What is stakeholder engagement?

What is stakeholder engagement? It’s a critical aspect of modern corporate governance education that ensures you communicate with everyone your business impacts. 

Stakeholder engagement is a broad spectrum of activities and may seem overwhelming to firms that have historically avoided it. That said, it’s crucial these days.

It’s anything and everything you do to communicate your activities to any group impacted by your work. 

Common groups of stakeholders include:

• Shareholders
• Regulators
• Consumers
• Employees
• Communities where your company works or owns property
• Suppliers

Stakeholder engagement involves dialogues and interactions with these groups through various channels and for multiple purposes. Finding the right methods for your company depends on its size, impact, and other factors relevant to your operations.

It’s important because it respects the crucial reality that businesses do not operate in a vacuum. Any company – big or small – will affect others, often through intricate and overlapping relationships that can easily be disturbed and require balance to get right. 

For decades, businesses got away with minimal engagement because repercussions were unlikely. Nowadays, it’s a different story. Increasing regulations around social and environmental impact demand more of many businesses, while stricter penalties provide more incentive to cooperate. 

You might have previously read about the “three Cs” of engagement best practice, and there’s a reason they are so popular: they work in summarising the task ahead of you. 

The three Cs are:

• Clarity – you need to make sure your communications get across what you want to say. No information overload, no information gaps, just clear and fluid language so your stakeholders understand key points. 
• Consistency – you need to maintain regular communications, avoiding long gaps or lapses in communication when important events take place.
• Commitment – you need to use the communications. Any news, opinions or other feedback should be acted on, not just noted and then forgotten. Remember: engagement works both ways.

There is no single correct answer. Simply find the best methods for you, and remember to follow tried and tested industry standards otherwise. 

For example, engagement with shareholders often hinges on a good annual report that is written well and has all the essential information. Engagement with employees relies on effective HR and internal comms through multiple channels, including in-person meetings and regular email updates.

• It enables stakeholders to address concerns – concerns that the company’s leaders might not see or appreciate in full. 
• It enables corporate leaders to explain the reasoning behind essential business decisions. 
• It fosters transparency and trust – indispensable for long-term success and risk management.

The most crucial pitfall is approaching it reactively rather than proactively. 

If you’re contacting your employees about budget cuts after some have already taken place, it’s a problem. If you’re contacting the community around your manufacturing plant about a building extension but have already submitted planning applications, it’s a problem.

True engagement means thinking long-term about issues likely to impact your stakeholders and acting on them as soon as possible. 

The other main pitfall is thinking of engagement as a once-off. It’s important to remember that it’s not a once-off but a continuous process of interacting and learning. When you engage, actively listen to your stakeholders and consider their input in your decision-making.