Stakeholder Engagement

What is stakeholder engagement and how to exploit it to grow on the market

by Beatrice Ortuani

What does stakeholder mean?

The definition derives directly from the GRI Standards which identify stakeholders as entities, internal and external, which can significantly impact the products, services and activities of an Organization which, in turn, can influence the same stakeholders.

There is no fixed list of stakeholders for all companies since the variables in this sector take into account specific factors such as, for example, the sector and the geographical area in which it operates, all very different from one organization to another. It is good to remember that for the same organisation, the stakeholders can also vary over time as the reference factors can vary (e.g. new business strategies, evolution of the surrounding environment, etc).

Wanting to analyze some macro categories, it is possible to identify some types of stakeholders such as investors, shareholders, members, customers and potential customers, suppliers and business partners, employees, companies operating in the same sector, governments and regulatory bodies, supranational institutions, but this remains a list too broad to be valid for all organizations.

It is also possible to proceed with a further subdivision between the stakeholders or between primary or secondary stakeholders, based on the level of influence and dependence on the company's decision-making processes: the primary stakeholders have a direct impact on the business activity and on the achievement of company objectives while the secondary ones have indirect impacts.

The stakeholder engagement tool

At this point it is possible to delve deeper into the so-called stakeholder engagement, the Organizations' tool for identifying and understanding the needs and expectations of their stakeholders. In general, it is a systemic tool for dialogue between all subjects who have an interest in the Organization; a tool capable of making stakeholders feel involved in decision-making processes. It is good to remember that no organization is self-sufficient but needs a deep involvement of the subjects who move together with it: stakeholder engagement consists precisely in this, in starting a dialogue with other figures in addition to those of the company to improve its image.

Stakeholder engagement works on different phases and is a progressive tool in the hands of organizations. Let's see the different steps

1. Planning

A mapping of sensitive topics and relevant stakeholders. At this stage it is useful:

• study the analyses already carried out by sector companies or verify some sector standards (e.g. GRI sector) to better understand the main needs for a company and its actors
• identify the internal functions to be involved in the stakeholder engagement procedure (e.g. Risk Management, Communication, Human Resources etc.).

The central purpose of this phase is to distinguish the most relevant stakeholders, to prioritize the action. It is in fact appropriate to understand:

• how much the stakeholder is dependent on the company;
• the influence of the stakeholder on the company's activity;
• the urgency of changing the type and method of relationship.

OnlineIn general, you can use the following scheme to ask yourself the right starting questions:

The same procedure is envisaged for the mapping of the most significant issues (according to the materiality analysis): analysis of internal and external documentation of the company, analysis of the context in which it operates, mapping the issues and prioritizing them etc.

2. Preparation and implementation

To implement an effective and efficient process, however, it is not enough to ask the right questions but it is also necessary to involve all the organisation's resources, both internal and external, and map the related risks. The preparation and implementation operations can be different and are identified in three progressive steps in intensity:

• Monitoring of the new needs of the company's stakeholders;
• Consultation of the stakeholders on the most relevant issues;
• Collaboration with the stakeholders to create shared value.

It is here, in this phase, that communication plays a fundamental role, because, for planning to work, it is appropriate to select the information and dissemination tools (e.g. analysis of information present online, surveys and questionnaires, meetings, partnerships, etc.)

3. Evaluation and improvement

This brings us to the third and final phase of the stakeholder engagement process, i.e. the evaluation of what emerged in the previous phases. Only once this "heritage" of knowledge has been acquired, is it possible to improve corporate strategies, in light of the data and evidence.

Specifically, it means understanding the overall quality of stakeholder engagement, evaluating both individual activities and the process as a whole.

In fact, thanks to the collection of suggestions, opinions and advice from its stakeholders, the Organization can optimize the performance of future activities.

Even in this phase, communication has an important role in the success because it is profitable, here, to communicate to stakeholders the value and impact of stakeholder engagement. The most effective tool is the publication of a report that explains the evidence obtained in a clear and transparent way, to make stakeholders understand the Organization's ability to understand their needs and take concrete actions for their specific interests.

Weed & Partners, together with Eftilia STP benefit and its professionals, follows and helps Italian SMEs also in the stakeholder engagement process.