Stakeholders refers to those individuals or a group who has vested interest in the outcome or the results of the body of a work in an organisation. The term “stakeholder engagement” is budding as a means of describing a broader, more inclusive, and continuous process. It takes place between the company and the potentially impacted stakeholders that encompasses a range of activities, approaches and, the entire span of a project. The change that is likely to occur reflects the broader change in the business and financial worlds. It increasingly recognizes the business and reputational risks that may occur as a result of poor stakeholder relations. It also places a growing emphasis on corporate social responsibility, transparency and reporting. Stakeholder engagement can therefore be defined as the process of effectively eliciting the stakeholders’ views on their relationship with the organization.
Stakeholder engagement is increasingly becoming a part of mainstream business and is being used to improve communications, obtain wider community support or buy-in for projects, gather useful data and ideas, enhance public sector or corporate reputation and encourages more sustainable decision making. Without proper engagement of the stakeholders, it is impossible to have a common abiding agreement, ownership and support for a particular project. Any company or an organisation is likely to benefit if it takes care of the environment in which it is operating and aiming to meet the needs of its stakeholders. Stakeholder engagement gives the impression of corporate responsibility. It appears evident that if an organisation shows commitment, through policy and practice, to stakeholder involvement it is acting responsibly towards these stakeholders: the more an organisation engages with its stakeholders, the more accountable and responsible that organisation is towards these stakeholders. It is traditionally seen as a corporate responsibility in action. The impetus behind the use of the term ‘engagement’ in corporate social responsibility (CSR) is the need to emphasize that, for firms merely to interact with stakeholders is no longer sufficient and the interaction with stakeholders is a logically necessary activity of business.
Why Engage with Stakeholders is Necessary?
Effective stakeholder engagement relies on a commitment to engage and communicate openly and honestly with stakeholders. The benefits an organization gets from stakeholder engagement activities are cooperation on operations/activities and at times on policy development as well. It enhances the community confidence and creates a more user-friendly, community/industry targeted service. Future costs can be reduced: for example, times spend in managing the crises with regard to the confidence level of the stakeholders can be avoided. It also helps in improving the access to emerging issues and communities, and helps in gaining the capacity to handle them before they develop a negative vibe in the community. This will include avoiding negative press releases.
In the case of changes and benefits that can take place inside the organisation are as follows:
- It increases the organisational effectiveness which will result in more effective and efficient practice and high quality policy input within the organisation
- It enhances the two-way communication skills and better understanding on both sides and thereby bridges the cultural gaps.
- It develops a culture of innovation and learning, for example by building the knowledge into our decisions and practices.
- Simplifies the conflict resolution through building trust, and a clearer articulation of what cannot be resolved.
Often the importance of stakeholder engagement is overlooked. It allows you to identify strengths and weaknesses and ultimately develop strategies to engage effectively. The stakeholder engagement is a critical element to the success of the project and it may be useful to develop a stakeholder engagement plan. For this, various sources, conventional and unconventional is used such as the media, online, literature or even word of mouth. As a part of the analysis, it is important to examine existing, current and past relationships, available resources and constraints and the desirable outcomes it looks forward to. For this purpose, the different desired outcomes of the stakeholders as well as the stakeholders engagement processes is analysed and studied.
The desired outcomes for undertaking stakeholder engagement process would be;
- Improved personal or working relationships
- Changed attitudes
- Improved communication channels
- Promotion of expansive circle of responsibility for actions and decisions
- Identification of key issues, conflicts and benefits
- Creation of new ideas
- Establishment of new orderly partnerships
- Improved services for society
- Change in policy
- Cost savings to long term
- Betterment of individual and organisational learning
- Local support and hostility supported for a new initiative
- Increased community union and strengthened shared identity