CHECKING FOR RESOURCE COMMITMENTS

CHECKING FOR RESOURCE COMMITMENTS AND DEFINING “MARGINS OF MOVEMENT”

BACKGROUND
Successful engagement may require signifi cant resources. Resources are
required for the engagement process itself, but more signifi cantly in making
any necessary changes in response to the outcomes of stakeholder engagement.
Th e availability of resources, degree of organisational commitment and the
operational and strategic necessities of the business infl uence the business’
“margins of movement” regarding the issue. Engagement outcomes may have
signifi cant consequences for your business’ operations and strategy. Th erefore, it
is important to consider these possible outcomes regarding specifi c issues before,
and to relate these to the margin of movement that you have regarding an issue.
You need to consider the possible costs of the process and the degree to which its
outcomes and follow-up activities would confl ict or require alignment with other
company objectives. If there is a discrepancy between what you think may be
the outcomes of the engagement and your company’s, check your organisation’s
willingness to adapt the objectives and strategy to respond to the stakeholder’s
expectation. Be aware that you can only engage on a meaningful strategic
level if your company is willing and able to reconsider its objectives and
strategies. Th is should be understood as a potential opportunity, because an
alignment of objectives and strategy with material stakeholder expectations
is one of the key benefi ts of good stakeholder engagement!
STAGE 2
Local Adaptability in Risk Assesments at Telefónica
The results of Telefónica’s CSR department’s risk assessments are compiled in individual reports for every country. They then form a
basis for discussion and joint development of a strategy. An important fi rst step in this is to ensure that the CSR department’s view of
the challenges and priorities corresponds to the reality as experienced in the local context.
Defi ning the margins of movement – knowing which expectations you can
and want to meet and which expectations you can’t meet – is a key step on your
way towards developing a plan of action, and for identifying suitable stakeholder
representatives to engage with. Being clear about your margins of movement
is also important so that you and your stakeholders can be clear about the
possibilities and limitations of a stakeholder engagement process.
Th e following factors need to be considered when considering your resources
for implementing outcomes and defi ning your margins of movement:
THE PRACTITIONER’S HANDBOOK ON STAKEHOLDER ENGAGEMENT | 71
P9: CHECKING FOR RESOURCE COMMITMENTS AND DEFINING “MARGINS OF MOVEMENT”
Analyse and Plan
BACKGROUND
Factors to consider for the engagement itself:
• Confl icting interests and dilemmas (internal and external), which might
prevent or derail successful engagement.
• Possibility of using/building on existing engagement processes and structures
both internally and externally (e.g. customer panels, investor relations
meetings, industry bodies, multi-stakeholder initiatives).
• Th e geographical scale of the engagement. Is engagement on a local, regional
or global (or all) scales required?
For the response and outcomes:
• Internal resources (systems, people, budgets, etc.) necessary to put insights
and possible commitments into practice.
• Confl icting interests and dilemmas (internal and external), which might
prevent or derail possible actions (e.g. strict and low pricing targets for
procurement vs. objectives for improved labour standards in the supply chain).
• Margins of movement in relation to a specifi c issue. Th is means, what can and
what cannot be done regarding an issue. Which stakeholder expectations can
be met under which circumstances? Which cannot be met?
SIG’s Consideration of its Positioning in relation to stakeholder expectations
Following a range of surveys, consultations and workshops evaluating the concerns and expectations of stakeholders, the Swiss
utilities company SIG undertook internal dialogues in order to defi ne it’s position on the identifi ed issues and expectations.
Amongst various functions, the internal dialogue also involved the executive management team. The dialogue focused on identifying
ways of ensuring that material stakeholder expectations are met. This involved a consideration of the company’s limitations, in order
to ensure that SIG does not commit to actions that would exceed them. Simultaneously, potential strategic opportunities that were
indicated by the stakeholder consultations were considered.
Use stakeholder engagement when:
• There is a major issue confronting the company.
• There is suffi cient overlap between the objectives and concerns
of the company and those of the stakeholder.
• There is concern about the impact of a company goal or strategy.
• It is necessary to improve the company’s knowledge of an issue.
• There is an opportunity to help shape company goals and
strategies.
• The company has suffi cient control or infl uence over a decision.
• The company needs to create more options for a planned action.
• All the decisions related to an issue have not yet been made.
Don’t use stakeholder engagement when:
• There is low or no company commitment to address an issue.
• The company has already made key decisions on the issue.
• There is insuffi cient time to engage stakeholders.
• Addressing the issue is a relatively short-term business objective.
• The company’s primary concern is risk mitigation.
• The company is seeking buy-in through advocacy and persuasion.
These are the guidelines that US consumer brand holding company Altria uses to help decide
whether stakeholder engagement is appropriate.
P9: CHECKING FOR RESOURCE COMMITMENTS AND DEFINING “MARGINS OF MOVEMENT”
STAGE 2
SUGGESTED METHODOLOGY M9:
ASSESSING MARGINS OF MOVEMENT
Th e purpose of this activity is to ensure that the organisation has the ability and
willingness to respond adequately to the outcomes of stakeholder engagement, and to
be clear about its margins of movement.
Conduct a workshop or individual conversations with senior management
and budget holders, and representatives from headquarters and the relevant
fi eld level. Make sure you include all the internal players that have the ability to
signifi cantly infl uence the process and the implementation of outcomes.
Discuss the possible outcomes of engaging with stakeholders, as well as the
possible consequences of not engaging with them (use stakeholder representative
assessment table as a basis). Consider worst- and best-case scenarios, and capture
possible outcomes.
Learn about the resources that would be available for engaging with the
stakeholders, and discuss your own preliminary assessments of required resources
with budget holders and decision makers.
Discuss the business objectives and plans regarding the issues that you
are considering engagement on. Come to an agreement with all relevant
individuals or departments regarding your business’ possible ‘margins of
movement’ on the issue.
Use the following table as a guide to considering these questions and for
summarising your results.
THINGS TO CONSIDER
If there seems to be contradictions between what individuals say, try and bring
them together to consider these contradictions further.
Th e resources required to act on engagement outcomes is likely to far outweigh
the immediate costs of engagement itself. Th erefore it is important to not just
focus on the resources required for the engagement itself.
THE PRACTITIONER’S HANDBOOK ON STAKEHOLDER ENGAGEMENT | 73
Analyse and Plan
Stakeholder group to
engage with
Issue to engage on
Availability of resources & margins of movement assessment
Stakeholder expectation
(Template 6)
Business’ Margins of Movement
What are we seeking to achieve?
What is subject to discussion
with stakeholder?
Possible Outcomes of
Engagement
Possible Outcomes of
Not-engaging
Best Case:
Possible Outcomes of Engagement
Actions/abilities & resources
required in response to the
outcome
Best Case:
Worst Case:
Worst Case:
Company’s ability & resource availability for the implementation of potential outcomes
(based on a preliminary assessment, reconsider once you have decided on an engagement
process, and on further development of your abilities (Stage 3, T 11)
Current abilities and available
resources
Defi ne lacking abilities and
unavailable resources
Currently lacking abilities, and
unavailable resources, but
commitment to development
Other comments
SUMMARY TEMPLATE T9*
Actions/abilities & resources
required in response to the
outcome
What is not subject to discussion
with stakeholder?
P9: CHECKING FOR RESOURCE COMMITMENTS AND DEFINING “MARGINS OF MOVEMENT”
electronic version downloadable at www.accountability.org.uk STAGE 2 BACKGROUND Th e information you have collected in previous stages, as well as the preliminary decisions and prioritisations you have made now provide the basis for developing a plan of objectives for further developments. Th is plan will provide you with an overview of the diff erent stakeholders that you are considering to engage on an issue, and will help you to decide on specifi c approaches in Stage 4. SUGGESTED METHODOLOGY M10: CREATING AN ISSUE FOCUSED PLAN This step is primarily a summary of selected outputs from previous steps which will be particularly useful during the subsequent process of capacity building, and when deciding on a specifi c method of engagement. Th e Template summarises: • Fill in one of the summary templates for each of the issues that you consider engaging on. • Consider previously researched examples, the best-practice standards and the maturity of an issue when reviewing the strategic engagement objectives for engagement on an issue that you set in Stage 1. If you change the strategic engagement matrix, remember to also change it in the Template 3, the ‘objective, issue and stakeholder matrix’. • Enter the diff erent stakeholder groups that you want to engage with on an issue and allocate the diff erent stakeholder representatives. Refer to the summary table of diff erent levels of engagement (p60), when capturing the current level of engagement, as well as the target level for engagement. Add additional rows if necessary. THE PRACTITIONER’S HANDBOOK ON STAKEHOLDER ENGAGEMENT | 75 P10: CREATING AN ISSUE FOCUSED PLAN FOR STAKEHOLDER ENGAGEMENT Analyse and Plan SUMMARY TEMPLATE T10: OVERVIEW OF STAKEHOLDER REPRESENTATIVES AND STAKEHOLDERSPECIFIC OBJECTIVES
Strategic objective(s) for
engagement on the issue
Issue of Engagement
Stakeholder groups to engage
with on the issue (Template 4):
Description of Stage of Maturity
Stakeholder
representatives
Current Level
of engagement
(if applicable)
Business’ preferred
level(s) of
engagement
Stakeholderspecifi
c
objective
Possible learning and examples from others (eg. standards, best-practise, benchmarks, etc.):
P10: CREATING AN ISSUE FOCUSED PLAN FOR STAKEHOLDER ENGAGEMENT
*electronic version downloadable at www.accountability.org.uk
STAGE 2
By the end of this Stage you will have developed a better understanding of the
gaps between your organisation and its stakeholders’ expectations. You will have
learnt about your peers’ and competitors activities in relation to the priority
issues and stakeholders, and you will have identifi ed possible stakeholder
representatives to engage with. You will also have gained an understanding of
the resources that are available for the implementation of possible outcomes, as
well as of the related Margins of Movement.
Outputs
Stakeholder Assessments for each Prioritised Stakeholder Group
Assessment of your Resources for the Implementation of Possible Outcomes
Understanding of your Margins of Movement
Assessment of the Business’ Ability to Respond to an Issue
Overview of Stakeholder Representatives and Stakeholder Specifi c
Objectives
STAGE 2 REVIEW
THE PRACTITIONER’S HANDBOOK ON STAKEHOLDER ENGAGEMENT | 77

STAGE 3
Maintain and strengthen the capacities needed to engage eff ectively
STAGE 3
Th e activities outlined in this chapter should be understood as an ongoing
eff ort to build and maintain the company’s and its stakeholders’ abilities to
engage. Th ese abilities concern not just the skills needed to facilitate dialogue
and other engagement processes, but also for all the activities that lead up to and
follow engagement, as described in stages one, two and fi ve. Th erefore activities
such as recruitment, training, performance appraisals and the development
of governance structures, policies and management systems should all refl ect
the requirements of the ‘engaging company’. Th is Stage provides some basic
guidance on how this can be done.
Th e abilities of stakeholders to engage also require attention and may need
strengthening. Companies who wish to engage with stakeholders need to
consider the specifi c requirements and limitations of stakeholders, and may have
to provide assistance to under-resourced stakeholders so that these can take part
in engagements.
PURPOSE
Th e aim of this Stage is to ensure that the company and its stakeholders have
the organisational systems and skills to engage successfully in a productive
relationship. It also looks at overcoming the barriers that may hinder stakeholders
from engaging.
Strengthen Capacities for Engagement
THE PRACTITIONER’S HANDBOOK ON STAKEHOLDER ENGAGEMENT | 79
Strengthen Capacities for Engagement
PRINCIPLES
Th e principles of materiality, completeness and responsiveness provide guidance
in ensuring that stakeholder engagement supports the goal of organisational
accountability. Th is Stage aims to strengthen the company’s ability to deliver on
all three principles.
PROCESS
The Accountability Commitment ‘Inclusivity’
Principles
“Considering the stakeholders’ interests in organisational decision making’”
Ensuring that your company and it’s employees are able to understand its stakeholders
concerns and expectations, and preparing your company for being able to respond to these
expectations and concerns adequately.
Materiality Completeness Responsiveness
Stage 2
Stage 3: Strengthen Capacities for Engagement
Strengthen the
organisational
ability to respond
Consider the
resource
limitations and
requirements
of specifi c
stakeholders
Strengthen the
skills of required
individuals
The company, the stakeholders,
and the involved individuals are
ready to engage
STAGE 3
BACKGROUND
The organisational ability to respond to issues has already been analysed in
Stage two, the following focuses on what can be done in order to improve this
‘response-ability’.
Samarco
Brazilian company Samarco has strengthened its ability to engage with employees at all levels, in order to improve both its quality and
environmental management systems and its capacity to innovate. This producer of iron ore pellets is owned jointly by Companhia Vale
do Rio Doce and BHP Billiton. Facing pressure from shareholders abroad, the company started phasing in ISO 14000 and ISO 9000
with certifi cation in the mid-1990s. Its “Quality House” model with clear targets provides for regular engagement of employees at all
levels and encourages the creative use of in-house knowledge. The result has been an environmental policy and management system that
is not the sole responsibility of the environmental protection division, but of all employees. Employees from all divisions volunteer to
assist in environmental monitoring and reporting. The start of a “Field of Ideas” programme at the initiative of the company president
has also encouraged employees to provide innovative ideas on how to improve company performance in different areas.
Norsk Hydro and Amnesty International
The Norwegian oil and aluminium company Norsk Hydro and Amnesty International (AI) have established a long-standing successful
partnership, in which Amnesty International advises Norsk Hydro to develop systems and principles for tackling issues related to
corruption and human rights abuses. For example, when Norsk Hydro started considering setting up operations in China, Transparency
International briefed the involved managers on human rights issues. While Norsk Hydro does provide fi nancial support to TI, TI still
maintains the right to criticise Norsk Hydro’s behaviour. Despite occasional disagreements on some issues, both parties agree that there
is a lot to learn from each other.
Th e key enablers to respond to specifi c issues, as already initially assessed and
described in Stage 2 (p55), are:
• Governance and management commitment
• Policy regarding the issue
• Performance indicators/measurements regarding the issue
• Clear assignment of internal responsibility to competent individuals
• Review and learning processes that ensure that the management of the issue is
constantly adapted to changing circumstances and improved
The development of these enablers is part of ongoing improvement processes.
Each organisation needs to fi nd its own approach that fi ts into already existing
management systems. Frequently, the integration of stakeholder engagement
into these management processes itself plays an important role.
Th e following table suggest some of the actions that could be taken in order to
improve an organisation’s ability to engage with and respond to stakeholders:
THE PRACTITIONER’S HANDBOOK ON STAKEHOLDER ENGAGEMENT | 81
P11: STRENGTHENING YOUR COMPANY’S ABILITY TO RESPOND
Strengthen Capacities for Engagement
P11: STRENGTHENING YOUR COMPANY’S ABILITY TO RESPOND
• Senior level champions for specifi c issues can drive high level responsiveness.
Internal allies can be very helpful in taking specifi c issues to top-level management,
can be found across the company, for example risk managers, investor relations, the
marketing department or quality management.
• Executive remuneration can be linked with issue-specifi c metrics.
• Key budget holders need to be involved in a conversation about necessary budgets
and the availability of fi nancial resources. Their understanding of these issues is
crucial to their buy-in, and for securing the necessary resources.
• Board and management shall also be encouraged to take a leadership role
in championing the issue. They need to be involved in order to understand their
responsibility for leading the process and driving the associated vision, mission,
strategic considerations and developing a responsive internal culture and values.
Strengthening Enablers for Successful Response
Enabler Ways of Strengthening the Enabler
Board and management
commitment to issue
Top management fully aware of the
issue, the required resources, and
understand linkages with business
strategy and objectives, as well as the
opportunities and the risks associated
with engagement.
• Not all internal groups will be involved in the development of a fi rst policy draft, but
should be involved in shaping the fi nal policy through, for example, stakeholder
advisory panels or consultations .
• Corporate responsibility standards, like the ones mentioned in the table on p57.
(where to look for further learning) or those developed by other companies can
provide a model for policies, which draws on or has already been legitimised through
stakeholder involvement.
Agreed policies or procedures
regarding the issue
Policies developed through dialogues
involving those responsible for
implementation, those infl uenced
by them, and those responsible for
allocating the required resources for their
implementation.
• The timing of stakeholder interactions should allow them to feed into internal
reporting, budgeting and management cycles.
• Governance and management processes should include specifi c quality control
mechanisms to control the quality of the organisational response.
Current engagement activities
regarding the issue
Engagement activities aligned with the
governance and management processes
that direct the business.
• Initial internal discussion about indicators and targets especially considered within
the context of other business objectives and measurement systems can form a basis
for discussion with other internal and external stakeholders.
Performance indicators and targets
regarding the issue
Performance indicators, measurements
and targets informed by stakeholder
dialogue.
• Integration of relevant skills into recruitment policies, job-requirements and
performance-appraisals is essential. This should include both individuals with
signifi cant contact with external stakeholders as well as for managers with signifi cant
infl uence over internal stakeholders.
Internal responsibility and competency
to address the issue
Staff involved have the required
skills, personal characteristics
and competencies to engage with
stakeholders and address this issue.
• A holistic approach to reviewing the whole engagement process is set out in Stage 5,
but on a smaller scale learning circles, discussion forums as well as learning
networks within or between different companies or stakeholders are a useful
mechanism.
Review and learning processes in regards
to the issue
Processes in place to ensure review
and learning to innovate and adapt
organisational policy and processes.
STAGE 3
Novozymes’ Social Responsibility Policy
“The Danish biotech company Novozymes will work to continuously improve our social performance. We will set ambitious objectives
and integrate social and human rights considerations into our daily business. We will identify and focus our efforts on issues most
relevant to us at an individual, national, regional and global level in order to make a positive difference.
• We are all responsible for identifying and assessing areas and issues where our social performance can be improved –
and act upon it.
• In our daily work we must all be aware of our social responsibilities, follow best practices and respect each other.
• We must always listen to the social responsibility concerns of our stakeholders and respond openly. We will have close
relations to the communities where we operate and act as a good corporate citizen.
• We will constantly challenge ourselves to improve our social performance and meet the local and global objectives.
• We must ensure that we all have equal opportunities to grow and fully unlock our potential in a non-discriminatory
environment.
• We will respect basic human rights and labour standards by monitoring our own performance and collaborate with our
suppliers and subcontractors to promote a socially responsible behaviour.
• We will do our utmost to ensure that our business practices are open and honest.
• We will seek partners with core values matching ours.
• When we develop new products we will consider the social impact.
• Product safety is a major priority – from development to customer application. We will not sell products that to our
knowledge will be used in a way that violate safety and regulatory requirements.
• We will report openly and honestly on our social performance on a regular basis.”
The US gold mining company has a ‘5 Star’ rating system for assessing community and external relations, from the top management
down to site level. The 31 management system elements and aspects assessed with this rating system include:
• Leadership & Commitment;
• Objectives, targets, KPIs and Improvement Programmes;
• Internal Communication and Consultation;
• Stakeholder Engagement & Communication;
• Risk management;
• Training, competency & awareness;
• Performance monitoring, measurement & reporting; and
• Human Rights awareness
Each of the elements is illustrated with a defi nition of fi ve different levels of achievement – detailing what is required from management
and staff in order to perform well regarding the element/aspect. This serves to provide effective guidance, and – in combination with
internal and external assurance procedures – also enables continuous performance monitoring and improvement.