The organisational leader who is serious about building stakeholder relationships will soon discover that effective and strategically aligned stakeholder engagement can:
•Lead to more equitable and sustainable social development by giving those who have a right to be heard the opportunity to be considered in decision-making processes.
•Enable better management of risk and reputation.
•Allow for the pooling of resources (knowledge, people, money and technology) to solve problems and reach objectives that cannot be reached by single organisations.
•Enable understanding of the complex business environment, including market developments and identification of new strategic opportunities.
•Enable corporations to learn from stakeholders, resulting in product and process improvements.
•Inform, educate and influence stakeholders and the business environment to improve their decision-making and actions that impact on the company and on society.
•Build trust between a company and its stakeholders.
Modern stakeholder interaction has moved from simply managing perceptions as drivers of corporate reputation to managing relationships as drivers of corporate reputation and resulting business outcomes. The organisational leader of the 21st century must be willing to identify the key drivers of stakeholder relationship collaboration including, but not limited to, (a) the new legal and voluntary obligations in place as a consequence of corporate governance, (b) increased public scrutiny and societal expectations, (c) the opportunities presented by new emerging markets, (d) the challenges created by introducing new technologies, and (e) specific critical events such as the product recall currently being negotiated by some of the world’s largest vehicle manufacturers. The modern organizational leader will need to demonstrate both an ability and a willingness to identify key stakeholders acknowledge their right to be heard. Having given an ear to key stakeholders there will also need to be a willingness to give account for one’s actions. Effective stakeholder negotiation should be built on the premise of acknowledging what is important for both you and your stakeholders, understanding the impact of your actions and how this will impact on corporate reputation, and then demonstrating an adequate and timely response.