Primer: Stakeholder Engagement

Primer: Stakeholder Engagement

Dr. Turcotte introduces fundamentals of stakeholder engagement, including key terms, issues, steps to implement strategy, and further resources.
Marie-France Turcotte January 5, 2011
Stakeholder Engagement: Involving constituents in business and decision-making to inform, consult, partner, or solve problems.

An organization can build support for its actions and avoid social backlash through stakeholder engagement. Interacting with stakeholders enables an organization to identify and address their concerns, which reduces the risks and deadlocks that can result from misunderstandings. By proactively engaging its stakeholders and identifying potential problems before they arise, the organization will operate in a more stable sociopolitical environment.

What is Stakeholder Engagement?

Stakeholder engagement can be defined as interactive activities initiated by an organization with its stakeholders. The organization typically has many stakeholders, and is itself “a stakeholder within the community” (ISO 26000).

There are numerous opportunities to undertake stakeholder engagement, and many ways to initiate a dialogue. An organization should consider carefully the relationships it needs to build, and identify all stakeholders who might be affected by new projects.

Stakeholder engagement can address issues of concern to the stakeholders or issues of concern to the organization. In both cases, stakeholder engagement will consist of two essential practices:

How to Identify Stakeholders

A stakeholder is “any group or individual who can affect or is affected by the achievement of the organization’s objectives” (Freeman, 1984). Traditionally, this has included: This concept has expanded to include often neglected stakeholders such as NGOs and local communities.

Managers should recognize all stakeholders, including those that are frequently forgotten but can have a major impact on an organization’s activities and reputation (e.g. activist groups, or aboriginal communities). A responsible organization identifies and interacts proactively with the stakeholders impacted by its activities, particularly if the impact is likely to be negative.

How to Engage in Dialogue with Stakeholders

The purpose of dialogue is twofold: The nature of the dialogue can range from confrontational interactions to avoidance to joint decision-making.

Choosing Your Engagement Strategy

Before implementing a stakeholder engagement process, managers must first consider the type of relationship they wish to pursue. For example, research points to a continuum spanning various types of engagement (Bowen et al., 2008):

Continuum of Engagement Strategies

4 Steps to Implementing an Engagement Process

Recommended Resources on Stakeholder Engagement

ISO 26000 Standard on Social Responsibility: This standard, in addition to defining societal responsibility, provides instructions on the main principles of stakeholder engagement.

Best Practice Guides: Some organizations have published best practices on stakeholder engagement. We recommend: 

For More Information

Case Study: Sustainable Development in Action at Gildan, Inc.

Gildan, a sports clothing manufacturer, learned the importance of stakeholders after poor working conditions in one of their factories were exposed in 2001.  Five years of controversy (2001-2005) ensued surrounding the choice of standards to be adopted to ensure good working conditions. Gildan finally decided to take into consideration all of the activists’ interests in adopting a new standard. It was only at this time that the controversy ended. Since then, Gildan has implemented stakeholder engagement structures and designated corporate social responsibility representatives.

Listen to Corinne Adam, former Vice President, Corporate Social Responsibility for Gildan, Luc Robitaille, Corporate Director of Environment at Holcim, and Jean-Sébastien David, Vice-President, Sustainable Development at Osisko discuss the importance of stakeholder engagement in managing controversy.

additional resources

Executive Report

A systematic approach to stakeholder engagement, like the one outlined in this guide, can bring genuine business benefits. 

NBS
Research Insight

Community stakeholders have substantial control over corporate resources and decisions companies make about the environment. Three groups often drive...

Lauren Rakowski