The importance of strategic stakeholder communications
Published - 24 April, 2020
The fast-changing nature of business has reinforced how important it is to understand the undercurrents of change that shape our world—and determine the success of a business strategy. Consequently, companies that anticipate underlying social, economic, technological, and political changes are positioned to win.
Communicating regularly with stakeholders can help with creating a positive understanding, ensuring that effective long-term relationships with key groups are built. A strong relationship with stakeholders brings a range of benefits, for example, communicating with customers can put you in a strong position when customers are making purchasing decisions.
Stakeholders are the people and organisations whose attitudes and actions can impact the success of a company. Stakeholders include employees, labour unions, suppliers, customers, business partners, investors and shareholders, the local community, government authorities and regulators.
Different stakeholders have different interests, attitudes, priorities and engagement needs. Effective communication ensures that they receive information that is relevant to their needs and builds positive attitudes towards a company or project. In this light, on-going consultation is generally used to track the progress of a company with regards to stakeholder expectations and to maximise buy-in.
Consistent, clear stakeholder communication helps with:
- Better understanding of your goals
- Creating influential and positive relationships
- Building a dialogue
- Influencing sources of power
- Stronger stakeholder relationships
Effective stakeholder communication includes listening to the opinions and beliefs of stakeholders as well as looking for their feedback. Inevitably, these are the people who will shape and influence future business successes.
This involves the nurturing of constructive and productive long-term relations. Stakeholder engagement aims to build associations based on mutual trust and benefits. Heeding to and understanding the views and feedback from stakeholders can help shape and improve the overall operations of a business.
The benefits of stakeholder consultation are clear, with some of the most significant reasons being:
- Enabling more informed decision making
- Leading to greater stakeholder satisfaction
- Improving chances of project/initiative success
- Promoting open, two-way communication
The Kellogg Company, the world’s leading producer of cereals, is an example of an organisation that takes strategic stakeholder engagement seriously. For more than 100 years, Kellogg’s has been a leader in health and nutrition by providing consumers with a wide variety of food products. Kellogg’s market-leading position and reputation are built on its commitment to ethical business practices and its values-based culture.
Kellogg’s uses a variety of strategies to maintain positive relationships with its stakeholders. For example, Kellogg’s commitment to its stakeholders and ethical practices is demonstrated through its Corporate Social Responsibility (CSR) initiatives. The focus here is on improving the lives of communities in which the organisation operates. Kellogg’s has identified four pillars to its Corporate Responsibility strategy:
- Marketplace ambition – meeting the needs of customers. Selling them safe, high-quality products whilst engaging in ethical and responsible marketing.
- Environment ambition – using scarce resources carefully whilst also reducing environmental impacts and supporting sustainable agriculture.
- Community ambition – contributing to the communities in which the company operates, concentrating on nutrition and physical fitness.
- Workplace ambition – supporting a talented and diverse workforce which values diversity and inclusion, abiding by best practice labour standards.
Kellogg’s business strategy is stakeholder-focused. The company’s decisions and actions are all made with the best interest of its stakeholders at the heart. Engaging with both internal and external stakeholders creates two-way communication that brings benefits to both Kellogg’s and to each stakeholder group. Although Kellogg’s engagement initiatives have huge cost implications for the company, they yield huge benefits to the communities and stakeholders as well as to Kellogg’s in order to demonstrate that it’s a responsible business.
Risks of overlooking the principle of consistent stakeholder engagement include:
- Lack of support: stakeholders become disillusioned with the project and withdraw support from the project.
- Cost: communication that is unclear or inconsistent leads to confusion and mistakes that must be remedied.
- Delays: overlooking key stakeholders such as the media or regulatory bodies or failing to spot changes such as suppliers being taken over, can lead to unexpected roadblocks and delay.
As understanding stakeholders becomes more and more important for businesses, stakeholder consultation will become a vital process to maximize success. Successful business outcomes and benefits realisation is grounded on good communication, which requires a good understanding of a company’s stakeholders, and regular reviews of the approach used when engaging with them.
Stakeholder consultation can be used to evaluate reactions and to track the perceptions of a company’s activities and ensure collaboration and partnership with all stakeholders. The long-term effectiveness of an organisation depends on its relationships with stakeholders, ensuring commitment and buy-in to any plans and challenges. This makes for a more informed organization that is responsive to the needs of all its users and stakeholders.
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