Suggested lecture to GreeNTD participants (footnotes can be checked into the original text)
Tables are attached as jpg
1.
Introduction
Due to complex developments and discussions about values, norms, and
responsibilities, well-organized communication about societal issues is
becoming increasingly important. Parties have a great need for information
about stakes, intentions, expectancies, and points of view (of other parties).
To gain this information, two information gaps need to be bridged, the first
one being the expectancy gap. Organizations do not always have a clear
understanding of what the actual, diverse, and often conflicting expectancies
of their different stakeholders are.
Secondly, there is a perception gap concerning the organization’s
behavior (and performance). Research has shown, that a great deal of consumers,
shareholders and employees are not able to name a single company known to be
‘socially responsible’, despite the fact that these groups have high
expectations and show great interest in the ‘social performance’ of companies.
On the one hand, companies apparently do not know precisely what
stakeholders are interested in. On the other hand, stakeholders are not always
up to date with the extent to which companies are already meeting their
demands, or are willing to do so. When parties fail to get across their
message, the chances are that discussions about ‘societal issues’ remain
confined to ways of how to prevent reputation damage. Effective communication,
however, enables parties to take away mutual distrust and misunderstanding,
paving the way for discussions about chances and solutions.
The dialogue in general, and the stakeholder dialogue in particular, are
seen nowadays as instruments for facilitating effective communication between
company, government, NGOs, science and other societal groups. The word dialogue
has become a very popular phrase in management, and is often used to describe
the collective forms of corporate interaction and communication. Sometimes it
is part of a deliberate strategy to boost a company’s PR campaign. However,
more and more managers are becoming genuinely interested in engaging
in dialogue, not lastly due to good understanding of their own interest.
Very often though, they do not have a clear understanding of the stakeholder
dialogue and the strategies accompanying it. This chapter will attempt to
provide as much clarity as possible in the conceptual confusion.
2. What is a
dialogue?
The Greek word ‘dialogos’
originally means ‘conversation’, in which the message becomes clear to all,
resulting in a common definition or meaning. A dialogue requires a certain
amount of participation and mutual influencing from all parties, ensuring the
incorporation of
different opinions, arguments, and preferences in the end result.
Participation should be voluntary at all times. The level of dialogue of the
interactions is determined by the nature, space and influence of the
participation.
Harris (2002) presents five basic categories of interaction. Each one of
these can be used for communication with stakeholders, as long as is made clear
what the underlying intentions are
and what may be expected from the interaction. Every type of interact ion
requires a different approach (See table 1).
Harris’ interaction categorization model shows that the first three
categories of interaction are
not in fact types of dialogue. Despite this, companies often claim they
are holding a ‘dialogue’ when in reality they are ‘providing information’ or
‘consulting’. A supermarket chain, for instance, mentions giving a group of stakeholders
(societal groups) a guided tour of a new branch, a week before its official
opening, as being a stakeholder dialogue, when it is clearly ‘providing
information’. The reasons for this conceptual confusion are:
• Managers are often not familiar with the concepts .
• Managers tend to underestimate the complexity of certain problems and
therefore think less intensive forms of communication will suffice. Obviously,
not every problem needs a dialogue, but when there are many parties involved
that feel they are ‘issue owner’, a dialogue becomes necessary.
• Window dressing: ‘dialogue’ sounds better than ‘providing
information’.
• Stakeholders often ask for a dialogue to take place when managers feel
a different approach would be more suitable. This results in the interaction
process being labeled ‘dialogue’, when in fact the company sticks to its own
course (method).
• Different types of interaction can easily coexist or even replace each
other. For instance, the gathering of information and testing it during a
consultation round, are processes that could easily precede a (strategic
stakeholder) dialogue. As well as that, a consumer panel is often part of a
dialogue process but it cannot replace it.
·
Dialogue is an
excellent way of freeing oneself of colored and false impressions of things.”
·
“Dialogue is a
unique opportunity to gain understanding and appreciation for the way in which
others view the problem, and to learn more about the values and concerns that
underlie the problem.”
·
“Dialogue is an
interaction process of being open and vulnerable towards another, trusting that
the other party will be open and vulnerable towards you too.”
·
Rather than
attempt to influence and coerce others, dialogue focuses on deep listening with
empathy, expressing hidden assumptions, focusing on common interests and
searching for conceptual breakthroughs.”
Starting an open dialogue shifts relations from confrontation and
competition towards consultation and cooperation. ‘Trust me’ and ‘show me’ are
replaced by the call for ‘involve
me’, ‘join me’ or ‘engage me’ (See figure 1.1).
In practice, this means the interaction type goes from a debate to a
dialogue. Table 2 on the next page summarizes the most important differences
between a debate and a dialogue.
A dialogue demands a completely different attitude, a different
dedication, and different skill
s than a debate. As a rule, a dialogue requires more complex skills.
A dialogue attempts to stimulate partners to learn from each other and
strengthen relationships
in order to take collective action. Dialogue is more ‘process
orientated’ than ‘issue orientated’. It is also more a continuous process than
a process with a clear start and finish. At
first, a dialogue is about learning and discovering each others thoughts
and values, and finding linkages. It is about exploring (divergence) and
subsequently reaching an agreement
or creating surplus value (convergence).
“In a
discussion, decisions are made. In a dialogue, complex issues are explored. When a team must
reach agreement and decisions must be taken, some discussion is needed...When
they are productive, discussions
converge on a conclusion or course of action. On the other hand, dialogue are
diverging; they do not seek agreement, but a richer grasp of complex
issues...The ground rules are different. The goals are different. Failing to
distinguish them, teams usually have neither dialogue nor productive discussions. A unique relationship develops
among team members who enter dialogue regularly. They develop a deep trust that
cannot help but carry over to discussions.” Senge, P. (1990). The Fifth Discipline: The
art and practice of the learning organization. New York: Doubleday/Currency, p.
247
A dialogue looks for linkages between participants through
self-reflection, to eventually reach
common ground. This common ground can serve as a basis for collective
activity, which leads
to the solving of a ‘societal problem’ as well as benefiting the actors
themselves.
3. What is a
stakeholder dialogue?
The ‘stakeholder dialogue’ is based on the same principles the ‘normal
dialogue’. A stakeholder dialogue often mean s involving primary stakeholders like
employees, suppliers,
debt and equity providers, governments and buyers in policy development
and / or implementation. Many companies are seeing a growing number of
stakeholders, partly because companies themselves are growing and becoming more
internationally embedded, and partly due to the emancipation of stakeholders,
meaning the desire to exercise their influence.
Who are the
stakeholders and what are the issues?
The circle of
stakeholders surrounding a company is increasing. Shell estimates that in a
local project it has to deal with around 10 – 25 stakeholders, often sharing a
common interest. But for strategic issues, Shell claims there are over 100
different stakeholder groups with highly differentiated interests.
There are
various methods for identifying and selecting stakeholders for a dialogue, for instance,
the stakeholder positioning map. Sometimes, companies determine which stakeholders
to invite for a dialogue by sending off a questionnaire.
The selection
of topics can be done through:
• Holding a
brainstorm session with operational staff and managers.
• Individual
issue ranking by key people internally.
• An
institutionalized monitoring system that is linked to a life cycle analysis.
The extent to which stakeholders are involved is often left unspecified.
In general, stakeholders as well as governments can initiate a stakeholder
dialogue, but in practice, it is usually the companies who take the initiative.
The stakeholder dialogue has two dimensions that are inseparable and often used
alternately or get mixed up. On one hand, a dialogue is a way of communicating with
a specific set of techniques, skills and rule s (See table 2). On the other
hand, it is also a process in which two or more parties try to build a
long-term relationship based on mutual trust. This way, the stakeholder
dialogue takes on the meaning of stakeholder ‘engagement’. It is hard to define
both concepts exactly; without a dialogue as
a ‘means of communication’, there will be no chance of building a
long-term relationship, and
vice versa. Both aspects, therefore, are essential prerequisites for growing
closer together.
In a dialogue, stakeholders share views and discuss (future) interests
and expectations, and
develop norms and / or initiate collective action.
·
Hemmati (2002):
“In a dialogue of stakeholders, representatives not only state their views but listen
to each other’s views for the purpose of developing mutual understanding,
including each other’s value base, interests, goals and concerns. Dialogue
requires the willing participation of all participants; even one person whose
primary orientation is towards getting her or his way can destroy the dialogue.”
·
The Environment
Council (1999): “Stakeholder dialogue involves a search for win-win situations;
an exploration of shared and different interests, values, needs and fears while
trying to resolve disputes; a focus on processes as well as issues and results;
and the strengthening and building of relationships.”Stakeholder dialogue is
not letting others dictate how we run our business, but giving others the
chance to help us do better.”
·
The World
Business Counsel for Sustainable Development (undated): “Stakeholder dialogue
is a powerful catalyst for change. It promotes greater transparency,
information sharing and inspires society to work together.”
There are at least three reasons for involving stakeholders in policy
development and implementation of companies.
A pragmatic reason: Stakeholder participation renders policy that is more
effective. Involving stakeholding parties in policy preparation make s them co
responsible for it. Furthermore, it prevents decisions from being attacked or
protested against in a later stage. Incorporating the views of many different parties ensures a decision
that is supported by a broad spectrum of society.
A moral reason: Stakeholder participation increases the legitimacy of
the policy because of a
more democratic decision making process. Sustainability issues are a
concern for us all and are not the sole property of statesmen, company
strategists and policy makers. Values, principles, basic assumptions are
central to the moral view of the stakeholder dialogue. Questions like: “What do
we want, and why” are the main questions in this case. As is the search for
larger communal interests.
A reason concerning content: Stakeholder participation results in more
and better reasons (arguments) to base policy on. It renders new insights and
views that would not have surfaced in a technocratic environment. The arguments
are ‘better’ because they contain the concerns of a more diverse group of stakeholders
and came forth from a confrontation of insights, interests and forms of
knowledge. This enables the incorporation of broad social and political
elements such as (un)equality, power, (in) justice, and cultural authenticity,
into the policy.
The ‘business case’ for a stakeholder dialogue initiated by a company
contains the following
elements:
• Early detection of trends and future issues and prioritizing them
• Gaining insight into stakeholders’ view of the corporation and
evaluating the current performance.
• Creating mutual understanding of each other’s interests, dilemmas,
role in society and contribution to society.
• Voicing respect for stakeholders. Engaging in a stakeholder dialogue
is not a “value free exercise”. By choosing a stakeholder dialogue, and
listening to the input of others with the intention of learning from one and
other, corporations show stakeholders they respect them. This alone is an
important message.
• Providing stakeholders with information on which they base their
opinion. In the case of an information vacuum the opportunity arises to link
the existing situation to a specific context.
• Creating support for policy and policy solutions.
• Solving tangible (actual, existing) tensions in the relationship with
stakeholders.
• Gathering suggestions and ideas for the improvement of societal
performance of the company as well as for key performance indicators for
stakeholder reporting.
• Creating a greater sensitivity in the company towards the expectancy
of stakeholders and a
greater sense of responsibility for societal issues
• Building of trust so that potential problems are dealt with in a more
effective fashion.
• Creating a basis for collective projects, alliances and partnerships.
• Prevention of incidents that are fought out in the media.
Reality shows that current stakeholder dialogues have either an overly
pragmatic or a dominantly moral approach. In the pragmatic approach, the
dialogue is very goal-orientated and everything revolves around achieving
certain targets and results. Problems are translated into issues of
effectiveness, efficiency and implementation, thereby very often leaving out questions
like: “Do we actually want this” and “why do we want this”. The pragmatic approach
can easily turn a dialogue into a discussion, which fails to go beyond the
operational
or tactical level. There is no encouragement or stimulation for
participants to develop innovative ideas or explore new boundaries (so-called
‘out-of-the-box -thinking’) while a ‘business as usual’ mentality is being worn
in (cemented in, anchored). People start looking for solutions within the
existing boundaries and it remains highly doubtful if these borders can
provide enough support in a fast changing business environment. In that
sense, not everything
that seems pragmatic automatically leads to effective long-term
solutions.
Indicators for
the necessity of a dialogue
• Increasing
negative media attention towards the company or its products;
• Increasing
stakeholder activity aimed at the company or the sector as a whole;
• Increasing
number of complaints by stakeholders;
• Incomprehensible
internal and / or external developments;
• Lack of
understanding within the company for the (societal) needs and wants of stakeholders;
• Competitors
who are already holding stakeholder dialogues;
• Opinion
vacuum;
• (Local)
political and societal developments threatening the company; and
• Emergence of
controversial issues like the development of technology and products that use
that technology, that can cause societal unrest, social discord and distrust.
A stakeholder dialogue does however not imply:
• ... that every decision within an organization needs to be discussed
with stakeholders;
• ... that the company gives away all its responsibility;
• ... that the result of a stakeholder dialogue always has to be a
compromise, sometimes it is good to ‘agree to disagree’; and
• a form of ‘back room politics’ in which everything takes place behind
closed doors without any transparency, feedback or accountability (afterwards).
When is a stakeholder dialogue not appropriate?
There are situations that signal that a stakeholder dialogue is not the
appropriate instrument for tackling a certain issue. For instance, when it is
highly likely that the dialogue process will
have to be cut short because of a lack of time or because the company
will not be able to reconcile itself with the results, holding a stakeholder
dialogue will create more distrust than not holding it. Neither is a stakeholder
dialogue a good idea when important decisions have already been made.
Stakeholders will get the feeling they have been brought in for a cheap PR
campaign, only to ‘echo’ what the company had already decided upon. This
would lead to more counter-pressure, distrust, credibility loss, and eventually
reputation damage. Also in the
case of tough deadlines, stakeholder participation is not the best alternative.
Because procedures have to be accelerated, stakeholders could get the idea that
they are not being listened too. Companies have to really think the stakeholder
engagement process through before they start it; relationships are by no means
without engagement. Another reason to (temporarily) refrain from a stakeholder
dialogue would be a lack of support. A stakeholder dialogue needs the
commitment and effort of all participating parties to be successful.
Dialogue skills
and techniques
Corrine Mc
Laughin has identified the following skills and techniques that are of crucial
importance to a stakeholder dialogue:
• “Build trust
by creating a positive and open atmosphere;
• Clarify what
constitutes consensus – unanimity (total agreement), or ‘willingness to step
aside’, and not block a decision if one disagrees;
• Surface what
is hidden – allow time for each to share feelings and concerns;
• Focus on
individual and shared needs and interests –not on entrenched positions and past
history;
• Build on
previous ideas –discourage tangents;
• State
differences clearly –avoid pressures to conform;
• Ask problem
solving questions, not judgmental ones;
• Clarify
perceptions –repeat statements back to the speaker;
• Don’t presume
motives –ask direct questions;
• Avoid placating,
blaming, preaching, dominantly or passively resisting –be direct;
• Draw out
quieter participants;
• Brainstorm
mutually beneficial options before final decisions are made; and
• Acknowledge
true human needs –economic security, recognition, belonging.”
4. What is a
strategic stakeholder dialogue?
The strategic stakeholder dialogue goes one step further that the normal
stakeholder dialogue.
The strategic stakeholder dialogue is a structured, interactive, and most
of all proactive process, aimed at creating sustainable strategies. This
process aims to find a balance between
moral standpoints and collective (for the whole of society) values on
one hand, and on the other, the pragmatic approach of solving strategic
problems. We are talking about complex problems that often involve trade-offs
that stem from the heart of the organization. They have
to do with the role of the organization in society, being the role is
currently plays in society, the role it could play, or the role stakeholders
think it should play.
A strategic stakeholder dialogue is not vague, but exactly the opposite.
All parties need to be firmly grounded in reality, have a good understanding of
business and feeling for the wider context in which sustainability-issues
evolve.
The stakeholder dialogue is about tangible issues and responsibilities
in which parties look for shared, suitable and realistic solutions that are
translated into proactive and sustainable policy. They first look for shared
values and principles that serve as a compass for collective action and define
clear boundaries for the strategy. This combines effectiveness and values, or
pragmatism and moral principles. Only this way will the basic conditions be
created from which all parties can reach effective results that are widely
supported and do justice to the common (and societal) interest.
Characteristics
and principles
The strategic stakeholder dialogue has the following characteristics and
objectives:
• Finding better solutions for complex problems by incorporating input
from a wide variety of stakeholders;
• Integrating different insights and generating new insights, letting go
of existing conflicts of interest to create wide support;
• Bringing together the most important stakeholders and building mutual
trust; All parties recognize and appreciate each other’s contribution and
expertise to serve a collective objective; A strategic stakeholder dialogue is not
limited to the participation of only NGOs but also invites suppliers, employees,
and shareholders to participate;
• Creating effective long-term win-win situations; this might imply some
stakeholders will have to endure short-term win-lose situations; Strategic
stakeholders recognizes that the potential ‘losers’ should also be involved in
the dialogue so to not face needless resistance or transaction costs during the
implementation of the chosen strategy. On the other hand, the strategic
stakeholder dialogue should prevent any ‘free riders’ from benefiting from any
agreement that they have had no part in;
• Self-regulation is not a goal in itself nor is it a means to prevent
legislation. It is a way of dealing with sustainability in a more effective
way; In case this does not work, companies, together with societal groups and
(local) governments, will have to start thinking about pro-active legislation
and what it can contribute to the solving of the issue; In practice, the outcome
of a strategic stakeholder dialogue will often be a combination of
self-regulation by companies and NGOs, and government legislation;
• International coordination of the dialogue and international
implementation of agreed upon solutions;
• Preventing information asymmetry between players caused by lack of
transparency;
• Actively seeking to incorporate (new) technology that can be of use to
future generations of consumers as well;
• Sharing responsibilities by treating each other as partners;
• Creating commitment at top-management level and with other parties
involved; When all parties give their support to a solution, the implementation
will run more effectively and efficiently;
• Putting people first during the searching, selecting and
implementation of policy options;
• Letting creativity and intelligence prevail over power and number.
To ensure the strategic stakeholder dialogue achieves the
above-mentioned goals and objectives, it must adhere to certain principles. The
same principles are found throughout the (stakeholder) dialogue literature,
sometimes overlapping each other as a sign of their inseparable connectedness.
Table 3 on the next page sums up the most important instrumental
principles of the strategic stakeholder dialogue.
When all parties consistently adhere to the above-mentioned principles,
the basic conditions are formed in which the stakeholders can start working on
building a relationship, the ‘engagement’ part of the strategic stakeholder dialogue.
Trust in the discussion partners as in the dialogue process are essential.
These two forms of trust are called: source
trust and process trust. Source trust is created when parties
come sincere, and do not appear to have a hidden agenda. It is important to
know what everybody’s intentions are before engaging in dialogue. Furthermore,
there should be a shared feeling of commitment so agreements are met. Process trust has to do with the way in
which the dialogue process is shaped and how the
parties fill it in further. It is about involving a diverse and
representative group of stakeholders, legitimacy, transparency and giving
honest information and timely feedback on
(preliminary) dialogue results. Important elements in this respect are
shared responsibility for:
the agenda, basic conditions and the way the process is organized,
together with trust in the (independent) leadership of the dialogue. The more
strategic a stakeholder dialogue becomes, the more important it is to adhere to
the principles of effective negotiation, described by Fisher and Ury in their
influential book: “Getting to yes”. These principles have been incorporated
into Table 3.
The instrumental – process orientated – principles lead to the most
important principle of all, the principle that makes the stakeholder dialogue strategic:
the (stakeholder) dialogue ought to
contribute to sustainability. In literature, sustainable development is
often seen as a process of
‘social system development’, in which actors engage in a process of
continuous change. This change is in ‘socio-technical’ systems within ecological
boundaries and remains within the boundaries of social justice that are continuously
subject to discussion and change.
Sustainability can be defined as follows: Respecting the relationship between ‘people, planet, profit’;
integrating a wide spectrum of expertise, creating broad societal support and
commitment of parties involved; long-term vision is more important than
short-term solutions; a coherent vision on the use and aim of stakeholder
dialogues, directions of solution are not fixed in advance, an effective stakeholder
dialogue should make a vital contribution to a company’s innovative powers, its
continuity and legitimacy.
5. Conclusion:
a (long) tough road from a reactive dialogue to a pro-active strategic
stakeholder
dialogue
Giving information is not the same as an open dialogue, but it is a part
of it. Strategic stakeholder dialogues are use more or less the same principles
as stakeholder dialogues. Stakeholder dialogues, in turn, use many of the same
principles as dialogues. Nevertheless, there are big differences in the
realization, the intentions and necessary skills. A dialogue does
not necessarily have to evolve towards a stakeholder dialogue, let alone
a strategic stakeholder dialogue. The breaking points between the three forms
of dialogue have been discussed in this chapter and Table 4 summarizes them
briefly. These are also the decision making moments that managers should keep in
mind when engaging in dialogue.
The wrong form of dialogue with the wrong effort can reduce the
effectiveness of the interaction severely. For instance, a manager claiming he
wants to engage in a stakeholder dialogue with several NGOs but in fact only wants
to gather information quickly will soon lose his credibility. Since the necessary
effort of a stakeholder dialogue is much greater the discussion partners will
soon get frustrated resulting in a premature termination of the talks or
the unnecessary hardening of the discussions. On the contrary, a manager
who obviously needs to make some strategic decisions but only organizes a
stakeholder dialogue will find that the stakeholders will probable not be interested
in thinking about strategic options. This will also reduce the effectiveness of
the dialogue severely. NGOs and government bodies have similar dilemmas to deal
with: linking the best suitable instrument to the right issue.
