making decisions

15. 3. Stakeholder Identification
 The “obvious” ones
 Primary
• Employees
• Business partners & suppliers
• Investors
• The government
• Consumers
• Communities
 Secondary
• NGOs (but very important)
• Institutions
• Lobby groups
• Academics and business schools
• The media
• Non-human stakeholders: Natural environment/climate change©AKnipe 201515

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Who are business
stakeholders?
Government Employees
Business
Community
Consumers
Owners

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Evolution and development
of the stakeholder concept
 Views of the organization

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Production view
Environment

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Managerial view
Environment

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Stakeholder view of the
business
Business
Owners
Consumers
Community
Government
National
Provincial
Local
General Public
Environmental
Groups
Civic Groups
Average
Consumers
Product Liabilities
Social Activists
Environment:
Political
Economic
Social
Technological
Employees
Minorities
Women
Older Employees
Unions
Private Citizens
Institutional Groups
Board Members
Business
Owners
Consumers
Community
Government
National
Provincial
Local
General Public
Environmental
Groups
Civic Groups
Average
Consumers
Product Liabilities
Social Activists
Environment:
Political
Economic
Social
Technological

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Who are business
stakeholders?
 Primary stakeholders are those
stakeholders that have a direct stake
in the organization and its success
 Secondary stakeholders are those
that have a public or special interest
stake in the organization

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Who are business
stakeholders?
 Core stakeholders are essential to the
survival of the firm
 Strategic stakeholders are vital to the
organization and the threats and
opportunities the organization faces
 Environmental stakeholders are all
others in the organization's
environment

23. Stakeholder identification: A
simple four step plan
1. Develop a categorised list of the
members of the stakeholder
community
2. When a list is relatively complete (not
perfect: it's a moving target) assign
priorities based on…
©AKnipe 201523

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A typology of stakeholder
attributes
Legitimacy refers to the perceived
validity of the stakeholder’s claim to a
stake
Power refers to the ability or capacity
of a stakeholder to produce an effect
Urgency refers to the degree to which
the stakeholder’s claim demands
immediate attention

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A typology of stakeholder
attributes
Power
Legitimacy
Urgency
5.
Dangerous
Stakeholder 7.
Definitive
Stakeholder
4.
Dominant
Stakeholder
6.
Dependant
Stakeholder

26. Stakeholder identification: A
simple four step plan
 Step three: Focus on the ‘right
stakeholders’ who are currently
important
Create a tool to visualise this critical
sub-set of the total community
 Step four: Benchmark this against
Freeman's model of primary and
secondary stakeholder to check
relevance
©AKnipe 201526

27. Freeman’s model
 Primary stakeholders: Those without
whose participation a company cannot
survive
 Secondary stakeholders: Those that
influence the company or are affected
by it but who are not essential to
survival
©AKnipe 201527

28. How do you justify this kind
of work?
 Stakeholder analysis helps identification of the
following:
 Stakeholders' interests
 Their mechanisms to influence other stakeholders
 Potential risks: Which groups may be affected by our
work?
 Potential opportunities: Who can help us solve
problems?
 Key people to be informed about the project during
execution phase
 Negative stakeholders as well as their adverse effects
on the project
©AKnipe 201528

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4. Stakeholder Management
 Key questions:
 Who are our stakeholders?
 What are our stakeholders’ stakes?
 What opportunities and challenges do the
stakes and stakeholders present?
 What economic, legal, ethical, and
philanthropic responsibilities does our firm
have?
 What strategies or actions should our firm
take to best manage stakeholder challenges
and opportunities?

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Who are our stakeholders?
 Management must identify generic
stakeholder groups and specific
subgroups

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What are our stakeholders’
stakes?
 Determine the nature/legitimacy of a
group’s stakes
 Determine the power of a group’s
stakes
 Determine specific groups within
generic groups

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What opportunities and
challenges do stakeholders
present?
 Opportunities are to build good
productive working relationships with
the stakeholders
 Challenges are representative of how
the business handles the stakeholders

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What economic, legal, ethical, and
philanthropic responsibilities does our
business have to its stakeholders?
PhilanthropicPhilanthropic
ResponsibilitiesResponsibilities
Be a good corporate
citizen.
Ethical ResponsibilitiesEthical Responsibilities
Be ethical.
Legal ResponsibilitiesLegal Responsibilities
Obey the law.
Economic ResponsibilitiesEconomic Responsibilities
Be profitable.

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Stakeholder/Responsibility
Matrix - example
Stakeholders Economic Legal Ethical Philanthropic
Owners
Customers
Employees
Community
General public
Social Activists
Etc.

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What strategies or actions should our
firm take to best manage stakeholder
challenges and opportunities?
 Should we deal directly or indirectly with
stakeholders?
 Should we take the offense or the defense
in dealing with stakeholders?
 Should we accommodate, negotiate,
manipulate or resist stakeholder overtures?
 Should we employ a combination of the
above strategies or pursue a singular
course of action?

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Stakeholder Type 4
Mixed Blessing
Strategy:
Collaborate
Stakeholder Type 3
Non-supportive
Strategy:
Defend
Stakeholder Type 1
Supportive
Strategy:
Involve
Stakeholder Type 2
Marginal
Strategy:
Monitor
High
Low
Stakeholder’s
Potential for
Cooperation
With Organization
High Low
Stakeholder’s Potential for Threat to Organization
?
Types of stakeholders

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Principles of stakeholder
management
 Acknowledge
 Monitor
 Listen
 Communicate
 Adopt
 Recognize
 Work
 Avoid
 Acknowledge conflict

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Principles of stakeholder
management
1. Managers should acknowledge and actively monitor the
concerns of all legitimate stakeholders
2. Managers should listen to and openly communicate with
stakeholders about their respective concerns and
contributions, and about risks that they assume
3. Managers should adopt processes and models of behaviour
that are sensitive to the concerns and capabilities of each
stakeholder
4. Managers should recognise the interdependence of efforts
and rewards among stakeholders, and should attempt to
achieve a fair distribution of the benefits and burdens of
corporate activity among them, taking into account their
respective risks and vulnerabilities

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Principles of stakeholder
management
5. Managers should work cooperatively with other entities to
ensure that risks from corporate activities are minimized, and
where they cannot be avoided, appropriately compensated
6. Managers should avoid altogether activities that might
jeopardise inalienable human rights or give rise to risks which,
if clearly understood, would be unacceptable to relevant
stakeholders
7. Managers should acknowledge the potential conflicts between
(a) their own role as corporate stakeholders, and (b) their legal
and moral responsibilities for the interests of stakeholders,
and should address such conflicts through open
communication, appropriate reporting, incentive systems, and,
where necessary, third-party review

40. 10 Fundamental things to remember
in stakeholder engagement
©AKnipe 201540

41. There are no secrets
Resist the urge to compartmentalize
information. Treat all communications as if
they were going to be posted on the
internet for all to see (because, that may
just happen).
Act authentically but remember everything
can and often will, end up on the record.
©AKnipe 201541

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Interest alignment
Constantly search for alignment between
company/project interests and stakeholder
interests.
Be creative – sometimes real opportunities
lie outside the box. Interest intersections,
where your interests and stakeholder
interests align are valuable gems.
Think inside and outside the box to find
them.

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Realistic timeframes and
budgets are vital
Make sure your CFO understands and
approves a realistic budget. Help them to
understand the cost of your failure.

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Share credit – it will multiply
Credit shared is goodwill created.
Acknowledge, recognize, praise and
promote partners and collaborators
(government, NGOs, communities,
organizations, etc.).
Do it every chance you can. You gain
much and lose nothing.

45. Smile
Let your humility and humanity show.
©AKnipe 201545

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Understand before
understood
Communication is critical.
Listening is key. Seek to understand
before you try to be understood.
Think about how you say things: Use soft
language, not hard, emotion generating
terms.

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Everyone is the face of the
business
They should be trained in stakeholder
engagement.
Right person to right position: If you
delegate, train and build capacity.
Make sure your people know how do it
right, never assume.
This means your bosses, your
reports and others across the company.

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Simplicity is good
Complexity will cost you
Simple guidelines beat complex
prescriptive procedures every day of the
week. Be realistic. If your stakeholder
engagement plan, process, procedure
is too complex who is going to follow it.
Don't turn stakeholder engagement into
box ticking! Train and trust your people.
Give them room to be creative and
responsive but let them now where the
boundaries are.

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All is not the same
The importance of taking note of culture
cannot be underestimated. Things change
from country to country and project to
project. Rigidity will often crack and break.
Allow room for adaptation to culture and
use it when necessary.

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Stay in touch
Ongoing communications even when there
is no obvious demand – Be open and
transparent, it builds trust. Think about
being counter intuitive with regular
communications about the good and bad.
Get the balance right. Communicate
frequently enough that you are not
forgotten but not so frequently that you are
ignored. Don’t always wait for a big win, or
failure.

51. So… pause, set, ENGAGE!
André Knipe
072 417 4084
knipeandre@gmail.com