Tobias Webb, Founder and Managing Director of Innovation Forum interviews Wayne Dunn, Professor of Practice in CSR and Founder and President of the CSR Training Institute on the Five mistakes companies make in engaging stakeholders.

1. Helping business to
serve shareholders AND society
SIMULTANEOUSLY
Top five mistakes
companies make in engaging stakeholders
-by Wayne Dunn
www.csrtraininginstitute.com/knowledge-centre

2. Has the term ‘corporate stakeholder engagement’
lost its meaning because it’s so casually over-used
by companies today?
Responses to questions by Toby Webb of Innovation Forum
Top five mistakes companies make in engaging stakeholders
I would suggest FMCG companies and extractive
firms are the leading sectors in viewing engagement
as strategic; would you agree?
I can tell you it gets real meaningful real quick when your operation
gets shut down by disgruntled stakeholders and their allies!
The reality on the ground, where business meets community, is
usually way different than the language of corporate websites and
presentations. So, call it what you will; but remember, many phrases
are over-used so much that the words are nearly meaningless.
You have to look beyond terminology; it’s how companies engage
with local stakeholders, and how they can organize operations and
activities to bring meaningful benefits to local stakeholders, that can
often mean the difference between long term success and shuttered
operation and damaged brand.
Absolutely. And I think that is driven by their vulnerability.
Extractive firms have complex permitting processes to navigate at
start-up and ongoing. These create intervention platforms; public
opportunities for unhappy stakeholders and their allies to voice their
opposition.
They provide a process that allows stakeholders to publicly
communicate their concerns and they can often delay, disrupt and
sometimes kill projects, damage corporate reputational capital and
derail individual careers.
On the other hand, the Fast Moving Consumer Goods (FMCG) sector’s
also vulnerable because they have so much value tied up in Brand.

3. Stakeholder relations can be an effective risk management tool, but
simply ticking the boxes only gets a company part way there. There
is a big difference between compliance-focused engagement and
strategic stakeholder engagement
With the ever-increasing number of global standards, reporting
frameworks and engagement protocols it often feels safer to focus on
compliance. It is an easier story to tell, easier to manage and gives
that
feel-good sense of accomplishment with ever tick.
But, it is a false feel-good!
A purely compliance based approach will miss key strategic
opportunities; opportunities to create value for stakeholders and
company. And ironically it is often these missed strategic opportunities
that can also offer opportunities to mitigate risk and protect shareholder
value.
Coming from a hockey background (I’m Canadian, eh?) I see
strategic engagement as more like offense and compliance focused
engagement more like defence. The challenge is finding the balance
between these, between strategic offense and compliance defence;
because an effective corporate approach requires both.
Use just one and you’ll find yourself in the penalty box often
and winning seldom!
Big companies now grasp the risk-management
benefit of stakeholder engagement, but how many
really see the opportunity side? Surely without that,
firms risk slipping into complacent box ticking?
Top five mistakes companies make in engaging stakeholders
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In today’s always-on and instant global communications world,
disgruntled stakeholders can find ways to reach consumers and
influence how they think about brands. This can have big and quick
impacts on sales and profitability (and on companies and careers).
So yes, both sectors are vulnerable to the impact that disgruntled
stakeholders can have, so finding ways to deliver value to stakeholders
and engage effectively with them is extremely important and a strategic
goal; important for protecting and growing shareholder value.

4. Give us some examples of companies who do
engagement well, or have done it well in the past.
There are many examples of individual projects, or even discrete
units within businesses, that do stakeholder engagement well, but not
nearly so many where a large company does it well across all of its
operations.
One of my favourite examples comes from the 1990s. Cameco
Corporation, the largest Uranium mining company in the world at
the time, was a leader in developing the Saskatchewan (Canada)
uranium industry.
The industry was based in northern Saskatchewan with a population
of 40,000 people (largely indigenous) scattered over 250,000
square kilometres.
Literacy levels were low, there was little history of industrial employment
and many families were only a generation away from a nomadic
lifestyle on the land.
There were regulatory requirements around consultation and benefits
but Cameco realized that it had to find a way that local indigenous
peoples would benefit directly and substantially. That required a
strategic approach.
By late 1999, 450 aboriginal employees, representing about 45%
of the site operations workforce, made Cameco one of Canada’s
leading industrial employers of aboriginal people.
A northern supplier development program was finding new and
innovative ways to engage local people in the industry supply chain.
Today northern suppliers, many of them indigenous, are supplying
half a billion dollars a year in goods and services.
However, despite the incredible success Cameco was having
with stakeholder engagement and benefits in Canada, this wasn’t
consistent across the company.
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Top five mistakes companies make in engaging stakeholders

5. You work a lot in emerging markets; what are the
top five mistakes you see companies making in
stakeholder engagement, and what does it cost
them when they do?
Too often key groups of stakeholders are missed and this means missed
opportunity for companies and stakeholders. And the group that I see
missed most often is the international development community.
Agencies like the UNDP and development partners like Britain’s Dept.
for International Development (DfID) and the United States Agency
for International Development (USAID), etc. are committed to MDG
priorities such as education, health, poverty alleviation and gender
issues.
These objectives are shared with community stakeholders,This gives
us three key groups that have a common objective and have a natural
potential for synergy.
Unfortunately, many companies define their stakeholders too narrowly
and miss these collaboration opportunities.
When they do, their stakeholders and their shareholders both pay the
price.
For example, in 1999 its operations in Kyrgyzstan experienced an
accident and a cyanide spill. The company’s share price along with
its reputation and its operations in Kyrgyzstan took a pummelling.
And the impacts of the incidents were compounded exponentially
because of poor or non-existent relationships with major groups of
stakeholders.
1. Defining
stakeholders too
narrowly.
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Top five mistakes companies make in engaging stakeholders

6. As I explained earlier, it is not easy to maintain a balanced approach
to compliance and identifying and developing strategic opportunities
for stakeholder engagement and value creation.
But this is important. Compliance can feel secure and easy to focus on
and report, but alone it simply isn’t enough.
Beware the temptation of security. Basing your security on compliance
isn’t secure if your goal is effective stakeholder engagement and
shareholder value.
Community/stakeholder meetings, especially in the early stages of a
project, often seem to start negatively with people lining up to voice
displeasure and concern over one thing or another.
For company representatives, especially senior executives, there is
often a tendency to ‘correct facts’ and provide balance and perspective
when faced with seemingly endless negative comments.
Don’t! This is a big mistake!
I’ve been in hundreds of community meetings and the negative
comments and complaints at the beginning are often more about
local community politics and posturing than they are about anything
the company has done or is doing.
This isn’t to say that there aren’t often real and meaningful grievances
and issues, just that the best approach in the early stages of a
community meeting is to simply listen.
I’ve found that by sitting and listening, the complaints and feelings
and issues can come out and, generally, the energy will eventually
shift and a constructive dialogue can develop.
Of course, it doesn’t happen this way all the time, but in general it is
best to simply listen and hear in the early stages of a meeting and see
where things go.
2. No balance
between defense
(compliance) and
offense (strategic
opportunities).
3. Going defensive
too quickly.
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Top five mistakes companies make in engaging stakeholders

7. Thanks Toby for giving me the opportunity to respond to these questions. It has been fun and interesting
for me. I’ve thought of a few other topics to cover so stay tuned for more CSR Thoughtpieces.
Let’s be clear. Companies engage with stakeholders and strive to
create local value and benefits for them because the company sees
that as being in their own self-interest. If they didn’t, why would they
spend the time and money?
Too often companies will try to position their engagement and CSR
work as being more about the interests of local stakeholders and
because the company is ‘good’.
Balderdash. Companies have a self-interest and hiding it or being
cute about their motivation is a big mistake.
This can not only create an awkward donor/recipient type of
relationship and undermine a company’s credibility, but can also lead
to questions on the sustainability of the company’s efforts.
If the company is only doing it because it is good for local stakeholders
then it might seem like an easy target for cutting from the budget if
financial challenges arise.
Far better to openly acknowledge self-interest and fully engage
stakeholders in the search for those areas where both shareholder
and stakeholder interests can come together.
Too much, too little, too promotional, too simplistic. And often not
disseminated in a way that will reach the intended audiences.
On the flip side, communication is an integral part of an effective
stakeholder engagement process. This article is about mistakes so I
won’t go into what makes an effective communications program.
But, doing communications right can add value for both shareholders
and society.
5. Communication.
4. Concealing
self-interest.
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Top five mistakes companies make in engaging stakeholders

8. Wayne Dunn
Wayne Dunn is President & Founder of the CSR Training Institute and Professor
of Practice in CSR at McGill. He’s a Stanford Sloan Fellow with a M.Sc. in
Management from Stanford Business School.
He is a veteran of 20+ years of award winning global CSR and sustainability
work spanning the globe and covering many industries and sectors including
extensive work with Indigenous Peoples in Canada and globally.
He’s also worked oil rigs, prospecting, diamond drilling, logging, commercial
fishing, heavy equipment operator, truck driver and underwater logging, done
a couple of start-ups and too many other things to mention.
His career and life has had big successes, and spectacular failures, and he
hopes he has learned equally from both.
To see other CSR Thoughtpieces and articles by Wayne click here>>>
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Top five mistakes companies make in engaging stakeholders