Guarantee Valuable Stakeholder Engagement by Taking These Actions

Anticipate hazards, select stakeholders, present roles and responsibilities, develop relationships and identify internal alignments

Engagement with stakeholders is crucial to the success of any organisation. A clear vision (based around a robust strategy or marketing plan) can only come from stakeholder engagement, as it ensures the voices of key internal and external individuals influence and strengthens the actions that the organisation takes.

Stakeholder engagement is also the basis of good corporate governance, allowing organisations to reflect on operations and perform checks and balances when required. For example, if communication is established with internal stakeholders, the organisation can identify any emergent changes that might be taking place within the company, and understand why this is happening. Together, engagement with stakeholders can help to implement actions that react to these changes, such as making them part of the company-wide strategy.

Although it’s easy to appreciate the value of stakeholder engagement, successfully managing the process and getting the most out of stakeholders can be a difficult task. It involves a variety of short and long-term actions that dramatically effect the quality of information and input an organisation can receive from stakeholders. In this article, we will be exploring just a few of the actions you must take place when addressing stakeholder engagement and the positive impact they have.

Essential Short-Term Actions

Whilst this is not an extensive list, these are just some of the essential short-term actions you must take when thinking about stakeholder engagement. Short-term in this case means that they aren’t ongoing actions during a project; they come at the start ahead of any communication with stakeholders. This being said, they can make or break the outcome, so shouldn’t be seen as lesser to more longer-term actions.

1 – Anticipating Hazards

Before launching yourself into communications with stakeholders, the best place to start is using foresight to anticipate hazards. As stakeholders are important influential resources, they should be treated as sources of potential risk. Ask yourself what information you require from stakeholders, and how you can restrict their actions to avoid any unnecessary changes to the way things are done within the organisation. For example, if you address a particular change, will this impact any other operation or ongoing project?

2 – Selecting Stakeholders

It might sound obvious, but there isn’t just the one type of stakeholders; in fact, the possible sets or groupings of stakeholders is arguably limitless. So be aware that the project you wish to address with stakeholders might only be relevant to one set. For example, if you’re talking about direct changes to a product, is that something external stakeholders (i.e. current clients or customers) should be a part of? Or, if it’s a change in operations, then which internal stakeholders (such as employees or investors who know the strengths and weaknesses of the way things are done) should be included in discussions?

Selecting the wrong stakeholders can have varying degrees of effective, from leading you down a hazardous path of inaccurate actions, due to misunderstanding, or even apathy from stakeholders as a result of feeling distanced from the issues brought to their attention. Think to yourself what core group of stakeholders you require based on the objectives before you do anything else.

Exploring Long-Term Actions

Long-term actions are those which are ongoing during the stakeholder engagement process, allowing you to continue to gain value from communication and develop stronger results. Whilst these should be thought about during the planning process, they’re generally actioned when engagement begins.

1 – Present Roles and Responsibilities

Identifying the roles and responsibilities of stakeholders is an important part of the engagement process and is something that should be ongoing through regular reinforcement. You should communicate with stakeholders why they are a part of the discussion and project, and inform them of what is expected so that they can take the right approach and give feedback as the project progresses. For example, if they’re manage the marketing department, they would be expected to share the views of their team and represent wider attitudes to potential changes. 

It also means that from the start, they have a greater understanding of why they are involved and know that they have certain responsibilities to meet. This creates a sense of ownership for the project and allows each individual stakeholder to value shared ideas and appreciate common goals.

2 – Develop Relationships

Taking the time to understand and regularly stay up-to-date with stakeholders helps you to develop a positive relationship with them. In turn, this will increase trust and making the process of sharing information and knowledge easier. It will also help any project leaders understand viewpoints and motivation easier.

As with anyone, keeping a positive relationship is an ongoing task, and whilst it might seem an investment of resources, its long-term benefits are more than worth it.

3 – Identify Internal Alignments

When consulting with stakeholders, you must discover the point of consensus or shared motivation that adds them to arriving at a positive decision and an investment in a meaningful outcome. This comes about from a wider understanding of how the group of stakeholders function together, and is a result of identifying underlying similarities between the needs of the collective.

Realising alignments is something you should be proactive in achieving through continuous stakeholder engagement and by bringing together a bigger picture. But be aware that as actions within an organisation change, so can the point of consensus or shared motivation.

Start-up: Tapping into a Wealth of Experience

Often companies that launch on a ‘shoe-string budget’ are wary of spending too much on employees. The result: employing less-experienced individuals who are immediately placed in high-risk positions.

Good governance is not just for big businesses. New businesses and startups must establish strong governance early on to increase their chances of success during volatile stages where they are finding their feet in the market. Here are a few things you should bear in mind, and why securing team members with experience early on will enhance the governance of your organisation.

Develop a Structure with Experienced Leaders

This first point might be glaringly obvious to some, but it’s surprising how many startups skip this during the early stages of their development. Often companies that launch on a ‘shoe-string budget’ are wary of spending too much on employees. The result: employing less-experienced individuals who are immediately placed in high-risk positions (such as managing all external marketing or sales). From our experience, we have also seen many start-ups employ individuals into extremely broad roles as another way of keeping employment costs down, and are encouraged to work “flexibly”, often managing a series of actions that don’t interlink with a particular business goal.

When starting out, we can’t stress how important it is to develop a core team of industry professionals that are able to lead projects. These ‘leaders’ will act as the cornerstones of your business, and will help develop different aspects of your organisation as it continues on its journey. For example, if you’re looking into how to market your organisation’s product or service, employing an individual to be a marketing manager with industry experience will give you valuable technical knowledge and a vision built on past actions (i.e. knowing what works and what doesn’t).

At this stage, you can begin to establish a structure in your organisation; establishing leaders in certain fields will allow you to develop a range of teams that are focused on specific aspects that contribute to the goal of the organisation. On a simple scale, this could be creating a sales team and a marketing team – each of which being lead by an industry professional.

Establish Accountability

Whilst a strong structure will ensure the focus and efficiency of tasks to be increased, it more importantly establishes ‘accountability’. As discussed in one of our previous articles titled ‘Good Governance for Small and Aspiring Businesses‘, many small business founders try to manage several (if not all) aspects of their organisation, making it difficult to keep track of where problems might have arisen and what changes need to be made.

So, in appointing those with experience as team leaders, you are more likely to gather valuable feedback and information on how each part of your organisation is performing, as well as whether there are an issues that need to be addressed. Founders must therefore distribute responsibilities to different leaders; they will then be uncharge of ensuring that their individual team is performing the correct actions to contribute to the overall goal of the organisation, and can feedback to the founder when required.

Get a Good Governance Team Onboard

Creating a good governance team (board or committee) is a must for startups. This team will make decisions about the future of the company, and, by forming a team with experienced members or leaders, will ensure that you know why a decision was reached and the thought-process behind it.

A strong governance team made of experienced members is a plus point for investors and promotes confidence. It’s likely that they will want you to be transparent and explain who the members of your governance team are at their past experiences, in order to establish an idea of the value they will add to the organisation.

Craft a Positive Company Culture

Employing or working with individuals with a wealth of experience can also enhance your company culture and help you to establish a positive environment. They will understand why things should be done a certain way, and will know why some approaches or methods work over others. Overall, they will have a better understanding of what motivates individuals, ensuring that they have a good work-life balance whilst contributing to the goal of the organisation.

A word of warning however – you must also be wary of employing individuals with similar experiences. This can result in the development of a business with a one-dimensional outlook, as the team begin to share the same mindsets and outlooks. Businesses made up of a wealth of different individuals (with different industry and cultural experiences) encourages a positive company culture where ideas are challenged. Whilst this will inevitably lead to some resistance on certain projects or changes, it will create space for negotiations to take place where ideas can be enhanced by a community vision. Overall this will improve the way in which teams communicate and work together, as well as improving the information, content or services that your organisation delivers to its audience.

Why Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) Standards are Real and Relevant and What’s the Difference

They encourage the integration of social, environmental, ethical, human rights and consumer concerns into business operations and core strategy.

Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) standards are crucial contemporary business practices. They encourage the integration of social, environmental, ethical, human rights and consumer concerns into business operations and core strategy. There are however important differences between them and what their outcome means to you; in this brief article I will explore their definitions and touch on a couple of best practices to ensure CSR and ESG standards are behaving in your best interests.

Corporate Social Responsibility

How a consumer views your business is, of course, extremely important. The actions you take and the values you present have a direct impact on your overall performance. This is where CSR comes in. CSR can be defined as the responsibility enterprises have with regards to their impact on society. In the process of creating a product or service, businesses should also strive to give something back, often in the form of supporting a charity (using a portion of profits, etc). For those on the outside (i.e. the consumer), these actions can be a huge bonus. It suggests that your business is not self-serving but is concerned with wider interests and issues. The result: people want to support and be associated with your brand. Those that commit to CSR outperform those that don’t, acting as a particularly strong way of helping your brand stand out against competitors.

There is some cynicism surrounding CSR that’s worth noting. Occasional charitable campaigns have been criticised as ‘marketing gimmicks’, which have resulted in negative reactions from the public and press. That’s not to say that a ‘gimmick’ will not boost your short-term sales, but it is important to be aware of how you present your actions and the causes you support. Jumping on the latest cause or trending hashtag might be a way to get your brand noticed, but ask yourself whether or not it reflects your companies overall message and attitudes. To forge a more genuine commitment, it’s valuable to form ties with causes that are linked to your organisation. For example, if you are selling food products then supporting ethical manufacturing or farming processes would be a good choice.

Patagonia is a great example of the benefits of good CSR. For Patagonia, CSR policies are considered as a core and inseparable component of their product, and it’s helped them grow their public support, allowing them to stand out in a crowded market. They have followed good practices, connecting their brand with contemporary concerns that relate to their products in order to carve a new conscious consumer culture.

Environmental, Social, and Governance Standards

ESG standards have a more internal focus, and are based around the values a company holds and how governance keeps it in check. The environmental aspect looks at areas such as an organisations targets to minimising waste or reducing water usage, whereas its social side looks at how individuals are treated, policies to encourage diversity and equal pay, and so on. When it comes to governance, this is the ability to show that the organisation uses accurate and transparent accounting methods, and that common stakeholders are allowed to vote on certain important issues.

Whilst ESG standards should be important to the organisation internally (and will benefit company culture in the long run), they have more of an impact on potential investors. Environmental, social and corporate governance criteria refers to the main factors and investor considers with regards to an organisations ethical impact and sustainable practices. It gives them an insight into how a company is performing as a ‘steward of the natural environment’, such as its impact on climate change, conservation efforts, etc. Companies with bad ESG practices are a no go for investors as they pose a risk for the firm suffering tangible losses, so in order to win the confidence of investors, it’s important to clearly present the criteria your organisation meets. It’s also worth noting that investors are looking for companies with values that match their own, so don’t be surprised if not every investor is suited to your ESG goals.

It’s clear to see that CSR and ESG standards should not be taken lightly. Although simple to grasp in theory, knowing that they have the power to make or break your business can put pressure on your organisation. And with consumers acting as an ever-watchful eye on the actions of organisations, you really can’t hide any dirty laundry. My advice – take CSR and ESG standards seriously; ingrain them in the roots of your organisations and set practices that has a positive effect on the planet and society as a whole at the forefront of what you do and how you are presented.

Updates in Corporate Governance in a Listed Environment

There’s a range of criteria that could mean your organisation will need to react to these requirement changes.

As a way of ensuring organisations show that they operate with responsibility, Corporate Governance requirements are updated regularly. Whilst not all businesses are affected by these changes, it’s extremely important to understand what they mean for you and what actions you might be required to take.

The most recent updates in Corporate Governance requires listed companies to report on two specific areas: firstly, CEO/worker pay ratios and the effect of share price on pay; secondly, stakeholder interests (S.172 Companies Act 2006).

There’s a range of criteria that could mean your organisation will need to react to these requirement changes, but in a nutshell this is focused on companies (not LLPs) that are UK-incorporated and considered to be ‘large’ (although different size tests do apply). All listed UK companies must report on the effect of share price on pay, and those that are listed UK companies with 250+ UK group employees should report on CEO/UK employee pay ratios.

When it comes to section 172 and stakeholder reporting, a size test determines whether your organisation is required to report. If you are a large UK company and match two out of three of the following tests, you will be required to report: if you have a turnover of £36m+, a balance sheet of £18m+, and / or have 250+ employees. These organisations will need to complete reports on the following: a statement of how directors, when carrying out their duty to promote the success of the company in Section 172 Companies Act 2006, have had regard to stakeholders; and, give more detail about how the company has engaged with key stakeholders, including suppliers and customers. All companies with 250+ UK group employees will be required to complete a report on engagement with UK employees.

There have also been a series of updates to the UK Corporate Governance code that are worth being aware of. These changes to the code stress the importance of company purpose and values, workforce engagement, stakeholder engagement, director independence, fair pay, and diversity. As before, all London premium-listed companies must apply and report on Code Principles, and comply / explain against Code Provisions, so bear these in mind when reporting.

The new disclosure rules will apply to reporting periods starting January 2019, which means that companies will have to start reporting from 2020 onwards. Listed UK companies must include disclosures in their annual reports. Ahead of this, it will be valuable for your organisation to look at your corporate reporting function and ask whether it’s set up to deal with these changes, and whether you need to train directors and stage so that they are equipped to deal with these new obligations.

Good Governance for Small and Aspiring Businesses

Small and aspiring businesses often fall at the first hurdle when it comes to ‘good governance’.

Small and aspiring businesses often fall at the first hurdle when it comes to ‘good governance’. Throughout the course of this article, we will highlight a few common mistakes and why they occur as a way of showcasing the best steps your business can take going ahead.

Why You Must Establish the Principle of ‘Capability’

The first point to make is that many small businesses rely solely on their founder when it comes to governance. Founders often feel as though they should make all the decisions as they have a clear vision of where they would like the business to go, and therefore wish to handle the entire structure of the business to ensure that the way things are done meet this ideal. The problem with this is that founder’s attachment to their ‘idea’ means that they often make assessments and judgements based on their emotions. By taking action based on emotions, rational approaches are often thrown to the wayside and their is often very little consideration, negotiation or understanding. Their view-point is often narrow or blurred (especially when under stress from shareholders) and they do not make the best decisions for the business.

For example, they may feel as if growth targets are not being reached and under constant stress from stakeholders they may implement a change that is not discussed with the team. The team themselves may not find that this change is necessarily the way things should be done and might not benefit how they work. This can result in apathy from team members who feel their ideas and issues are not being addressed, damaging the outcome of their tasks and hindering the business further.

To avoid this, small businesses must reflect on one of the core principles of corporate governance – ‘capability’. Capability is enabled when organisations are led by a team of stakeholders that have a diverse mix of skills and responsibilities, as well as varying levels of experience. When those with different capabilities are brought into discussions about change projects and how business goal can be achieved, a much more structured organisation is formed where there is greater understanding of the inner-workings.

Clearly Defined Roles and Responsibilities Establish Good Governance

When a range of capabilities are harnessed, understood and operating together, this principle of corporate governance also makes sure that members are able to discharge their duties and responsibilities by clearly defining their roles and obligations. A structure of ‘who’s who’ and what they do is established; teams or departments develop (such as a marketing team) lead by key stakeholders (i.e. a head of marketing), in which individuals are expected to perform specific functions that go towards the ‘status quo’ of the business. This can be used as a metric for ‘good governance’ since there is a stable team working together (albeit often in separate departments)in the best interests of the business whilst being engaged in constant and fluent communication across all levels of the organisation.

The Importance of Accountability

Once a founder has distributed leadership by utilising varying capabilities, accountability is also enhanced. There is a clearer flow between the actions taken by individuals and their outcomes as a result of a greater number of ‘team leaders’ who are able to track and monitor results. When meeting shareholders and other stakeholders, a fair and balanced assessment of the organisation can be presented, which is something that can only be achieved when there is a strong system of communication which reaches into different aspects of the organisations. This can then take check of the business, ensuring that it is achieving its purpose, meeting legal and regulatory requirements and stating how responsibilities are met. If there are flaws in the organisation, it’s easier to identify where mistakes are being made.