Primer: Stakeholder Engagement
Dr. Turcotte introduces fundamentals of stakeholder engagement, including key terms, issues, steps to implement strategy, and further resources.
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:
- Identification of stakeholders
- Dialogue with the 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:
- Internal stakeholders (shareholders, employees, etc.)
- External stakeholders (suppliers, customers, etc.)
- Coordinating authorities (governments, professional associations, etc.)
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.
The purpose of dialogue is twofold:
- Involve stakeholders by providing them opportunities to share views and concerns directly
- Improve the management and scope of activities carried out by the organization while legitimizing the decisions it makes
The nature of the dialogue can range from confrontational interactions to avoidance to joint decision-making.
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
ISO 26000 Standard on Social Responsibility:
, 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:
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