Your stakeholder map is not enough

Most organizations can name their stakeholders. They have lists, matrices and increasingly sophisticated maps showing who has high influence, who has high interest, who needs to be engaged and who merely needs to be monitored.

That is useful. But it is not stakeholder management.

A stakeholder map is a snapshot. Business performance is a moving target. Between the two lies a much harder management challenge: understanding which relationships can enable or constrain the organization’s ability to achieve its objectives, then managing those relationships with the same discipline applied to strategy, finance, operations and risk.

This distinction matters because companies do not operate inside organizational charts. They operate inside systems of relationships.

A company may have the capital to expand, but regulators can affect when that expansion happens. It may have an excellent product, but distributors determine whether customers can find it. A major infrastructure project may be technically sound, yet communities can influence whether it proceeds smoothly. A transformation strategy may look impressive in the boardroom, but employees determine whether it survives contact with reality.

Investors, regulators, customers, employees, suppliers, communities, business partners, media, industry groups and increasingly digital platforms all possess different forms of influence over enterprise outcomes.

Yet stakeholder management is still frequently treated as something that happens after strategy has been decided.

Management develops the business plan. Finance establishes the numbers. Operations determines execution. Then communications, public affairs or another corporate function is asked to identify the stakeholders and develop an engagement plan.

I think we have the sequence wrong.

Stakeholders are not an audience surrounding the business. They are part of the environment through which business performance is produced.

This thinking led me to develop what I call the Enterprise Performance–Stakeholder Model, or EPSM.

Its central proposition is straightforward: business performance is created through internal capability and enabled through strategic stakeholder management.

An enterprise brings together strategy, leadership, people, capital, technology, operations and governance. These create organizational capability. But capability alone does not guarantee results. Between what the organization is capable of doing and what it eventually achieves sits an operating environment populated by stakeholders.

EPSM therefore asks leaders to move beyond the familiar question, “Who are our stakeholders?”

The more important question is: Which stakeholder relationships most influence our ability to achieve business performance, and how should we manage them?

That changes the conversation considerably.

Take a company planning a major expansion. Traditional stakeholder mapping might identify government agencies, local governments, communities, investors, employees, suppliers and customers. Boxes are drawn. Influence and interest are plotted. The map is completed.

EPSM asks what happens next.

What does each stakeholder need or expect? What decisions can each influence? How strong is the existing relationship? Where are the points of friction? Who influences whom? What evidence do we have for our assumptions? What action is required? Who inside the enterprise owns the relationship? Most importantly, what business outcome depends upon it?

That is stakeholder intelligence rather than stakeholder identification.

The distinction becomes even more important at the executive level because stakeholder relationships are rarely owned by one department.

A regulator may interact with legal, government affairs, operations and the CEO. A major customer may simultaneously deal with sales, finance and customer service. Employees experience leadership through their immediate managers, HR policies and executive decisions. Communities may encounter the company through operations long before they ever meet the communications team.

Stakeholder management, therefore, cannot simply be delegated to public relations.

It is an enterprise responsibility.

EPSM organizes this responsibility around five questions that I believe executives should repeatedly ask: What really drives our business performance? Who actually influences that performance? Which stakeholder relationships matter most? How should we manage those relationships? And how do we know stakeholder management is working?

The last question is particularly important.

Organizations often measure stakeholder activity rather than stakeholder outcomes. They count meetings, events, consultations, media stories and engagement programs. These numbers tell us that something happened. They do not necessarily tell us whether the relationship improved or whether that improvement contributed to enterprise performance.

The better measures are harder.

Did stakeholder confidence increase? Did resistance decline? Did decision-making become faster? Did regulatory uncertainty decrease? Did employee alignment improve? Did community acceptance strengthen? Did customer loyalty increase? Did a critical partnership become more resilient?

These begin connecting relationships to performance.

This does not mean every stakeholder must be pleased. Business leadership sometimes requires decisions that particular groups will oppose. Strategic stakeholder management is not the art of making everyone happy. It is the discipline of understanding interests, influence, expectations, dependencies and consequences well enough to make better enterprise decisions.

There is also a reputation dimension.

Reputation is ultimately created through accumulated stakeholder experience. What an organization says matters, but what stakeholders repeatedly experience matters more. Strong relationships can build trust, legitimacy and goodwill over time. Poorly managed relationships can quietly accumulate what I have previously described as reputation debt.

By the time that debt becomes visible, the business problem may already be expensive.

This is why stakeholder management deserves a place beside strategy, operations, finance and risk in executive conversations. It should begin when business objectives are being formulated, not when somebody asks for a stakeholder map.

Maps tell us where people are.

Management determines whether they will help us get where the business needs to go.

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Ron Jabal, APR, is the CEO of PAGEONE Group (www pageonegroup.ph) (www.pageonegroup.ph) and the founder and president of the Reputation Management Association of the Philippines (www.rmap.org.ph). Please correspond to [email protected] or [email protected]