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"Consultation is a good thing when people agree with you and a waste of time when people don’t agree with you," controversial former mayor of London Ken Livingstone said.
The benefits of business leaders engaging with their internal stakeholders (such as their staff) are widely understood. Yet, there is also power in meaningful engagement with external stakeholders.
A stakeholder is anyone who can affect or is affected by the actions of an organisation. The concept of the stakeholder was first used in 1963, at the Stanford Research Institute.
It defined stakeholders as “those groups without whose support the organisation would cease to exist." In other words, they are people with “a stake on the success of something" . In business, this can involve your customers, suppliers, funders, partners, regulators, etc. With the rise of online connectivity and social media, it is critical that you seek feedback and understand the views of those who support your business, or who have a vested interest in it.
The public sector has embraced this approach by consulting with its stakeholders as an expected step in the successful development of policy and services.
Businesses also need to be in tune with the perceptions and attitudes of those who will shape and influence their success (or failure).
Your reputation is based on the way people see you operating and the future directions you plan and take, therefore understanding those who influence your future is crucial.
What is consultation?
Consultation helps you to see and monitor trends, challenges and perceptions over time with specific groups of stakeholders, including:
- Identify and track what they need and expect from your business.
- Identify and track their perceptions and attitudes of your business.
- Provide feedback on your specific planned developments.
- Evaluate how they feel you have put a plan into action.
- Establish what they see as your brand and values.
Consultation usually takes on two forms:
- Targeted consultation on specific projects, products, strategies; and ongoing consultation to track and monitor stakeholder perceptions within your broader operating environment.
- In business, targeted consultation is usually used, for example to test new products and services. You might ask existing customers in a focus group to give you feedback on a prototype before the final product is released to market.
However, you should not overlook ongoing consultation. It ensures buy-in from stakeholders and ensures you are not moving away from the expectations and needs of those who have an interest in your business.
It is often used when organisational change is being considered for matters like restructuring, branding or a new strategic direction.
It is a way of reducing operational and political risk, especially if your business is dependent upon certain stakeholders to provide funding. For example, you may talk regularly to shareholders to track their views on where the business is heading strategically, even though they may not be technically required to have a say in that.
Why you should consult?
Consultation helps leaders to better understand problems and risks, and to craft solutions that are more likely to meet your stakeholders’ needs. It also helps improve loyalty and respect because decisions that come from open and collaborative processes with strong stakeholder input can be trusted more.
This is particularly important when you have to make hard choices, when disruption may result, or when you want to influence what people in and around your business can do.
It can be self-reinforcing, creating greater acceptance and involvement from your stakeholders in future consultation — especially when there's clear evidence that you are doing things based on what they have told you. It is beneficial to build legitimacy for tough or complex decisions, showing that you thought through the challenges and trade-offs. This will then lead to a greater chance of a successful implementation of what is being consulted on. Stakeholders will feel included, and therefore more likely to want it to succeed.
How to Consult
A well-planned consultation process is a chance for you to get information to your stakeholders as well as get their feedback.
As with any process, it is important to start with clear objectives about what is to be achieved. After that, the actual process of consultation will need to be planned. Common forms include online surveys or facilitated group meetings.
In designing the process make sure you understand the stakeholders involved and interact with them in ethical ways that reflect awareness of their culture, circumstances and values. For example, a school community may need softer consultation than corporate shareholders.
Here are some key questions to help design your consultation process:
- Who are the key stakeholder groups? How accessible are they?
- What information do they need? How can we get it to them?
- What is the best method of consulting with the groups? How can their co-operation and engagement be gained?
- What will give us the best quality information? How should it be reported back to business leaders?
You should ensure equal and fair access to the consultation process by all stakeholders. Consultation should not be used ad hoc as there is a risk of "consultation fatigue’' among participants or the feeling like some stakeholders are getting more of say than others. To make sure your process is done well you may need to get help from someone outside your business.
The final stage relates to what you do as a result of the consultation. Part of the process of engaging with stakeholders is the investment in a longer-term relationship of mutual benefit and trust.
Without proof of stakeholder feedback being put into action, this can be damaged. A poor consultation process can almost cause more harm than no consultation process.
Give accurate, transparent and timely information to ensure that your stakeholders understand how their consultation has been translated into action or change.
Consultation is becoming popular as a way to improve business success by getting you to look both inward and outward at those who are affected by your business decisions. I recommend that you check in with stakeholders after consultation is completed to track their reactions. This keeps the lines of communication open, encouraging a good relationship with those who are affected by your actions or who have a vested interest in the success of your business.
- Kate Hesson is director of Hesson Consultancy