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Aligning interests: Stakeholder engagement tools, strategies and approaches

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Lecture slides on effective stakeholder engagement. Oct 31, 2014. London

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Aligning interests: Stakeholder engagement tools, strategies and approaches

  1. 1. Aligning Interests Stakeholder engagement tools & approaches Wayne Dunn President & Founder CSR Training Institute Professor of Practice in CSR @ McGill wayne@csrtraininginstitute.com www.csrtraininginstitute.com Thursday Oct 30, 2014 London, England
  2. 2. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Should business serve shareholders? Should business serve society? We help it to do both. Simultaneously Consulting Advisory services Training CSR events Strategy Project review CSR diagnostics Custom workshops Partnership development Stakeholder engagement Executive programs CSR communications
  3. 3. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Aligning Interests Value for shareholders AND society
  4. 4. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Session Objectives / Agenda Think Inside AND Outside the Box • Stakeholder engagement: Simple but not easy: Develop some common understanding around stakeholder engagement • Aligning Interests: Self-interest, the sustainable common denominator for all stakeholders • Strategic tools & approaches: • Some Cases • Guinness Ghana • Extractive Sector Case • Industrial chemicals marketing case • Competing stakeholder interests • Discussion Value for shareholders AND society
  5. 5. CSR/Stakeholder engagement in the OLDEN DAYS Policies & Good Intentions Solving Social Problems Suddenly communities could influence how, or if, a project could proceed. Business had a new challenge to figure out
  6. 6. the OLDEN DAYS (cont) Stakeholder Engagement/Community Relations Framework Plan ?Results? System
  7. 7. Stakeholder Engagement/CSR Compliance / Strategic Compliance • Internal codes • External codes & guidelines • Global norms • Reporting protocols • CSR Laws & regulations • Often zero sum Important, but tend to establish a ceiling. Everyone targets minimum required (who volunteers to pay more tax?) Strategic • Room for innovation & creativity • More challenging, even overwhelming (blank slate fear) • More room for value creation (make bigger pie) • More fun and interesting (for me anyway) Both are important. Some balance between the two is ideal
  8. 8. Compliance / Strategic Compliance • Change over time • FPIC • IFC/World Bank • Canada-Supreme Court grants Indigenous Title: Tsilhqot'in Nation v. British Columbia Compliance is price of admission – and admission costs keep rising Strategic • Will focus on strategic in this session Both are important. Some balance between the two is ideal
  9. 9. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Stakeholder engagment: Simple, but not easy Sometimes even confusing
  10. 10. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets CSR: Simple, but not easy What’s in it for me? Aligned with What’s in it for you?
  11. 11. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets CSR: What’s In It For Me? Does CSR make sense without self-interest? Key issue is value alignment: Value propositions that align shareholder interests with those of other stakeholders
  12. 12. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets It is about value • $121M in cost savings by developing local supply chain BHP Billiton • 60% of water reclamation project offset through partnership/shared value strategy Anglo American • 20% reduction in cost of treating by-products by re-purposing water used in production processes Pacific Rubiales • 88,000 reduction in shifts lost to malaria Anglogold Ashanti *Extracting with Purpose, FSG
  13. 13. No Matter How you Slice It
  14. 14. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets If not Value, then what?
  15. 15. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Effective stakeholder engagement What’s in it for me What’s in it for you
  16. 16. Step by Step How To • Great if nothing changes But… • Tend to be specific to projects, companies, industries, countries, etc. Strategies & Approaches • Foundational • Can be applied to ‘How To’ guides • Portable across projects, companies, industries, countries, etc. Stakeholder Engagement Needs to be some of both Our focus will lean towards the art side Science or Art
  17. 17. Strategies & Approaches • Best strategic practices, strategic guidelines, principles • Provide tools frameworks for addressing tactical/structural topics • Will review and use case studies and group work to deepen understanding Tactical/Structural Topics • Pre-engagement due-diligence • Stakeholder mapping • Stakeholder engagement planning • Social entry strategy/approach • Data management and reporting • Managing expectations • Capacity building • Partnerships • Training your bosses Strategies & Approaches
  18. 18. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets
  19. 19. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets What about “Shared Value” The ‘Shared Value’ 4 bucket model Do Nothing Bad Philanthropy Better But not good CSR Alright OK.. The Best Shared Value
  20. 20. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets CSR Value Continuum© • Helps to understand aggregate of project/corporate CSR activities. • CSR includes a range of activities from Philanthropy through to synergistic value alignment (and a well-rounded and developed program would have activities along the continuum) • Continuum of value distribution through to value creation • Shared Value should be created on all CSR projects, not just those at far right. Level and amount of shared value/value creation changes but all are about value and shared value Value Distribution Value Creation • Grants/Donations/Philanthropy • Local organizations/governance • Education & Healthcare • Skills training • Employment • Procurement • New products, markets, ventures © CSR Training Institute 2013 All Good - All the way it’s all shared value Every CSR investment and activity should create value for the company & for one or more stakeholders.
  21. 21. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Value Distribution Value Creation Value Proposition Alignment • Grants/Donations/Philanthropy • Local organizations/governance • Education & Healthcare • Skills training • Employment • Procurement • New products, markets, ventures 1 1 3 CSR Value Alignment Framework© © CSR Training Institute 2013
  22. 22. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Value Sustainability •CapEx or OpEx? • Does the initial investment continue to provide value beyond the investment timeframe • Community Sports Event • Local Supply Chain Development
  23. 23. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Value Sustainability© Current Value Medium Term Value Long Term Value • Grants/Donations/Philanthropy • Local organizations/governance • Education & Healthcare • Skills training • Employment • Procurement • New products, markets, ventures Does a CSR investment continue to produce value over time
  24. 24. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets
  25. 25. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Best practices in effective stakeholder engagement Foundation: Honesty, trust, integrity, openness, humility & transparency 1. Think Value and Interests – and do it transparently 2. It’s OK to disagree – but, disagree without being disagreeable. And stay curious 3. Do compliance but think and act strategically – check the boxes yes, but that is just the foundation 4. Share the credit, multiply the resources. Find partners! 5. Communicate so you are heard and understood. 6. Define stakeholders broadly and strategically – go beyond compliance Will review each and then look at how each applies in a case
  26. 26. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 1. Think value & interests and do it transparently • Engagement is based on self-interest • Be open about your interests and shareholder value • Invest a lot of time and effort in thinking about your stakeholder’s interests • Don’t judge their interests. Identify them. Think about how you can further them.
  27. 27. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Be creative – think outside the box • Don’t limit yourself to the obvious • Look at other industries and sectors • Sometimes you’ll find interesting examples
  28. 28. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Scrimshaw Artworks • Hobby to a business • Creating allies • Creating cash-flow • Aligning interests • Creating & leveraging value • $3 cost: Up to $5,000 value
  29. 29. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets
  30. 30. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets RCMP Foundation Series
  31. 31. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets And the winner is • Over $10,000,000 raised through donations of prints and artwork • Over $1,000,000 cash contributed through co- published prints • Over $300,000 for RCMP Foundation alone (19 prints) • 65% of prints are co-published with charities • Glen built comfortable life from a passionate hobby www.glenscrimshaw.com
  32. 32. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 2. It’s OK to disagree • But, not OK to be disagreeable • Be open about your interests and shareholder value • Invest a lot of time and effort in thinking about and understanding your stakeholder’s interests • Don’t judge their interests. Identify them. Accept them. Think about how you might be able to support their interests and yours at the same time • Stay open and engaged
  33. 33. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 3. Do Compliance AND be strategic • Know the compliance requirements • Know what you want to comply with AND WHY • You don’t have to comply with everything • Compliance is seductive. • Checking boxes feels like accomplishment • It’s easy to communicate • Provides defensible cover if things go wrong • Don’t let compliance be your ceiling
  34. 34. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 3. Do Compliance AND be strategic • IFC has published a great guide to stakeholder engagement • Good Practice Guide for Companies Doing Business in Emerging Markets- http://bit.ly/IFC-Stakeholder • Lots of processes, lots of examples, lots of additional resources • Covers a lot of compliance focused material (and some strategic and operational too)
  35. 35. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 4. Find partners • Think about your stakeholder’s interests • If they are met, who else’s interests get met too • Share the credit – Stakeholder/CSR credit is funny math. Everyone can claim credit without anyone losing credit • Remember, be creative
  36. 36. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Natural Partnerships Unnatural Partners • Education, health, environment, economic development and livelihoods, environmental management and gender equity • Common stakeholder interests in frontier markets • Who else shares these interests?
  37. 37. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 5. Communicate so you are heard and understood Applies to verbal, written, internet and everywhere • No Socialwash (greenwash for CSR) • Communicate value created, not just what the company did • Acknowledge what’s in it for the company • Focus on issues, interests and stakeholders, not the company • Acknowledge concerns and shortcomings • Keep it simple and straightforward COMPLEX
  38. 38. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 5. Communicate so you are heard and understood • Don’t be defensive. EVER • You often are a local political football. Be a spectator. • Share the credit, liberally. Don’t take a look at us, we are wonderful approach • Tell stories. Put facts into stories, don’t always let facts tell the stories • Think about timing – sometimes best to let results speak without your help • Be interesting BORING
  39. 39. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Communication touchpoints • Who all is involved in the project? • Who is benefiting from the CSR project? • Why is that important for them? • Why is it important for society? • Who is helping us with it and what are they doing? • What have we really achieved? • How have we achieved it? • Why is the company investing in it? • What are the challenges and issues?
  40. 40. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Communication Case Study Guinness Ghana Video
  41. 41. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Communication Assessment • No Socialwash (greenwash for CSR) • Communicate value created, not just what the company did • Acknowledge what’s in it for the company • Focus on issues, interests and stakeholders, not the company • Acknowledge concerns and shortcomings • Keep it simple and straightforward • Don’t be defensive. EVER • You often are a local political football. Be a spectator. • Share the credit, liberally. Don’t take a look at us, we are wonderful approach • Tell stories. Put facts into stories, don’t always let facts tell the stories • Think about timing – sometimes best to let results speak without your help • Be interesting
  42. 42. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Guinness Ghana • Input cost pressure, Declining local currency made imported inputs costly and risky • Crowded and competitive marketplace (lots of other beverage/alcohol producers) • Reputational issues • CSR outreach had been traditional (grants, donations, small scale, ad-hoc)
  43. 43. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 0% 10% 20% 30% 40% 50% 60% 70% F12 F13 F14 F15 F16 F17 PERCENTAGE INCREASE IN LOCAL CONTENT BY WEIGHT 2012 – 12% local content by weight 2014 – 38% local content by weight
  44. 44. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Guinness Ghana Increasing local raw materials resulted in: Reduce forex exposure / managing cost Lower input costs (theoretically) Provide value to communities Provide differentiation in the marketplace Provide connection with communities and consumers Support national and community economies Provide framework for further community investments Overall brand and reputational capital value
  45. 45. Guinness Ghana
  46. 46. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 6. Define stakeholders broadly & strategically • Go beyond compliance • Sometimes national and international stakeholders can benefit and bring value for you • Think about groups and individuals whose interests are affected. Positively or negatively • Think about those who could be supportive and helpful and how you can make it in their interests to do so
  47. 47. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Beyond compliance saved the day • Engaged before it was required • Engaged on issues beyond what was required • Identified and worked with strategic influencers on broad value interests
  48. 48. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Industrial Products Case • How can We Be Good use stakeholder engagement to support its business development and marketing strategy
  49. 49. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets
  50. 50. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Six Best Practices Applied to a complex case • First major international mining company to enter post- apartheid South Africa • Retrenched 50% of workforce and didn’t follow established ‘norm’ • Challenged in court by mining union • Company publicly called ‘worst employer in South Africa’ • Government, industry and other stakeholders standing back • Created progressive and very ambitious program to support retrenched workers and families • 70% of workers/families are economically active This case is used as a consultation best practice by Northern Ireland Ministerial Advisory Group http://bit.ly/1sfeJVy
  51. 51. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 1. Think Value and Interests and do it transparently • Interests of the company • Interests of the retrenched workers • Interests of the workers families • Interests of the worker’s communities (migrant labour force – 5 countries, scattered across Southern Africa
  52. 52. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 2. It’s OK to disagree • But, disagree without being disagreeable. And stay curious • In court with Union • Yet collaborating with Union’s development arm Workers and unions resisted the retrenchment
  53. 53. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 3. Do compliance but think and act strategic • Met the legal requirements for retrenchment • Didn’t make lump sum payment to the Union (the ‘norm’) • Accepted responsibility to mitigate impact at family level (huge innovation, raised the bar for industry) • Set up elaborate data gathering and management systems • Ensured that management systems supported objective of family level economic action
  54. 54. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 4. Share the credit, multiply the resources. Find partners! • CIDA partnership • TEBA • Mineworkers Development Agency (gave Union a way back in) • Other national, local, international partners • Always, always, always acknowledged partners in communications. • Let partners lead much of the communications
  55. 55. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 5. Communicate so you are heard and understood • Communication strategy needs to be based on the situation • In this one it was show me, don’t tell me • Created results first and then let partners lead the communication • Direct communication at the onset would have created focal point for opposition
  56. 56. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 6. Define stakeholders broadly and strategically – go beyond compliance • Opened retrenchement benefits to women and families (recognized traditional family as a stakeholder) • Brought in CIDA and MDA • Chokwe example
  57. 57. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets
  58. 58. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets 8 self-interested steps to a CSR plan 1. Admit that it is all about self-interest. What’s in it for me? 2. Find out who else cares. Or should or could care. Make a list. 3. What’s in it for them? 4. What are their biggest wants/needs? 5. Where does What’s in it for me? meet What’s in it for them? 6. Group, arrange and re-arrange the stakeholder interests 7. What’s in it for me? (Again!) 8. CSR and stakeholder engagement are about business efficiency and value too!
  59. 59. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets CSR is about Self Interest • Self-interest. What’s in it for me? This is the true heart of CSR and stakeholder engagement. How could it be otherwise? • Why would companies, individuals, communities and others not act in their own interest? CSR is simply about finding ways to align those self-interests. • CSR is about finding ways that you win by helping other stakeholders to win too. It is about aligning interests so that others win when you win. So that you win when others win.
  60. 60. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets CSR is Self Interest • Good work yes, Do-gooder no • Business works with shareholder resources and interests. Actions MUST create value for shareholders. • It’s the law! • It’s OK for company to benefit from CSR (Mandatory even) • It’s OK to feel good about doing good (that’s a self-interest) No Do-gooders
  61. 61. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Identifying Stakeholders Who else cares? • Start by identifying who might win or lose if your business or project is successful. Who is effected? Who might be effected? Who could be effected? • This step is critical. Don’t just limit yourself to the obvious. • When identifying stakeholders boldly go far beyond where others stop. • Your most perfect and influential ally might be lurking way out there. • Just because you identify them doesn’t mean will engage with them
  62. 62. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets What’s in it for them? • Go through your list asking “What’s in it for them?” • Good or bad • Make a list of how your success, or failure, would affect the stakeholders on the list. • Go back over the list again and push the boundaries. Ask “What might be in it for them? What could be in it for them?” Be crazy, be creative. • No idea is wrong at this point. Push the horizons. The gem may lay on the far horizon and you’ll miss it and leave a lot of value on the table if you don’t push.
  63. 63. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets What are their biggest wants/needs? • Go through your list again and try to make a list of the biggest wants and needs of each stakeholder. • Don’t confine yourself to whether or not the want or the need is related to your business. Note: In the real world you would be interacting with these stakeholders throughout this process.
  64. 64. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Where does What’s in it for me? meet What’s in it for them? Find the interest intersections • Go through your list, stakeholder by stakeholder and look to see where/if your interests meet theirs. • Positively or negatively. • Even tangentially. • These meeting points are where value is created, or destroyed • Apply creativity, insight and anything else you can think of to the interest intersections to find and release value
  65. 65. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Organize, Analyze, Prioritize • Of course, it had to get boring sometime! • There is no magic here. Some of the stakeholders will have the same or similar interests. Some will have complimentary interests. Some will have opposing interests. • Sometimes two stakeholders may have common, complimentary and opposing interests, all at the same time. • The point is that by analyzing stakeholder interests you will get an understanding of the interest landscape as it relates to your business. • Remember, much of the success of CSR and stakeholder engagement rests on efficient and effective alignment of interests. • The better you understand the interest landscape the better your chances of success.
  66. 66. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets What’s in it for me (again) • Look through the interest landscape you have created • See where there are natural intersections, positive and negative • What are the stakeholder interests that will be naturally supported by the success of your venture? • What are the stakeholder interests that, at first glance, are harmed by your business? • What are the stakeholder interests that, no matter how hard or creatively you try, just have nothing to do with your business? • Set aside those interests that have nothing to do with your business.
  67. 67. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets What’s in it for me (continued) For those interests that are naturally supported • Is there any way they can be supported more? Better? • Are there any natural partners? For those interests that will be harmed • Is there any way to mitigate or reduce the harm? • What else could you do? • Are there any partners?
  68. 68. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Extractive Sector Case Study • Strategy to deal with stakeholders and issues and secure robust social license for development and operation of the mine
  69. 69. Best Practices • Think Value and Interests – and do it transparently • It’s OK to disagree – but, disagree without being disagreeable. And stay curious • Do compliance but think and act strategic – check the boxes yes, but that is just the foundation • Share the credit, multiply the resources. Find partners! • Communicate so you are heard and understood. • Define stakeholders broadly and strategically – go beyond compliance Self-interested steps • Admit that it is all about self- interest. What’s in it for me? • Find out who else cares. Or should or could care. Make a list. • What’s in it for them? • What are their biggest wants/needs? • Where does What’s in it for me? meet What’s in it for them? • Group, arrange and re- arrange the stakeholder interests • What’s in it for me? (Again!)
  70. 70. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets Key Questions 1.Who are your key stakeholders? 2.What are their main interests? 3.Which interests can you easily support/address? 4.Which interests will likely be opposed to your success? 5.Are there any potential stakeholders that weren’t specifically named in the case? 6.Are there any allies or partners that you might be able to work with? 7.If there are interests that would likely be opposed to your success how would you deal with them? • Would you have any natural allies? 8.What are the major areas where your interests meet those of your stakeholders 9.What do you plan to do around those intersection points? • What is the value in that for you? • What is the value in that for your stakeholders?
  71. 71. London, UK – Oct 2014How to effectively engage stakeholders in frontier markets And that’s all for today! Overall Objective • To be able to think smarter and ask smarter questions In two intense days in a small group you have • 20 hours of lectures, cases, group time • 6 speakers/faculty with well over 125 years combined experience in frontier markets • 7 case studies / scenarios • Engaged and worked with people from 9 different countries with combined experience in over 75 countries For (free!) follow-up support contact Wayne Dunn wayne@csrtraininginstitute.com www.csrtraininginstitute.com

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