In an extract from his new book, Witold Henisz has some thoughts on how to identify a company’s stakeholders
Who should be included within your stakeholder database?
The goal is to incorporate people or groups who have a stake in the outcome of your project, and who can influence its success or failure now or later. Stakes may be direct – someone will get, say, money or a job; or indirect – he or she will receive benefits from another person or organisation that benefits directly.
Even when people are not affected in obvious ways, they may still care about the outcome. They may associate a project with any number of controversial topics such as imperialism, political favouritism, government intervention in the economy, the loss of traditional values or environmental degradation. Sometimes, their beliefs might not seem reasonable, but that will not make the holders any less convinced they are true. The set of potential stakeholders can seem overwhelming.
Screening based on influence is thus required. Include in your database any stakeholder who can ruin your day. That potential is a function of how much power stakeholders have and how much your project matters to them.
How powerful are your stakeholders independently?
Power seems straightforward – a company CEO has it, an unskilled worker does not. But quantifying it poses difficulties. There is no objective unit of measurement, and people may differ in their perceptions. A labourer in the island nation of Tuvalu probably sees his prime minister as powerful; the CEO of Exxon Mobil may not. In the context of corporate diplomacy, the appropriate measure of power reflects the extent to which a stakeholder owns or controls resources that can influence a desired outcome or public opinion about that outcome.
These resources include money, legal or political rights, and guns. They also include reputational assets and other sources of “soft power” that confer influence or status. The 14th Dalai Lama, Tenzin Gyatso, has little formal power, but many people, and not just Tibetans, see him as a moral leader of unusual probity and charisma. Power does not lend itself to a single objective measure, so it is easier to consider it in relative terms – how does the power of one stakeholder compare with another? Who follows whose leadership? The goal is to assess the resources that an individual or organisation has that can influence the success or failure of any project. Critically, this measure does not vary by project but is an overall score that should be equivalent for any given investment or project in that location. Contextual differences in power related to the nature of a proposal or due to the ability of one stakeholder to influence others are captured elsewhere.
Is a stakeholder’s disposition towards the project cooperative or oppositional? Are your operations perceived as legitimate?
Like power, stakeholder position can be hard to define, but it is relatively easy to array stakeholders with respect to their degree of support or opposition for your work. Cooperation and conflict are signalled by words or actions. Pledging support and giving time, for example, signal cooperation, while condemning and protesting indicate conflict.
Some scholars and practitioners speak of the extent to which a firm, investor or policy-maker receives a social licence from stakeholders. A social licence is offered by a stakeholder when that person or group perceives you or your outfit as acceptable or legitimate at a moment in time. Social licence is based on perceptions, not objective criteria, and, like a personal reputation for fair dealing or truth telling, it can be lost if it is not maintained. Its measurement requires canvassing the opinions of stakeholders.
How motivated are stakeholders by the opinions of their peers?
Some stakeholders may be resolute in their opposition, even in the face of pressure from their family, friends or allies. Others may be swayed by the opinions of peers. Someone’s degree of independence can affect his or her role in a stakeholder network. Some stakeholders are more prone to jump to the majority, while others will stand fast even if they are the last holdout.
What issues matter to your stakeholders?
In developing an engagement strategy, you should understand what matters for each stakeholder. What do they value? What matters less to them? You may be able to bundle issues together in a manner that shifts the overall level of cooperation. If, for example, a stakeholder worries about environmental protection, addressing pollution may help. By contrast, influencing someone else may require attention to schools or healthcare.
How strong are the connections between stakeholders?
Every stakeholder operates in a network of some sort – family, friends, neighbours, colleagues, co-religionists or political allies. Through these networks, stakeholders share information and resources and, at times, work together to achieve common goals. Understanding the structure of a network helps to identify key relationships and influencers – people who touch and can sway many others.
For each stakeholder pair identified, your database should contain information on the strength of the particular stakeholder relationship (as compared to that between other stakeholder pairs), the kinds of connections between the stakeholders (financial, informational or social), their joint activities (political, work or social) and their typical means of communication (eg face-to-face conversations, phone calls, email, online social networks).
Compiling a stakeholder database – some suggestions
Many sources can contribute to a stakeholder database. Some can be accessed quickly, such as news articles available online. Others, like the information on social relationships, will require more time and money to collect. Either way, reliability increases with effort expended.
In the easiest and quickest process, a small group of managers with knowledge of external stakeholders creates the database in a workshop over the course of a few hours. They draw on their experiences with stakeholders and their knowledge of media reports and other sources.
The process may include a consultant or facilitator. It may also be informed by the report of an external consultant with expertise into relevant political and social dynamics. This approach relies upon the objectivity of the managers involved. They must accurately and dispassionately record information on stakeholders. Inasmuch as they do not, the database loses value.
A powerful tool to develop a quick analysis that minimises bias has been developed by Eva Schiffer. Her Net-Map diagnostic tool was developed when she was a post-doctoral fellow for the International Food Policy Research Institute working in rural Ghana with the Challenge Programme on Water and Food.
The process involves the literal mapping of stakeholders using figures whose varied heights represent their power. These are then linked with colour-coded markers capturing different types of relationships. A group of internal experts and, possibly, external stakeholders can convene a workshop to quickly identify the pertinent inputs and create the map. The map itself, which is seen by all participants in the workshop, helps to identify biases and omissions while highlighting areas of disagreement among participants.
Furthermore, the act of making it is itself a form of stakeholder engagement, which can help to build and maintain trust between the company and stakeholders. These benefits have been seen in the use of Net-Map in water projects in Ghana, Canada and Iraq; agricultural projects in Zambia, Uganda, Nigeria, Malawi, Kenya, Ethiopia and Brazil; women’s health advocacy in Ethiopia, Malawi, Nigeria and India; nutrition policy in Bangladesh; development policy in Burundi; and environmental policy in the US.
This is an extract from Corporate Diplomacy: building reputations and relationships with external stakeholders, by Witold Henisz and published by Greenleaf.book extract CSR books identifying stakeholders stakeholder engagement Witold Henisz