This document discusses stakeholder engagement in the public sector. It defines stakeholders as any group that is affected by or can influence the entity's activities. Effective stakeholder engagement provides benefits like improved service delivery and risk management. The document recommends that public sector entities identify their stakeholders, understand their needs, and develop transparent communication strategies. It also advises creating a documented stakeholder engagement plan that identifies risks, objectives, and processes for relationship building and evaluation.

1. Public sector governance
© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.
GoodGovernanceGuide
Stakeholder engagement (public sector)
It is good governance for a public sector entity to
define the interests of all stakeholders and develop an
understanding of the role that stakeholders have in or
with the entity.
Benefits of stakeholder engagement
Stakeholder engagement benefits for the public sector
entity include:
• increased efficiency in and effectiveness of service
• improved risk management practices — allows risks
to be identified earlier, thereby reducing future costs
• streamlined policy and program development
processes
• greater engagement with stakeholder interests —
ensuring services are delivered in collaboration with
stakeholders and provide outcomes which meet
community needs
• enhanced community confidence in the public sector
• enhanced capacity to innovate.
Who are the stakeholders?
The public sector entity should identify and understand
all affected stakeholders, their distribution and their
needs and interests. It is good governance for a
public sector entity to strive to bring the voice of the
stakeholder into the business in order to build trust
and confidence in the entity and facilitate better
community outcomes.
As an initial step, it is necessary for the public sector
entity to recognise and understand the roles of the
Minister and/or other shareholding Ministers and relevant
department, their particular portfolio and the department
that reports to the Minister. Similarly, the entity should
have an understanding that board members are also
stakeholders as they have a fiduciary duty to act in the
best interests of the public sector entity.
Due to the complexity inherent in the public sector,
where there may be ambiguous measures of service
and perceived elements of public policy prioritisation, it
is vital to understand who the stakeholders are both in a
specific and broader sense. This understanding should
be demonstrated in the entity’s strategies and focus in
regards to stakeholder engagement.
Public sector stakeholders broadly include:
• those who are the focus of the entity’s activities
and services
• those directly involved with or responsible for the
activity of the entity
• those who devise, pass, and enforce laws and
regulations that affect the function of the entity
• other authorities that interact, partner or collaborate
with the entity, such as councils and the boards of
other public sector entities, and
• those with an interest in its processes or the outcome
of its activities.
Specific stakeholder groups that require engagement
include:
• entity management and staff
• customers — these could be either paying clients or
customers in receipt of services
• suppliers
• professional industry associations that represent the
industry or profession that is related to the portfolio
• integrity and liaison agencies, such as integrity bodies,
Auditors-General, the Public Sector Commission and
the Office of the Ombudsman
• parliament as a representative of the public
• employee associations, such as unions
• special interest groups and advocacy groups — these
may be small or large bodies that have been formed
to advocate for particular short-term interests or
may be longstanding interest groups, such as motor
vehicle associations. It should be noted that it is often
the case that these groups require large amounts of
thought and time in engagement

2. GoodGovernanceGuide Public sector governance
© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.
• industry groups
• lobbyists, that is, those people/groups that act
as agents on behalf of others’ interests, and who
demand a particular kind of stakeholder engagement
that should take into account the potential for
conflicts of interest and consequential reputational
risk to the entity
• the general public.
There are different levels of stakeholder engagement,
ranging from active decision-making in facilitating
strategic objectives to informing stakeholders of the
public sector entity’s activities and undertakings.
Transparent and consultative engagement
The public sector entity should establish effective
communication strategies to ensure that stakeholders’
needs are met by choosing the most appropriate
methods and technologies to inform, consult, involve,
collaborate with and engage the various stakeholders
in a timely manner. No single method of engaging
stakeholders is suitable for all situations and often a
mix of approaches, such as the use of structured and
unstructured processes, is necessary. Accordingly, it is
important to tailor the interaction process by considering
the unique characteristics of stakeholders, including the
nature and intensity of their interest, and decide which
approaches are best suited to particular groups.
Fostering a two-way, inclusive dialogue with
stakeholders is necessary for the sustainability of
public sector organisations. Therefore, it is vital that the
communication strategy delivers the transparency that
stakeholders demand in an engaging, enriching way.
Further, it should be recognised that having meaningful
engagement with stakeholders is much more than
communicating to them. Stakeholder engagement
requires clear guidance and objectives to use resources
effectively and an ability to recognise what is required in
terms of time, resources and skills for meaningful two-
way dialogue and participation.
Clearly documented stakeholder
engagement plan
Understanding who the stakeholders are and the process
for establishing their needs will shape the strategy for
engagement. A stakeholder map or plan should provide
a basis for the key information that prioritises those
stakeholders with a degree of proximity to the strategic
objectives and ensures a level of success and alignment
with the entity’s strategic plan. The plan may also
establish or reference a protocol, which may include the
requirement for stakeholder engagement.
The plan should clearly document:
• the risks that threaten the entity’s objectives
• the management and governance structures that
inform the objectives, and
• the monitoring and feedback processes that report on
the success of, or areas of improvement identified in,
the exercise.
It is good governance to consider the following
questions when customising the public sector entity’s
stakeholder engagement plan:
• What is the benefit or opportunity to the entity as a
result of the engagement?
• What is the risk and cost of not engaging?
Stakeholder engagement plans may have a basis in
risk management in addition to or separate from being
performance-based. Risks to the entity that might arise
include the acceptance of gifts by the public sector
entity’s employees or other conflicts of interest that
may arise where the employees or board members
of the entity have the potential to gain knowledge or
insights that could benefit them materially. These risks
should be incorporated in the entity’s code of conduct.
Establishing processes for developing stakeholder
relationships will depend on the scale and complexity of
the engagement but might include:
• representing the entity to the external environment
through media and social media tools. The internet,
social media and other communication methods now
enable wider consultation than has occurred in the
past, including beyond expert or interest groups to
other potential stakeholders
• community engagement strategies such as
community collaborations
• developing outreach strategies to inform businesses
about the entity, including opportunities to work with
it and other programs
• providing information about events and activities that
relate to the entity

3. GoodGovernanceGuide Public sector governance
© Governance Institute of Australia 2015. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.
• using effective communication channels to ensure
access to practical information concerning the entity
• regularly evaluating the effectiveness of programs.
Evaluating stakeholder management
External corroboration of the success or otherwise
of the strategic engagement plan for stakeholder
management can be valuable in assisting the entity with
ongoing development of the plan. Tools that might be
useful include:
• annual, anonymous surveys, to gain evidence across
a range of engaged stakeholders in order to evaluate
and create longitudinal data
• employee exit surveys.
Communication policy
The public sector entity should ensure that a
communication policy is developed that articulates
the rationale for communication by and addresses the
responsibilities of the entity.
The communication policy may include a media policy,
or it may be separate from it. It is good governance
for the entity to be prepared to engage with the media,
including in a crisis situation. If a policy is not in place,
the risk arises of an individual speaking ‘on behalf’ of
the entity who is not nominated to do so and the policy
should address:
• whether public relations are managed in-house or
externally
• who is authorised to speak on behalf of the entity
• how to manage the media in a crisis situation — this
ensures that the entity can respond appropriately to a
particular situation as the policy will set out:
- who is responsible to prepare the media release
- who will brief the external PR consultant if one
is used
- the contact person for the media
- how escalation of an issue will be managed.
Dealing with difficult and/or hostile stakeholders
Occasionally the public sector entity may be required
to respond to external or internal threats that require
immediate crisis management and therefore there is
real value in establishing ongoing relationships with the
media in a non-crisis environment.
The communication policy will provide the processes
and protocols that need to be followed to deal with
other difficult or hostile stakeholders and clarify
responsibilities. Such a policy will also ensure that
any response from the entity is perceived to be fair
and scrupulous.