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Almost anyone, regardless if you’re a business owner or not, knows that the success of any business is contingent on loyal customers and consistent investors – but little do most realise that stakeholder engagement is equally as important.
Stakeholder engagement, a term becoming increasingly known as companies seek to implement greater sustainability, is paramount to ensure your business operations continue to run smoothly. However, at times – it can be hard to facilitate stakeholder engagement for various reasons.
In this article, we’ll review what stakeholder engagement is, why it is important, and how your company can avoid the difficulties of stakeholder engagement.
Before we explain what stakeholder engagement is, it’s important to understand what a stakeholder is to begin with. In short, a stakeholder is any party that takes interest in a company's operations seeing as they may be affected by the company’s activities.
Essentially, a stakeholder is any third party that could be both beneficial and negatively affected by a company’s business endeavors.
👉 The importance of stakeholder engagement has risen dramatically as awareness on corporate social responsibility (CSR) has skyrocketed in the midst of climate change and more sustainable efforts on behalf of businesses.
Examples of stakeholders often include:
Stakeholder engagement, on the other hand, refers to the process of identifying, analyzing, and improving your business ventures based on the feedback you receive from your stakeholders.
Think of someone taking guitar lessons after having self-taught themselves to play the instrument for many years – evidently, the self-taught guitar player may have picked up some bad habits that prevent them from improving their instrumental skills. The teacher is there to help identify those areas to be improved that the guitar player themselves may not realise. Stakeholder engagement works in a similar manner by enlightening companies on key issues most important to their stakeholders.
👉 As a result, stakeholder engagement allows businesses to identify key areas where improvements should be made before a problem gets out of control.
Stakeholder engagement is imperative, especially for companies looking to implement sustainability and ensure that all of their customers, employees, investors, and business partners remain satisfied.
One of the main reasons why stakeholder engagement is so important is because it humanises the business experience, as it allows for honest and viable feedback that can help to prevent deleterious backlash and bad press.
Think of when you haven’t cleaned out your rain gutters in a while – this can result in damage to your roof tiles and leaks. However, if you seek to consistently clean your gutters – this wear and tear can be prevented. The same goes for stakeholder engagement, as it prevents a build up from issues and the need to tackle all of them at once.
Benefits of stakeholder engagement include:
👉 Ultimately, stakeholder engagement can help a company to demonstrate their commitment to improvement, retain loyal customers and investors, indirectly aid in complying with environmental regulations, and even result in increased business revenue.
If your company fails to implement stakeholder engagement policies, it could have severe consequences for your company – as if one stakeholder decides to take a stand, many other stakeholders are likely to follow.
Think of a standing ovation at a concert – aren’t you more likely to stand up and join in on the clapping for applause if others already are? The same goes for stakeholder engagement – more stakeholders are likely to join in on a protest against a company if one takes the leap first.
As a result, stakeholder engagement ensures that companies with more than one stakeholder are continuously seeking to adhere to the needs of all the parties that could be impacted by their company.
Companies that fail to implement stakeholder engagement could suffer from the following:
👉 At the end of the day, the consequences of failing to implement stakeholder engagement are not worth the potential “shortcuts” that can be made without it – seeing as the repercussions could result in serious challenges that could prevent your business from moving forward.
Stakeholder engagement can be challenging, especially for larger companies that have many multiple stakeholders involved – often a part of different communities, governments, and businesses that will have various needs and demands to remain satisfied.
Think of trying to teach a class that will be effective for all of your students, who each are bound to have different preferences and learning styles. This is the same kind of difficulty found when trying to implement tactics to increase stakeholder engagement
Stakeholder engagement can also prove difficult when your stakeholders:
Luckily, there are many things that businesses can do to improve their stakeholder engagement – even when they have extremely uncommunicative and stubborn stakeholders.
We understand that maintaining reputable stakeholder engagement can prove difficult. That’s why we’ve rounded out some of our best ideas to ensure your company is doing its part to implement better practices for improved stakeholder engagement.
Here are just a few of our tips to increase stakeholder engagement:
Although this can prove difficult to maintain and equal balance – it is certainly possible and can prove extremely effective for improving stakeholder engagement. This is because demonstrating personable skills can allow stakeholders to feel more comfortable in sharing their opinions, while remaining professional allows for business boundaries and effective communication that doesn’t let emotions get in the way of finding a solution. Ultimately, seeking to be positive and solution-oriented can help to facilitate greater stakeholder engagement.
Especially in today’s society where everything is instantaneous, the opinions of stakeholders are subject to change at any given moment – meaning ensuring your company keeps up with consistent communication is key to prevent potential backlash from an unsatisfied stakeholder. This can be done by providing your stakeholders with monthly reports, meetings, and even conversations with individual stakeholders if necessary.
Some people, especially in the age of social media where many hide behind a screen, are too scared to confront an issue – but that can easily be taken care of with anonymous surveys. By sending out a monthly or even weekly survey, your company can gain insight on how your stakeholders currently feel without feeling overexposed. In fact, it is up to 75% more likely for people to tell the truth when remaining anonymous under surveys – making this a great way to encourage honest communication and greater stakeholder engagement.
Ultimately, stakeholder engagement is not easy to implement – but it can prove beneficial for your company in the long run, especially in the midst of climate change where environmental regulations and sustainability practices are expected to become the new norm.
We understand that incorporating CSR practices such as stakeholder engagement can be challenging, but Greenly is here to help!
If reading this article about why stakeholder engagement can prove difficult has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!
It can be difficult to identify which areas, such as decreased stakeholder engagement, are slowing your company down in your climate journey, but don’t worry – Greenly is here to help! Click here to book a demo and get personalised expertise on how you can start to reduce your own emissions and decrease your environmental impact.
Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.
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