A stakeholder engagement strategy helps organizations secure their freedom to operate by mitigating risk and uncovering new opportunities.
The types of risks and barriers that can threaten a company’s freedom to operate (FTO) range from regulatory restrictions, public policy, reputational issues, tort litigation, activism and more. Whether managing legacy environmental issues, creating transparency around current environmental footprint or bringing a potentially controversial technology to market, many companies find themselves investing significant resources in securing and protecting their FTO.
We all know that no company operates in a vacuum. Every situation is influenced by a universe of stakeholders who can impact a company’s ability to conduct business, not to mention its reputation. Through a thoughtful stakeholder engagement strategy, organizations can remove barriers to growth and even develop a network of potential supporters of initiatives critical to their success. Here are three reasons why you should have a stakeholder engagement strategy to secure FTO:
Know Your Stakeholders to Know Yourself
Your organization’s reputation reflects what your stakeholders think about it. Knowing who these stakeholders are and understanding their needs and expectations can give you a clear idea of how your organization is perceived. First, take the time to map out your stakeholders based on their level of interest in your company and their ability to exercise influence. Don’t be surprised if this exercise uncovers new organizations in addition to the usual suspects. Then, seek input from the groups most interested in you and most likely to influence issues of mutual importance. Don’t assume you know what they think. You can collect input through surveys and focus groups, in individual meetings, or by assembling advisory boards that bring together various perspectives. Knowing how your organization is seen by those who can impact your ability to conduct business is critical information that can shape your business strategy, public affairs and communications approach as well as your community involvement.
Risk comes from misalignment between what your company does and how it’s perceived by stakeholders. These gaps indicate vulnerabilities and potential risks, not just to reputation, but to the ability to commercialize new products or continue operations. For example, the environmental benefits of GMOs – genetically modified organisms – might mean little to some consumers who have very strong emotions about this topic. Scenario planning will help you determine what actions, if any, need to be taken to collect input, answer questions, correct misconceptions, align supporters around common goals or neutralize opponents.
It’s important to understand that a successful stakeholder engagement strategy requires sustained commitment and time. One meeting is not enough to establish a relationship and build trust. Successful stakeholder engagement is an ongoing practice that requires senior leadership commitment and a clear stakeholder engagement strategy that articulates goals and areas of focus. Consistent engagement can take many shapes, but at its core it is based on listening and two-way communication. Here are several examples:
- Advisory boards – Bring together diverse external perspectives to seek input early to inform major business decisions, such as product commercialization.
- Public affairs – Frequent engagement with regulators, legislators and community leaders can help identify potential information gaps and risks and allow you to share information to answer questions or correct misinformation.
- Industry relations – Stay engaged with industry peers through trade organizations to secure support for new initiatives and encourage the creation of a level playing field from a regulatory standpoint. Additionally, generating consumer acceptance is easier when companies in a certain industry segment speak in one voice.
- Corporate social responsibility – Communicating transparently about an organization’s environmental and social impact is now table stakes. A CSR report opens opportunities for more active engagement with multiple stakeholders.
A stakeholder engagement strategy will ensure that you are seeking input from the right people to identify risks and that you are engaging in the right conversations and taking action to avoid hurdles. Through consistent collaboration on issues of mutual importance, you will earn the trust of those who can impact your ability to conduct business and secure your FTO.
Standing Partnership has helped many organizations map their stakeholders, develop engagement strategies and build fruitful connections. To learn more about the benefits of stakeholder engagement, download this free resource: The Stakeholder Engagement Playbook: Your Guide to Securing Freedom to Operate.