PRIORITIZING STAKEHOLDERS AND ISSUESPRIORITIZING STAKEHOLDERS AND ISSUES

Engaging with all stakeholders or on all issues is neither possible nor desirable.
Th is would go beyond any available resources, and at the same time make it very
diffi cult to adequately respond to stakeholders, leading to frustration. Th erefore,
you should try and prioritise your stakeholders and issues to ensure that time,
resources and expectations are well managed.
Th e previous processes have enabled an initial overview of the materiality of
issues and the related concerns and expectations of stakeholders, as well as over
their relationship to the organisation’s strategic objectives. However, further
factors need to be considered before deciding on priorities for engagement.
Prioritisation is diffi cult because it is often not possible to quantify the various
‘stakes’ and make objective comparisons. Nevertheless by setting clear criteria
for prioritisation linked to the company processes and business strategy you
are better able to steer the engagement away from being driven by un-strategic
considerations such as the ‘noisiest’ stakeholders, the short-term focus of the
media, or the comfort-zone of managers. Below are two ways of prioritising
stakeholders:
Prioritisation according to the social maturity of issues
One useful way to understand the wide range of issues raised by the diversity
of stakeholders is to consider the maturity of the issues. Pharmaceutical
company Novo Nordisk created a scale to classify issues according to their
maturity (see box).
SIG’s Initial Prioritisation and Categorisation of Stakeholders
The Swiss utilities company SIG started the process of prioritisation with a discussion amongst the executive management team.
The sustainable development team facilitated the discussion. It identifi ed an ‘a-priori’ set of stakeholder categories: shareholders,
clients, business partners, employees, public contractors and civil society interest groups.
The expectations of these groups, and their degree of satisfaction with SIG’s performance, were subsequently evaluated in various
dialogues with stakeholders. Existing customer surveys also served to shed further light on these subjects. In the prioritisation of
their stakeholders, SIG considered their importance to SIG’s strategic business objectives, and their current degree of satisfaction.
Think Strategically
– Some activist communities and NGOs are aware of the issue.
– There is weak scientifi c or other hard evidence.
– The issue is largely ignored or dismissed by the business community,
– There is political and media awareness of the societal issue.
– There is an emerging body of research, but data are still weak.
– Leading businesses experiment with approaches to dealing with the issue.
– There is an emerging body of business practices around the societal issue.
– Sector wide and issue-based voluntary initiatives are established.
– There is litigation and an increasing recognition of the need for legislation.
– Voluntary standards are developed, and collective action occurs.
– Legislation or business norms are established.
– The embedded practices become a normal part of a business-excellence model.
Latent
Emerging
Consolidating
Institutionalised
The same issue can be at diff erent stages of maturity in diff erent regions
or countries, and in diff erent industries. For example, biodiversity is an
institutionalised issue for European businesses, but an emerging one in North
America, whilst employee privacy is only an emerging issue in Europe but
already institutionalised in the US. Similarly, whilst animal welfare has been on
the agenda for the pharmaceutical industry for some time (in relation to animal
testing) and business norms on animal testing have now become institutionalised
in this industry, within the oil and gas industry it is only now emerging as an issue
of controversy and debate, although animal welfare NGOs express much concern
about the use of animals in testing petrochemical products.
While acknowledging the fact that issues, which are high on the ‘maturity
ladder’, receive quite a lot of attention in various ways, this does not mean
that the societal debate about its resolution is over. At the same time, high
social maturity also does not necessarily imply that a sustainable solution
has been found – nor that the current approach is acceptable to the majority
of stakeholders. Th erefore, an effi cient process of stakeholder engagement
needs to be open to constant change and to the involvement of changing
stakeholder groups, even if the issue is becoming increasingly institutionalised.
A good example of this is the development of corporate reporting practices on
environmental issues in the last 20 years.
At each Stage of maturity there is a diff erent mix of stakeholder expectations,
external pressures, risks and opportunities, all of which are essential to
understand in prioritising areas for engagement and planning the actual
engagement processes.
STAGE 1
The Four Stages of Issue Maturity
THE PRACTITIONER’S HANDBOOK ON STAKEHOLDER ENGAGEMENT | 41
In general, the more mature an issue is, the more essential it is for a company
to address the issue. However, the response to the issue also depends on the
company’s general approach towards stakeholder engagement, or issues of
corporate responsibility more generally. Th e table below illustrates the way that
a company, which considers stakeholder engagement as an opportunity, might
typically decide to react to each Stage, as well as the reactions of a company that
takes a more defensive, reactive approach.
Leadership company’s
stakeholder engagement
process.
Maintaining ongoing dialogue
with NGOs and stakeholder
opinion leaders.
Working with an international
organisation to develop new
preventative or proactive
management, production or
marketing approaches that
address stakeholder concerns.
Play a leading role in multisector
and sector-wide
responses to the issue by
promoting best practise and
developing standards
Formalised engagement
processes such as industrial
relations with trade unions or
governments.
Leadership company’s
opportunity focused response:
Gain early understanding of
new risks and opportunities,
and practise precaution as
required.
Address the issue early to win
market shares, or competitive
or reputational advantages.
Finding allies for managing
and addressing these impacts
to prevent best practise from
being undercut by companies
that ignore the impacts.
Making sure that everybody
complies with social norms
and commitments.
Stage of
issue maturity
Defensive company’s response
“ It’s not our job to understand
that”
“ It’s not our job to
address that”
“ It’s not our job to
regulate that”
“We’ll do it if we have to”
Novo Nordisk and the growth of diabetes in the developing world
The Danish healthcare company Novo Nordisk’s main business is the prevention and treatment of diabetes. Diabetes is now
recognised as a pandemic, and the current number of people with diabetes, which in 2003 has been estimated to be 194million, is
expected toincrease to 333 million by 2025. Two-thirds of future diabetes cases are expected to occur in the developing world.
Meeting the associated challenges is complicated. Low- and middle-income countries often lack the healthcare information to meet
the needs of a growing number of people with diabetes. Furthermore, a lacking awareness of and education about diabetes is a serious
problem. Therefore, many experts believe that the solution lies in taking an approach that combines increased awareness, education
and prevention with improved access to treatment.
Novo Nordisk works together with governments, patient organisations and other partners to improve diabetes care in poorer countries,
using its expertise and competence in diabetes to address some of the above issues. At the same time, Novo Nordisk is building a
long-term sustainable business advantage as a leader in diabetes care in the developing world, while responding to growing pressure
from society to increase access to medicine in developing countries.
This strategy for improved access to diabetes care has been built on World Health Organisation’s recommendations. Novo Nordisk
supports the building and development of national healthcare strategies and capacities with the National Diabetes Programme, which
is setting up diabetes activities in eight developing or emerging economies. Activities include educating nurses, equipping diabetes
clinics, supporting diabetes patient organisations and working with governments. It has also offered insulin to the public health
systems of the 50 least developed countries, as defi ned by the UN, at prices not to exceed 20% of the average price in the highly
developed countries of North America, Europe and Japan.
Latent
Emerging
Institutionalised
Consolidating
P4: PRIORITISING STAKEHOLDERS AND ISSUES
Company
response
Different responses to the maturity of issues
Think Strategically
STAGE 1
Stakeholder dependence on
the organisation
Further to my points above, it’s important to note that dialogue doesn’t necessarily
stop or ‘just’ become formaised once an issue becomes inststutionalised.
Between defensive and opportunity focused companies, there is a spectrum
of approaches where companies take an increasingly proactive and embedded
approach to addressing issues raised by stakeholders.
Prioritising according to the infl uence and dependence of stakeholders
Another way to approach the question of strategic alignment is identifying those
stakeholders that are likely to have the greatest impact on the achievement of
your strategic objectives, and those stakeholders that will be most positively or
negatively impacted by the company’s operations. Th is will enable you to prioritise
your attention and action to ensure that you can achieve your strategic objectives,
while respecting the rights of signifi cantly impacted stakeholders.
In order to ensure this, a company might prioritise stakeholder groups in this way:
However, for any particular company or issue, such a matrix may need to be
adjusted to refl ect the most relevant prioritisation criteria in each case. For
example, instead of company dependence, one could consider the dependence
of specifi c strategic business objectives, or of specifi c business divisions on the
stakeholders, which would allow for a more specifi c prioritisation of stakeholders.
Also, it is important to be aware of the interactions between the diff erent
stakeholder groups, for example through lobbying or advocacy activities.
One key driver for corporate responsibility in recent years has been the
development of coalitions of diverse stakeholders around key issues. In particular,
high infl uence /low dependency stakeholders such as investors and consumers
have ‘lent their infl uence to low infl uence high dependency stakeholders such as
supply chain workers in developing countries, future generations and animals,
in order to focus corporate attention on issues such as supply chain labour
conditions, environmental care and animal welfare.
High
Low
Low
Treat fairly – honour commitments to
these stakeholders in line with company
policy, regulations and industry norms,
otherwise endeavour to keep stakeholders
satisfi ed insofar as balance of costs and
benefi ts allow.
Low priority – provide access to general
channels of information and feedback.
High
Strategic threat or opportunity – invest in
engagement processes to understand
concerns and develop solutions.
Keep involved and informed, but ensure
balance between the concerns of high
infl uence stakeholders and those of people
actually impacted by decisions.
Stakeholder Infl uence and Dependancy Matrix
Stakeholder infl uence on organisation
THE PRACTITIONER’S HANDBOOK ON STAKEHOLDER ENGAGEMENT | 43
Maturity of issue
Latent
Emerging
Consolidating
Institutionalised
Evidence
Weak scientifi c or other
hard evidence.
Emerging body of research,
vbut no clear agreement on
conclusions
Strong evidence
Less focus on evidence:
the case has been made and
accepted.
Awareness
Some activist communities,
academics and NGOs are
aware of the issue.Little
business community awareness.
Focus of NGO campaigning,
political and media awareness.
Leading businesses are
experimenting with
approaches to dealing
with the issue.
High level of general
awareness of issue amongst
relevant business, civil society
and public bodies.
Addressing this issue is a normal
part of a business-excellence
model.
Expectations
No regulation or
recognised standards for
business.
Boundaries of business
responsibility subject of
public debate.
Best practice approaches
increasingly promoted and
recognised. Voluntary
standards are established
and legislation may be
proposed.
Legislation or strong
business norms are
established.
SUGGESTED METHODOLOGIES M4:
PRIORITISING STAKEHOLDERS AND ISSUES
Th e purpose of this activity is to identify which issues and/or stakeholders represent
key priorities for engagement by your organisation.
Decide whether to focus initially on prioritising by issues or stakeholders – this
will depend on the context as outlined on p36 – If you have already determined
which stakeholders you need to engage with, prioritise issues. If the engagement
is issue driven, prioritise stakeholders. Otherwise be guided by whether you
know more about the stakeholders or the issues.
In both cases convene a workshop of managers from across the departments and
functions that are likely to be knowledgeable about the stakeholders and issues,
be concerned about the outcomes of engagement or be responsible for
implementing follow up action. You may also consider inviting outsiders with
expertise relating
to the issues or stakeholder groups involved.
Select a person either from inside or outside the company to facilitate.
you can use the objective, issue and stakeholder matrix (T1) a basis for
discussion.
Prioritising issues
Categorise the issues identifi ed in the issue/stakeholder matrix as latent,
emerging, consolidating or institutionalised according to the following criteria:
P4: PRIORITISING STAKEHOLDERS AND ISSUES
Issue maturity rating
Think Strategically
STAGE 1
Discuss the objectives of your organisation in relation to the issues within each of
the four categories of maturity, the risks and opportunities involved and the types
of stakeholders that are relevant for this. Consider how to approach issues in each
category and whether further prioritisation criteria are needed.
Use the issue maturity analysis to assign levels of priority or broad approaches to
engagement to each of the issues.
Prioritising stakeholders
Decide on prioritisation criteria for stakeholders. Infl uence, dependency and
willingness to engage are good general starting points but you may also need to
consider other more specifi c criteria.
Discuss and analyse how each stakeholder group rates against these criteria.
Plot stakeholders on the following grid using infl uence and dependency as the axes.
– Remove, grant or infl uence ‘license to operate’
– Restrict access to resources, operating sites or intellectual capital
– Damage or build company reputation
– Contribute or detract from companies ability to learn and innovate
– Restrict or provide access to investment funds
– Provide useful early warning signals about emerging issues and risks or cause
distractions diverting management attention and time from core activities
depending on the context of engagement may want to focus on some or all of
these sources of infl uence.
– Direct fi nancial dependence (e.g. who depend on you for wages, purchases, grants)
– Indirect fi nancial dependence (e.g. whose livelihoods depend on you through your
contributions to the regional economy, or for example low income customers who depend
on low prices for basic goods which you may provide)
– Non-fi nancial dependence (e.g. those who depend on you for essential services)
– Non-fi nancial impairment or risk from your operations (e.g. through air or noise pollution
or from risk to health for consumers of your products)
– Low/no choice (e.g. employees facing compulsory redundancy, neighbours to a
production plant, addicts in the case of addictive products, consumers vulnerable due
to illiteracy, etc)
– Adversarial/ hostile
– Unknown
– Uninterested
– Engaged through formal mechanism (e.g. via governance, regulation, negotiation)
– Cooperative
– Competitive
High impact
stakeholder groups
are those with the
power to:
High dependency
stakeholders are
those who are in a
position of:
The willingness and
ability of stakeholders
to engage can be
classifi ed in various
ways as appropriate:
THE PRACTITIONER’S HANDBOOK ON STAKEHOLDER ENGAGEMENT | 45
Stakeholder dependence on company
(or project, objective or business line…)
High
dependence

no choice
No direct
impacts –
stakeholders
have
broad range
of choice
No Infl uence Low infl uence Some infl uence Formal power/
high infl uence
Stakeholder infl uence on company (or objective, project or business line)
SUMMARY TEMPLATE T4: STAKEHOLDER INFLUENCE DEPENDENCY MATRIX*
Optional: illustrate relationships between stakeholders using arrows to show
infl uence from one stakeholder to another.
Discuss the mapped results; consider how to approach stakeholders in each
quadrant and whether further prioritisation criteria are needed.
Use the stakeholder analysis to assign levels of priority or broad approaches to
engagement to each of the stakeholder groups
P4: PRIORITISING STAKEHOLDERS AND ISSUES
Think Strategically
*electronic version downloadable at www.accountability.org.uk