1

M&E as the Foundation for SRMEquipping Institutions for Building Social Trust

2

Background• Towards the end of 2005 FeedbackRA was commissioned to

conduct a social audit

• Client was a large, semi-autonomous industrial asset of a TNC in highly industrialised area, itself consisting of multiple semi-autonomous Bus

• Intense stakeholder environment

• Consultancy period punctuated by industrial action, negative press on environment and safety, public criticisms from cabinet level

• Social audit became a SRM audit

3

The Strategic Imperative

• The five common business processes:– Exploiting market intelligence– Marshalling resources– Mobilising people– Executing operations– Integration

• The business case for effective stakeholder relationship management: you have to mobilise people to realise your strategic objectives

• Successful strategy implementation is team dependent, and in the current operating environment your team includes all your stakeholders

• Ultimately, the aim of SRM is to align all stakeholders in the pursuit of common strategic objectives to ensure sustained success

Most of your stakeholders either can’t or don’t work as hard for your organisation as they might. Because they don’t understand your strategy, or don’t agree with it or feel the need to support it, they aim their energies elsewhere. A key objective in strategy is to get all that stakeholder energy focused on the same objectives.

Tony Manning, Strategist

4

Objectives of a SRM Audit• Conduct an analysis of the stakeholder

environment • Undertake a discovery exercise that will

– Contribute to existing body of stakeholder intelligence– Catalogue existing sources of stakeholder intelligence

• Audit the SRM infrastructure to determine organisation’s current ability to effectively manage stakeholder relationships

• Make recommendations towards formulating a SRM strategy and designing an effective SRM infrastructure

5

A Basic SRM Infrastructure

Stakeholder Analysis

Stakeholder Engagement

Function Integration

6

Auditing Stakeholder Analysis• Aspects to Investigate:

– Adequate– Systematic and consistent– Universally utilized

• Research Questions:

– Whether SA methods were being employed– Whether those methods were adequate to the

SRM challenge at organisation– Whether those methods were systematically

implemented – Whether their benefits were being universally

utilized across the organisation

7

Auditing Stakeholder Engagement• Aspects to Investigate:

– Multiple and accessible channels– Consequential participation– Representivity– Intelligence gathering and repository capacity– Reactive vs. responsive– Focused on strategic alignment

• Research Questions:

– Whether there were multiple channels for stakeholder engagement– How accessible the channels were to stakeholders– Whether these channels were characterized by consequential

participation– Whether there were any representivity or issue gaps in stakeholder

engagement arrangements– Whether stakeholder engagement arrangements were geared to

gathering stakeholder intelligence– Whether stakeholder engagement had a ‘memory’– Whether stakeholder engagement was responsive or reactive– Whether stakeholder engagement focused on strategic alignment

8

Auditing SRM Integration• Aspects to Investigate:

– Dedicated– Comprehensive– Strategically driven– Intelligence system enabled– Externalising expertise and memory – Proactive– Operates in a facilitative environment

• Research Questions:

– Whether a dedicated SRM function exists– Whether it attends to all stakeholders– Whether it is driven by an organisation wide SRM strategy– Whether it has systems for managing stakeholder intelligence– Whether it provides for externalizing SRM expertise– Whether it provides for externalizing SRM memory– Whether it manages stakeholder issues proactively– Whether it operates in a facilitating environment

9

Stakeholder Classification Typology

Operation Critical Extra-Operational

Company: producers of our products Facilitators: those who make it possible or impossible to operate

EmployeesSuppliers

Local GovernmentProvincial GovernmentNational GovernmentGovernment Agencies

Organised Labour Influencers: those who make it easy or difficult to operate

Trade UnionsNote: The rationale behind separating trade unions from employees is that

the union is a national body that may conceivably act based on a broader agenda than strictly the interests of the local members.

NGOsCBOsCSI BeneficiariesBusiness CouncilsStakeholder ForumsNote: Stakeholder forums are a tentative inclusion based on a hypothesis

emerging from the SRM audit - although intended to be a representative body the perceptions and actions of the forum is to some extent a product of the forum dynamic, independent of the views of the members’ constituencies.

Customers: consumers of our products Peers: those who operate on a similar scale to us

Note: For the purposes of the current analysis customers are considered to be purchasers of products and services outside of the group of companies.

Note: Peers are considered to be large enterprises with substantial local operations that have a near equivalent impact in the region and by implication should share the social role assumed by organisation.

10

Stakeholder Prioritisation MethodologyActual or potential impact is a function of Interest and Influence

• Interest - the extent to which the stakeholder is committed to securing their interests, as demonstrated in consistent, self-initiated activity

• Influence - the power of the stakeholder to impact on organisation, inherent in the stakeholders, determined by their six C’s – Centrality: the extent to which they are critical to the integrity of the

business’ value chain (eg. Suppliers, employees are very central, whereas environmental NGOs are not)

– Constituency: the importance and/or size of constituency the stakeholder represents

– Credibility: the regard in which the stakeholder is held by others– Capacity: the extent to which the stakeholder has the resources to act– Control: the extent to which the stakeholder has direct power over

organisation’s interests (e.g. government and regulators)– Connection: the extent to which the stakeholder can access networks

to exercise influence

11

SRM Infrastructure: SA Audit

• Pro: Incomplete mapping exercises

• Pro: Largely incidental prioritising of stakeholders

• Con: No consistent SA methodology

• Con: No consistent or universal utilization of SA results

• Con: No currency in SA intelligence

12

SRM Infrastructure: Engagement

• Pro: Multiple channels exist• Con: No catalogue or integrated management of

channels• Con: Very limited intelligence gathering capacity• Con: No repository of stakeholder intelligence• Con: Severe representivity gaps• Con: Consequential participation doubtful• Con: Reactive issues management• Con: No strategy or activity for alignment

13

SRM Infrastructure: Integration

• Pro: Functions exist• Pro: Competent personnel• Con: Limited stakeholder groups managed• Con: No meta-strategy• Con: No explicit systems for utilising intelligence• Con: No explicit systems for externalising memory• Con: Reactive issues management• Con: No deliberate externalizing of expertise• Con: Absence of synthesis• Con: Cumbersome relations with Rosebank• Con: Environment is not SRM sensitised, territorial

14

Conclusions

• Is the organisation responsive to stakeholders?

• Is there a vivid appreciation of stakeholder risk?

• Is commitment and appreciation manifest in appropriate SRM strategies and mechanisms?

15

Operational Recommendations• Formalising and resourcing the SRM function• Broadening the conception of SRM to include all stakeholders• Centralising and Integrating SRM

– Develop a strategy with the overarching objective of aligning all stakeholders to strategic objectives– Facilitate collaboration with Community Relations, CSI, HR, IR, Supplier Management and Customer

Relations• Systematically embedding SRM across the organisation

– Streamlining and supplementing deliberate channels– Identifying and incorporating incidental channels over time– Mobilize and externalize institutional expertise and memory

• Introducing stakeholder analysis (SA) as a management practice– Deposit the intelligence and manage it– Develop and employ the analysis methods

• Creating an information meta-system– Identifying and accessing sources of intelligence (employee surveys, sustainability report stakeholder

engagement)– Generate intelligence: log the issues

• Issue logging at supplier management• Issue logging at environmental management• Issue logging at call centre• Stakeholder forum minutes analysis• CSI stakeholder surveys during M&E

– Mandatory policy of submitting stakeholder intelligence to central repository• Cultivating a SRM culture (for incidental channels)

16

External Intervention Recommendations

• Capacitate civil society• Reintroduce an effective community direct channel• Enhance the lobbying capacity of the SRM function –

analysis, strategy and skill• Become insistent about multi-industry collaboration –

common CSR, government relations and CSI strategy to start with

• Increasing the strategic leverage of CSI – a collaborative and overarching LED strategy, planning, monitoring & evaluation and reporting

• Meet omitted accountability obligations and address urgent stakeholder perceptions