Companies Must Be Open to Stakeholders Who Criticize

“Social responsibility” has become a powerful force that, combined with social media and the Internet, is forcing global corporations to change the way they do business.

by Mike Hunter

Feedback-BoxNow is a new age of stakeholder activism. From single billionaires seeking to disrupt boards to activist “Davids” in the field launching stones at the temple of these global Goliaths, more and more passionate — and very vocal — critics are scrutinizing how corporations handle issues like energy, water use, conservation and social justice.

“‘Corporate mansions’ have taken on the role formerly held by nation states like France or England,” says Bruce Piasecki, who holds a doctorate in Environmental Management from Cornell University and is the author of the new book Doing More with Teams: The New Way to Winning.

This new role implies an expanded sense of responsibility that reaches far beyond the old “making money for shareholders” focus. Says Bill Shireman, co-founder and CEO of Future 500 and author of Engaging Outraged Stakeholders, stakeholders — who include investors, regulators and citizens — are looking beyond immediate gains to how corporate decisions might impact their children’s future.

Humanizing Stops Demonizing

Stakeholder engagement breaks the hold of corporate demonization, say Shireman and Dr. Piasecki. The first objective, when dealing with outraged activists, can be summed up in one word: humanize — yourself, your company, even your adversary.

It’s only by displaying its place and awareness in the neighborhood of concerns that a company can be trusted again. Corporate strategy, once the realm of only the general council, the business P and L leaders, and the board, is now something more available for inspection.

“We do not advocate disclosing your corporate strategy, your competitive advantage,” clarifies Dr. Piasecki. “Instead, companies like Coca-Cola, Toyota, and even Warren Buffett firms are beginning to offer stakeholders a chance to reply to key public choice points about their supply chain, their choices of energy selection and, at times, even glimpses into their product redesign choices.”

Of course, disclosure is only the start. According to Shireman, the essence of sophisticated and successful stakeholder engagement is dialogue and sustained structured exchange. “That is why it is a mistake to begin engaging your stakeholders in a formal, scripted manner,” he notes. “What we recommend is more like a dance of dialogue, what the best trial attorneys call ‘structured discovery’ or mutually derived ways to outsmart an impasse.”

The key to a successful “dance of dialogue”? Shireman and Dr. Piasecki say it is understanding the emotional make-up of human beings. “Some social scientists believe humans are wired to respond to challenges with six major core emotions,” notes Dr. Piasecki. “They are anger, fear, disgust, surprise, sadness and happiness. As Darwin pointed out, ‘The same state of mind is expressed throughout the world with remarkable uniformity.’ The fact that we’re all hardwired to be emotional in fundamental ways is as applicable in business as it is in the realms of poetry, theater and literature. As you seek to redesign your corporate mansion, it’s good to keep these fundamentals in mind.”

Redesigning the Steps from the Corporate Mansion into the Neighborhood

So how does one engage stakeholders? These are ten steps Future 500 and the AHC Group often follow when helping companies and stakeholders find common ground:

  1. Set the business objectives.
  2. Inventory and map the stakeholders — by category, risk, opportunity and modes of engagement.
  3. Select priority and strategic stakeholders — a business cannot work with everyone in the neighborhood, but it must have balanced representation.
  4. Plan the engagement process — so as to seek quick wins, add momentum and anchor change in the results.
  5. Train the team — there is a magic in teams that is inclusive and best run when transparent.
  6. Engage informally.
  7. Engage formally only when necessary.
  8. Validate leadership opportunities; share ownership.
  9. Develop a shared vision — this offers the neighborhood a set of shared actionable understandings.
  10. Follow through: Lead change and share credit.

“In all cultures, people tell stories about Davids and Goliaths,” says Shireman. “They recite poetry about the quest for social justice. … They wonder about the causes of good and bad fortune. And they concoct theories of the universe and how we think.”

“But in the end, it is only through participation in the actions of the neighborhood that corporate leaders can regain trust and be given the license for further growth,” adds Dr. Piasecki. Noting it is the job of stakeholders to remind business owners and managers of their world view and preferences, he says, “The corporations that survive, profit and grow in the near future will be more open, transparent and responsive than ever before.”

Dr. Bruce Piasecki is the president and founder of AHC Group, Inc., a management consulting firm specializing in energy, materials and environmental corporate matters whose clients include Suncor Energy, Toyota and other global companies in his Corporate Affiliates training workshops. 

Bill Shireman is the president and CEO of Future 500, which helps the world’s largest companies and most impassioned activists — from Coca-Cola, General Motors, Nike, Mitsubishi and Weyerhaeuser to Greenpeace, Rainforest Action Network and the Sierra Club  — work together to improve the profits and performance of business.

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