Routes to success in Stakeholder Management

What’s the difference between Virgin and M & S?
In your eyes…and in everyone else’s?

Both companies have been meeting their challenges in public in the last three years.
What’s been the impact …with customers, with employees, with investors?

The answer lies in how well they have managed their stakeholders.

It’s a topical subject, engaging hours of Boards’ agendas at present and provoking the questions :

who are our stakeholders?
what do they want?
how can we manage them?

There was a time when a business thought it could choose who to talk to and what to tell them; it might even imagine it could control the pace of information. Those times are gone. Transparency of information through published accounts, city reports and internet mean there is no hiding place. Speed of information flow across investment houses, consumerist organisations, and activists’ sites necessitate speed of reaction not delusion of control.

Winners in the new game know their stakeholders, identify their issues, give them a clear, consistent message of what they stand for, and keep an open two-way dialogue going that builds trust and mutual benefit.

Who are our stakeholders?

Customers, employees and investors are mentioned already – most would readily add suppliers to the list. But did Shell believe Greenpeace was a major stakeholder before Brent Spar ? Aren’t share values of oil companies affected by how responsibly they’re dealing with environment and sustainability ? Better add pressure groups to the stakeholder list. And what about the rest of society – not directly involved in the financial fortunes of the business today, but all potential customers, investors and opinion formers. Not to mention the Media, which can be segmented into the old divides of TV, Press, radio etc or the new divides of UK, European, World; paid for advertising or ‘free’ publicity; general broadcast or special interest.

What do the stakeholders want ?

Within each stakeholder group there’s a myriad of agendas, hidden or otherwise :

Those customers who want a long-term partnership and those who want a short term argument
The employees who made the past have a very different agenda to those who’ll make the future – and their families, vital stakeholders with their own very distinct agenda!
That pressure group, is it really intent on changing your policy on effluent in Scotland or do they have a wider, more insidious goal?
Why did that press release on the new product launch stir up all the publicity on the product recall from three years ago?

Many different Agendas from different stakeholder groups, ……….or sometimes different groups within the same person! As The Henley Centre says ‘the same person can be more different on two different occasions than two different people on the same occasion’. The city investor who evaluates you for risk, also buys your product and reads about you in Investors Weekly, the FT, the Mirror, Private Eye and his local freesheet paper. The Buyer at your biggest customer might have a son working in your Marketing Dept and a daughter active in your most threatening pressure group.

Worst and best in stakeholder management

How to communicate to such a wide range of people with so many special interest agendas ?

At worst, what currently happens in many businesses :

Marketing talk to the consumer
Sales to the customer
Finance pick up the investors
Corporate Affairs defend against the pressure groups
HR act as mouthpiece to the employees

This creates a confused message leaving people to see what others want them to see.

Best practice leads people to see what you want them to see, by achieving :

A consistent core message agreed by the Board
A translation of the message to meet the needs of each major stakeholder group
A campaign of stakeholder communication as part of the Annual Budget and Plan
Commitment of Senior and Middle management to cascading the campaign
Monitoring the impact of company image with each of the key stakeholder groups

Transport companies are in the spotlight of publicity at present and may have, in addition to their many passengers (or customers), a dozen major stakeholders each with a major impact: regulators, customer lobby groups, safety lobby groups, contractural partners, different factions of government. Identifying the message for each group and delivering on their needs is difficult — even more difficult when the needs of each group are in conflict with the others. Stakeholder management in this case requires the communication technology of the 21st century and the diplomacy of the 19th. When it becomes impossible to reconcile the warring factions, the best course can be to set a clear objective, then withdraw from the debate and leave some of the stakeholders to battle out their opposing views between themselves.

Worst and best – the difference shows

Not so long ago M & S had a core image based on values to die for : ‘good value for money, quality, reliability, trust’. All stakeholders would have shared this image, with the possible exception of some of the hard-pressed, over-dependent suppliers. No need to advertise or manage the stakeholder communication. Then, a touch of introspection, competition more in touch with consumers, too much cost-cutting and the values start to unravel, first with suppliers, then with investors and finally with employees and customers. Values passed by word of mouth from generation to generation take a generation to regain.

Virgin has only been with us for one generation – it just seems longer ! Built on core message of ‘dynamism, entrepreneurial spirit, challenging the status quo’, with one spokesman – like him or not – committed to communicating the core values to all stakeholders. The business has extended its portfolio from record shops to pensions; it has felt the business damage from cola wars, railways’ fiascos and failed lottery bids; but the essential image has survived to be used in the next new venture.

Business demands of the future mean that success not only has to be achieved, but has to be seen to be achieved. Successful companies have taken stakeholder management on to the already overloaded Board Agenda and seen its effects throughout all its operations.

Conclusions from the innovators seem to be :

businesses have more stakeholders than they imagined
each stakeholder has a different agenda
stakeholder communication campaigns need a clear, consistent message
stakeholder management must be an integral part of the company strategy

A purely functionally-based career is unlikely to have equipped Managers with the skills needed for stakeholder management, such as tolerance for ambiguity and negotiation capability. An essential element across the functions that manage stakeholders is the need for different communication styles and flexibility of presentation in addressing the various concerns and ways messages will be received. This breadth of understanding is in a different dimension to heading a functional responsibility.

The Success Group’s core business is development of people within an organization, within a team or as individual executives. Adopting a consistent coaching style and a proven process gives effective results including making the transition from Functional Manager to General Manager/ Board Director, a leap which needs help in enhanced self-awareness, personal development and additional skills in the essentials of ‘people and politics’.

The Success Group draws on its experience across many industries in adapting its process to the needs of specific clients.

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