Chapter 2

Communication: Establish the dialogue

The purpose of communication

Communication is one of the four important milestones that lead to effective action and change. If you want to change things you need to communicate. Communication helps you to understand your stakeholders. If you listen to them you will be able to constantly adapt your working efforts to the needs of the stakeholders you are serving. And you may bring these stakeholders along on your journey. Whether it’s your boss, your internal customers in a company or the external consumer and client or a colleague. Communication allows us to both inform and to learn. And successful communication only occurs when both partners change after that process – either because they have learned something and can better understand the other person’s viewpoint or because what you learned will make you change the things you do and how you do them. So, there has to be the will to change, the openness to accept and to listen.

The Listening Leader uses good communication to become a better leader, every day. Practising good communication means establishing a dialogue, creating the prerequisite for a structured listening process, followed by sharing this input and helping to modify the company’s strategy accordingly. Only by knowing and understanding the needs of the stakeholders can the leader improve her own performance and that of her colleagues. She will understand where people need to be enabled to do a better job and decide to delegate and empower them in order to become agents of change. But you can only figure all of this out if you entertain a genuine communication, if you listen, and if you do something with it.

All relevant strategy experts, from Pericles to von Clausewitz and from von Moltke to Henry Mintzberg, note that strategy is a flexible thing, that you both need a vision of where you want to go and the adaptability to re-tune, fine tune, constantly challenge this strategy according to the context. And the ‘context’ is the stakeholders, normally summed up in ‘the market’, made up not only of the investors but of the peers, the customers, academia with its research, new talents on the job market or rules changed by regulators and legislators. The so-called perfect strategy followed through from A to Z as it was schemed and designed at the beginning, is normally simply the result of mystification in hindsight. The really perfect strategy is the one that leads to success. And this can only be obtained if you as a leader are open to accepting input for change. For this you need to master communication.

The purpose of good communication is to help you become a better leader and perform better, for yourself and for your employer. As you will have become stronger through the input of your stakeholders, your decisions will be more likely to be accepted by them, because they will recognise themselves and their own input in them. They will own your strategy as much as you do.

And for your stakeholders, being involved and co-owning a decision will make them more likely to grant you the license to operate, to grant you the legitimacy as a leader. If your stakeholders, your staff, your colleagues, your clients truly communicate with you they might be ready to accept you and accompany you along your journey, faithfully, critically and motivated.

And now, how to go about communicating? There are many different ways to entertain a dialogue so let’s look at the most common ones in the business environment.

Why the CEO matters

The top manager heading the company is where all the interests converge or collide. The CEO is the last resort for the balance between the stakeholders’ demands. She is the symbol of the appropriate balance between the stakeholders. She is responsible for exactly this equilibrium between the different interests. If she manages it to the satisfaction of both the stakeholders and the company she is successful and the company thrives. She has to be able to relate to all interest groups, to be empathetic with them. She is the Ombudsman of the stakeholders, the Court of Last Appeal. And she might lose her job if she loses their support.

It is therefore in the best interests of the CEO to lead the pack in terms of communication. Peter Záboji, a successful leader and CEO and then teacher at the INSEAD business school briefly wrote: ‘Modern leadership is mainly communication.’²

And a talent interested in a job should carry out a thorough check on whether the CEO is a Listening Leader. There are many ways to find this out. Look at the company’s website and their annual report. How often is the customer mentioned? How many figures and how much information is provided on the performance of the company relative to customers? Is there any information on employee engagement?

Look for key performance indicators in the company’s publications. I don’t believe blindly in Robert Kaplan’s ‘You can only manage what you can measure’, but most of those who are sceptical of what they – wrongly – deem ‘soft-factors’ do. And if you look at the shareholders’ KPIs you’ll find whole books on how to measure profitability. So, let’s take them at their word: where in your publications do you address employees, customers and society, next to the investors?

Why is it so important to read about facts and figures on the communication between the company and its stakeholders? Because talk is cheap and verifiable facts are the best way to establish a basis of trust on the earnestness of the communication by the company. If this communication is earnest it will be based on true listening. The CEO has to prove that he’s honest about listening and only reliable and verifiable data will show his or her commitment. Verifiable and verified, ideally by an independent auditor, like with the financial reporting.

‘Warm’ and ‘cold’ communication

I distinguish between warm and cold communication. Cold communication is technical, electronic or printed. It is an intermediated form of exchange, occurring through technical tools. The weekly conference call is cold communication. You can share information, you can ask and answer questions but you’re not in a room with someone. One could say that normally cold communication stimulates only one sense, hearing or seeing, in our case listening to a person in a conference call or reading a text.

Warm communication is personal, physical. It appeals to two senses, sight and hearing. It allows for many more dimensions of communication that cannot be fully deployed in the cold communication: pauses, body language, tone of voice, volume of voice.

Both are potentially interactive and immediate (otherwise they wouldn’t be called communication).

If one wants to qualify them I would say that warm communication is generally better than cold communication, because it can convey more emotions, it comprehends body language and is a holistic mutual listening experience. It is more personal. For large numbers, though, cold communication is generally the only fast way to go about having a dialogue.

Communication should not be a lonely event. It should become a habit, a constant exchange. The dialogue with stakeholders has a purpose as we have seen. So it’s about a journey. And journeys allow for different means of transport: on foot, horseback, or by car, train, ship and airplane. A successful journey will integrate as many elements of warm communication as possible into a communication campaign. Even if cold communication might prevail, be as personal as possible. It may help to remember that a ‘warm-hearted’ person is more likely to be accepted than a ‘cold-hearted’ one.

People speak different languages and with a little mindfulness we can learn to listen to these different idioms and understand and respond to them.

Before we get deeper into the different dimensions of listening, let’s pause for a second.

What are the most important practical goals of good listening for a Listening Leader, next to earning the name?

There are two. First, to learn. To truly understand. Managing the process of listening allows us to learn and integrate the input into action, or strategy. It enriches and improves the quality of the management action, makes it more sustainable, grounded on more solid pillars, a stool with an additional foot.

Second, to become aware of the importance of listening for the greater good of the company and of society with accepted market mechanisms. This may grant the company the license to operate – and therefore thrive.

The most important thing about listening is another, however: Good listening is a wonderful experience. If you are even only minimally interested in people, good listening will open doors, will establish trust, it will expand your knowledge and your feelings and can lead to pure bliss. But while this truly matters for our lives, it would be an unlikely reason for your boss to be happy hearing that you read this book. Unless your boss already is a Listening Leader.

Richard Sennett explains that good listening skills are about ‘closely attending to and interpreting what others say, before responding, making sense of their gestures and silences as well as declarations.’⁴ I like this definition – it’s as good as it can get in one sentence.

The different dimensions of listening

We have many ways to express our thoughts and emotions, from speaking to grunting to rolling our eyes to angrily waving our arms to shouting to … being quiet. And if all these efforts aren’t to be in vain, we better swap position and rather than just sending these signals, we should start learning to read them. Learn to listen. The first thing you need to know about good listening is summed up wonderfully by Anne Scoular, the Southern Star of Business Coaching (she’s from New Zealand, after all). Answering the question ‘How do you listen better?’ she answers: ‘Step 1: stop talking!’⁵

Quiet, or the sounds of silence

What was only a ruse to get my journalistic story later turned out to be a powerful means to truly learn from the other. To allow for a true sharing of knowledge, of emotions, of experience. The tool remains the same. The purpose is different from the journalistic one, slightly on the verge of being a trap for the speaker. Instead of simply becoming a trap, the higher value of silence is to lead to the contrary, to building trust. So practise it. As short as your tongue may be, you will technically be able to bite bits off the tip enough times to learn the lesson. Quiet will not let you down. Or, as Nancy Kline puts it: ‘Consider how long you think you could bear to be quiet and let someone think out loud. With only the occasional benign murmuring and nod and smile of understanding from you and the occasional question requesting even more thoughts, a person in your presence might just turn into a genius – at least, for that moment.’⁶

Do not interrupt

Chatty cultures such as the Italian allow for frequent interruptions in conversations. When Irish men sit in a pub the different layers of a conversation are like a complex cobweb that everybody weaves, still able to follow somewhat of a red thread. As the poet and good friend James McCabe, an Irishman living in Germany, once acutely observed about Germans in a pub: ‘They may be drunk like pirates after a bounty but they will wait until Otto has finished to lull his sentence before Franz burps out his wisdom. Everybody will listen to Franz before Fritz will share his fundamental views on that questionable penalty in the last football derby.’ This is something peculiar about the German language where the verb comes last in – sometimes enormously long – sentences. So, if you want to know whether the protagonist of a story told in German has died or survived you literally have to wait until the last word of the story. This is how I, an extroverted Italian boy moved to Germany, learned to listen. It suddenly convinced me that not interrupting wasn’t such a bad thing in other languages, too. Interrupting is rude, of course, but it mainly is stupid. Because only a conversation where everybody has the opportunity to fully vent their thoughts with no interruption is a respectful conversation. Respect allows for the unthinkable to be expressed, without fear of derision. It will allow that one single contribution to emerge that will change the whole game in your business.

Proper feedback

If you want to know what feedback is useful for, play a round of Chinese Whispers with your team. The rules of the game are simple. You are only allowed to repeat to the neighbour on your right what you heard from the neighbour on your left. You have only one chance to say what you heard. No discussion is allowed. You start by whispering a couple of words into the ear of the first team member and this goes on until the words have reached the last team member who is then allowed to loudly repeat the words. I play this regularly with my students and the results are appalling. You start with the gentle words ‘nice lady’ and you end up with the serial killer’s confession ‘sliced baby’. How come? Because the rules of the game cut out the feedback, that wonderful mechanism by which we check that we have heard what was said.

Feedback is not forced upon anyone if it is to be effective. It may be offered but it has to be wilfully and consciously wanted by the recipient. If someone is not interested in your feedback you may as well keep it to yourself. And if you want to grow, ask for feedback.

Feedback has to be specific and focused on a behaviour, an event, or on something that has been said. It is not a judgement of a person, rather it is a reaction to a singular thing.

If you want this feedback to be heard, it’s advisable to keep the ratio of positive and negative feedback to three positives for each negative.⁷

What is a bad listener?

The ‘active listening’ trap

Beware of cheap shortcuts. There are a lot of good pieces of advice you can find on listening: nod frequently; sum up what the other person said, paraphrasing it, showing that you listened and understood; show interest with your full body – don’t lean back, don’t put your feet on the table (yes, I read that advice and it was not in a survival guide for jail or a manual for opium caves). They sometimes come under ‘active listening’. Nothing wrong with it except for the bitter taste in my mouth that they are ‘tricks’ to pretend to listen. From good coaching practice we know, for example, that paraphrasing is not necessarily the best thing to do: if someone uses one specific word, she means that word and not a synonym. Paraphrasing then only shows that you can find other words for a term. A good skill, but not evidence for good listening. Just imagine talking to your boss and he practises all of those ‘active listening’ tricks. Wouldn’t you probably notice and find this to be highly annoying because it feels instrumental, mechanical, schemed, not sincere?

As always, there are no absolutes.

If there is really no listening culture or if Mr Talkative suddenly applies one of these techniques, it might turn into a useful exercise, as artificially as it may have been performed.

The listening monster

Reading the speaker

Body language is an art in itself. There are entire books, some of them with very funny illustrations and photos, on body language. The funniest are the Italian ones. Few people know that less than 10 per cent of the people of the freshly united Kingdom of Italy in 1860 spoke Italian. Before 1860 there was no Italy as there were no Italians speaking one language. The people spoke Neapolitan, Venetian, Piedmontese, Sardinian, Sicilian and so on. And they could barely understand each other. To this day I wouldn’t be able to understand one single sentence in Sardinian. On top of it, my home country had been a patchwork of city states, regions, dukedoms and kingdoms which had been governed by Arabs, Spaniards, Germans, Austrians and French rulers before becoming a nation-state. This explains why we Italians speak with our hands. It’s to bridge the language gap with the authority, represented by foreign rulers. Or with our fellow countrymen speaking remote dialects and languages.

This early training in body language has made me aware of the many shades of non-verbal expression.

Neurology’s progress in the last decades has allowed us to better understand how to read facial expressions. If our eyes wander while we speak, it may show that we are trying to remember something (looking to the upper left) or that we are trying to imagine something out of the blue (eyes looking to the upper right), if they turn to the left we try to remember something we have heard, to the right if we try to construct a sound never heard before. If our eyes are pointing down to the left we are just asking ourselves something; if they are eyes pointing down to the right we are experiencing feelings. Entire books have been written on these subjects, all inspired by John Grinder and Richard Bandler, the founders of neuro-linguistic programming (NLP).

What is important for the Listening Leader is the awareness that we basically have three ways of thinking: the visual way, the auditory way and the feelings way. Most of us have a preference. We can either see a memory, we remember a scene, a picture of people sitting around a table, how they were dressed, whether it was a day with summer light or with a grey sky. Others may remember perfectly well the music the radio played on a certain day, the voice of the grandfather, the sound of pans and dishes in the kitchen while others again can tell you exactly how they felt on that day, whether they held the hand of their sister or whether coffee was served, freshly brewed with a mild aroma.

Knowing about these thinking patterns allows us to read the other much better, to ask different people different questions, eliciting the best expression of their thinking and thereby reaching a much higher level of listening sophistication. If you know what language they prefer you’ll be able to allow them to express themselves in the most perfect way and you can get the most out of the other.⁸

If you want to know whether you are a good Listening Leader, a simple exercise will do. It comes from the Bible of Leadership of General Electric, later published for the benefit of a larger public under the wonderful title of Love ‘Em or Lose ‘Em. The exercise goes as follows: ‘Stop now and write down three or four things you learned from your employees this week. It could be process improvement ideas they have, a customer (or family) challenge they face, or a team issue they struggle with. If you can’t list three or four things you learned, you probably have not been listening carefully enough to your employees.’⁹

Good communication and its impact on business results

Managers have tasks to accomplish and they have to perform according to their targets. Depending on the company they work for and the job they have, reaching the objectives may be a constant challenge, often frustrating and for some, simply threatening. Why should someone under this pressure consider any additional efforts in better communication instead of ‘just getting the job done’?

Because good communication allows you to get the job done and to increase the performance of the organisation, thus allowing you to over-deliver on your targets.

Bain & Company found out that the answer to a very simple question would allow a company to predict its profitable growth.¹⁰

The question is: ‘Would you recommend us to a friend?’ The customer rates his answer on a scale of 0 to 10. Those who answer 0–6 are detractors, 7 and 8 are neutral, 9 and 10 are promoters. So, you take the percentage of customers who are promoters and subtract the percentage who are detractors and you get the net promoter score (NPS). The top companies have an NPS between 50 and 80 per cent. Most average between 5 and 10 per cent. Others again have a negative NPS, which means they lose customers every single day and cannot sustain growth even by aggressively buying new business, a rather expensive exercise. Many excellent companies are run using NPS as the key performance indicator for the stakeholder customer, from Allianz, Apple, Lego, Philips to Progressive and many more.

The system allows us to look at the whole value chain of a company and identify all the moments of truth, all the factors that have an influence on the willingness of a customer to recommend the company. The simple fact that an insurance agent takes a call while he is advising another client personally, will never allow him to score a 10, as good as his piece of advice was. Being interrupted by a phone call in the middle of a conversation about your old age provisions is highly irritating and this irritation will never be mended in the whole insurance relationship from underwriting to payment.

NPS analyses allow us to sustain an enthusiastic customer experience – for big business and small companies, in all industries, in retail as well as in business-to-business propositions. Enthusiastic customers and promoters speak about their experience and become contagious new business generators. Everybody would concede that this is a fair way to grow.

At Allianz we have found a strong correlation between good communication and profitable growth. To investigate further we have worked closely with Bain and the media analysis institute Media Tenor, to relate good internal and external communication and profitable growth.

While carrying out this project we found out that bad communication habits and low scores given by the employees to their managers were clearly measurable in the laggards, companies losing market share and reducing the sustainable profit pool. Good communication habits and an engaged workforce were clearly seen in the loyalty leaders, companies gaining market share and being more profitable than the market. More details can be found in Chapter 7.

Let’s summarise: It’s a smart business move to invest in better communication and learn to listen.

Let’s now look at how good communication can help drive business results.

Communication allows us to know, understand and reflect upon stakeholder interests – and to take them into consideration for our decisions. Business success, broadly speaking, is the result of striking the right balance between the enthusiastic stakeholders (‘Only the NPS 10 counts’) and the company’s interest in sustainable, profitable growth.

Why can’t we simply go all the way and take the input of stakeholders at fair value and just do what they tell us to do?

To make a point, sometimes it’s useful to stretch arguments, or to create hyperboles, exaggerations. So, let’s imagine what it would mean to blindly follow the stakeholders’ wishes and to do this. Let’s take extremes, what I call the hyperboles of creating stakeholder enthusiasm.

What would make the individual stakeholder happy and the company bankrupt? A product for zero price with top-notch quality would enthuse the customers. Paying out the whole turnover of the company as dividend might please the investor. Paying 100 per cent taxes on profits would make the Chancellor of the Exchequer rejoice. And wouldn’t the employees cheer at the announcement that everyone gets five times their present salary and has to work only five hours a week? Everybody would be happy – for a moment – and a moment later the company would be bankrupt.

And, for the sake of argument: What might make the company happy and still drive it to failure, as well? Never paying any dividend, angering the investors, charging high prices for low-quality products, driving customers away, excelling in tax avoidance or even tax sheltering, not really amusing the taxman and so on.

So, matching the best possible outcome for stakeholders with the best possible outcome for a company is the difficult trick. And this is only achievable if the whole organisation interacts smartly with stakeholders, considers their input, weighs it against the general good of the company and adapts the company’s strategy and behaviour to what has been heard from stakeholders, thereby continuously reinventing itself. And explaining what it does, creating transparency. There will always be acceptance for a company making good profits if the stakeholders benefit from the company’s deeds.

So, you need transparency (see Chapter 1) and you need to constantly communicate with your public.

How a company can make best use of stakeholder input

The power of senses is known to all of us, even to those who lack one or more.

Hearing the weak signals of the market and the stakeholders is as important as drawing the right conclusions from an attentive antelope to the direction of the wind. The experience evaluates these facts and the conclusion is that there must be lions to the far right. Listening has become a necessary survival skill in modern economy.

Going on a safari may seem the easier exercise in terms of organising the private listening to the weak signals of the predators (just have a good local guide on board). What do you do in a company to build a listening organisation?

As well as the traditional listening tools of classical business administration (such as market research) and the modern ones (datamining) there are a couple of tools I consider superior because of their trustworthiness.

Ombudsman: The Swedish idea

The Swedish Parliament first instituted an ombudsman back in 1809 to guarantee the application of laws. Ombudsman means representative, proxy, attorney. In business it refers to independent people that oversee the fair application of rules, who guarantee the stakeholders about the proper steps being taken by the organisations they oversee.

Take an excellent and impeccable professional with a clean ethical track record, maybe a judge or a scholar, ideally with grey hair, and make her look at complaints with the eye of the objective observer. Let the ombudsman (who could well be a woman) get an opinion on the dilemmas between the company’s and the customer’s (or any other stakeholder’s) position. Let her be the steward of rules and values.

Here, again, everything stands and falls with the (communicative) qualities of that person. Is it just a bureaucrat, simply looking at paragraphs and their honest implementation? She may well comply with her duties but she is not a Listening Leader, she is not truly communicating.

What does it take for her to step up? She has to listen beyond the rules. Is there a legitimate point in a complaint? Is there a formally correct but emotionally wrong procedure that can be considered fair but also belittles the stakeholder and therefore makes him a detractor of the company?

An ombudsman that looks behind, that questions and challenges, is a precious ombudsman to the organisation that employs him or her.

This can be ensured by having one or two meetings a year, where the ombudsman convenes the departments most concerned by the complaints and listens to their point of view, gathers an impression of the leadership quality deployed in that area. Is the manager defensive? Is she understanding? Does she come up with alternatives to handle processes?

Organisations can improve enormously thanks to a good ombudsman. That is, if both the organisation and the ombudsman listen carefully.

John Smith, board member

Are you just an interested reader, maybe a civil servant who has no professional interest in business and whose role in the economic environment is simply being a customer? Well, you may aspire to become a board member of a stock-listed company. No need to take an MBA or practice management. Just by having a bank account with, let’s say, Commerzbank in Germany. Or simply by using software from Oracle. These companies are just two out of hundreds of companies who have established a customer advisory board.

It basically is a high-level sounding board, a focus group. These boards work well if the prerequisites of communicative leadership are applied:

1. Customer advisory boards should be made of up to 12 customers. Some companies have bigger boards, I would advise against: a trustful discussion is only possible in a group not larger than 12 people.
2. Discussions in such boards have to be relevant for all participants and focus on the experiences of customers with the company and the products of the company.
3. Understand the business of your customers and their real-life situations in using your products. This may allow you to change your products or discover new ones for new customer needs. That’s why you should be very attentive to their issues.
4. Your role as a company is to be there to listen. Don’t use it as a sales opportunity – this is a listening opportunity. The talk is the customer’s one, not yours. Make sure at least 80 per cent of the air-time is taken over by the customers, not by the company.
5. Be prepared to change your products and services and even adapt your strategy if there is relevant input from your customer advisory board.

A customer board can be an excellent way to integrate the other listening activities and provide the company with a picture as full as possible on the customers’ views. It is also the opportunity for John Smith to take an active role in the life of the company providing him with important goods. It involves the participants and engages them in real discussions, which results in a much deeper understanding of customers’ opinions, compared to blogs, tweets and posts on social media. They allow discussion of the inputs coming from other sources and complete the picture.

ESG boards – an opportunity to overcome greenwashing

I know I’m biased, but every time I read the term corporate social responsibility (CSR) I become suspicious. Is somebody trying to put lipstick on a gorilla? Generally said, I’m even suspicious of simple donations by a company. If it’s a stock-listed company I always ask myself: who’s paying for this donation and who gets the benefit? Clearly the money of a public company comes from money not spent on salaries or lowering prices for customers or money from the shareholders. Is this money benefiting any stakeholder of the company or a group of people totally unrelated to the company until that moment? Is this money serving the vanity of a hired manager to shine in the public light? Remember, it’s not his money, it’s the company’s money.

I admit that sometimes I take too radical a view, but I remember a very shrewd politician, the late multiple Italian Prime Minister Giulio Andreotti saying: ‘Suspecting ulterior motives is a sin, but you’re mostly right.’ I felt that was a respectable view when your gut tells you something may be wrong. My time served as a journalist left me with a natural suspicion for greenwashing and whitewashing, when soothing PR messages of responsibility for the environment accidentally meet that same company’s reproachable deeds in pollution.

On the other hand I know that well-practised CSR can be a very important factor for the engagement of the employees and a factor increasingly important for the recruitment of talents. It is one of the four pillars of stakeholder acceptance. A company that wants to retain its license to operate has to respond to the demands by society. It has to be an accepted and welcome corporate citizen.

Good CSR should be:

1. Explained by the company: what is the purpose, what is the strategy, what are the principles of CSR?
2. Linked to the core challenges of the company and its industry.
3. A further listening device: to listen to society, non-governmental organisations, neighbours, the public at large.
4. Eligible to generate output that will impact the strategy and the business practices of the company.

Best-in-class companies are those who say what they think, listen to what the stakeholders say and do what makes the best possible sense for the company and its stakeholders. In other words, where CSR helps changing the company and improves it.

This is why I like the opportunity Environmental Societal Governance (ESG) boards can give. Some companies have already established ESG boards. The idea being to establish a body with the following characteristics:

1. Representing the top managers responsible for the business, not (just) the corporate communications people.
2. The ESG board establishes the environmental, societal and governance principles that the company will adopt and makes them public.
3. These principles are binding for all business units of the company.
4. This board engages in a permanent dialogue with external and internal stakeholder groups in order to listen to their concerns, proposals, best practices followed by other corporations.
5. This board is empowered to drive business decisions (within the proper corporate governance), and feed the input of the stakeholders into the strategic process of the company.
6. Every year the work of the ESG board is made as transparent as possible (some conversations need to be kept private, sometimes, because the external partners want this, not the company). Changes in the strategy of the company coming from the ESG board’s work have to be made transparent as well as any other impact the ESG dialogue has had on the company and its stakeholders.

An ESG board is a modern and efficient way to channel the very diverse impulses coming from society and to challenge the status quo of the company. It may be because of diversity-related issues, concerns for the remuneration of the management or the carbon footprint of the company. These concerns have changed in the past and will continue to change in the future. Only a dialogue with stakeholders allows you to listen into society and not rely solely on media or research – as important as these outlets are in order to grasp trends and fundamental changes in society that may affect the company.

The importance of integrated reporting and of putting your money where your mouth is

We have seen some examples of how to set up a stakeholder (listening) governance that basically allows three things:

1. To listen to the stakeholders and enter into a true dialogue
2. To be ready to use this input to change your strategy and business
3. By involving and empowering the stakeholders this dialogue allows the company to constantly earn a license to operate.

As outlined in Chapter 1, companies providing first-in-class information produce either an integrated report (One Report by Bob Eccles and Mike Krusz of Harvard mentioned in the previous chapter) or they at least publish their performance against the four stakeholders in different reports.

What really matters is the question of whether management compensation is linked to those stakeholder KPIs. The company is credible if as many people in the company are compensated according to the feedback of the stakeholders as condensed in a key performance indicator. That’s not something I need to ask at a shareholder meeting. I want to read this on the company’s website: how much of the top managers’ compensation depends on customer enthusiasm, employee engagement, investors’ return and societal acceptance?

So, where do I put the little parcel with the stakeholders’ input every day?

What do we do with all the input by stakeholders? Is there an address where the parcel is to be delivered with the daily or weekly input by stakeholders? If you want to get into action mode and shape the change there are three natural recipients for your input in your company:

1. Your own team: The dialogue with stakeholders doesn’t occur in a void, somewhere in the atmosphere, separated from your everyday work, or in some debating society or Viennese cafè. It’s in the daily interactions with our business partners. It’s in your team, then, that this input by stakeholders is analysed and used to constantly improve your performance. Use your normal interactions with your staff to address this listening exercise. Is there a presentation on a new project? It should start with an evaluation of the EMMA of stakeholders (see Introduction). Are you discussing the mid-year review with your direct report? Let her start with rendering what the biggest learnings by stakeholders were in the half-year and what she did with them. Get your people used to always putting themselves into the ‘victim’s shoes’. Discuss strategy regularly with them as you should do with your own boss. Where are we in reaching our objectives? How has the context changed? How can we change ourselves or the context in order to create enthusiasm in our stakeholders, so that they recommend us to friends and family? Never forget the ultimate goal, success and acceptance, which is to increase profitable growth by recommendations from our customers, increase our attractiveness as an employer by becoming a great place to work, grow our market cap because investors like to buy our shares as recommended by the over-performance, gain and retain the license to operate by society, when citizens and institutions recommend us as exemplary responsible corporate citizens.
2. All the others in the company: Most important is the C-suite. Where that address is, you know. But it may not be the right protocol in your company. Normally the recipients for the input by stakeholders are known, though. In most companies data on customers is managed by the marketing department. Normally, input from investors is dealt with in the investor relations department and in the CFO office. Employee and applicant’s input related to the company is usually processed in the human resources department. Societal issues may have Public Affairs, Governmental Relations (lobbying), ESG office, CSR, legal department as their natural haven. This is an old silo approach, though. More and more often this input is broadly shared within the whole company on corporate social networks, in team-rooms and so on. Beware: sometimes these electronic ‘containers’ are so fragmented that the big picture gets lost. If this is the case, address it in the company. The company has an interest to gather this input and should make it easy to find the proper address (Ombudsman, Corporate Communications, CEO office) where all this information can be sent.
3. The report: If your employer publishes an integrated report, it will address the performance of the company towards all four stakeholders, along clear KPIs, benchmarked against the competitors. The team compiling the report should be grateful for your input. It may be a fact, a figure, but it also may be a compelling story about an important failure from which you and your team have learnt, a complaint you managed successfully or unsuccessfully. Share your experience – it’s an episode of a saga that should keep your stakeholders awake reading until the sun rises.

A millennial’s view on inter-generational differences in how we communicate and their impact on corporate culture

The concepts of effective communication are the same as they have always been – listening, using empathy, constructive criticism. The shape that effective communication has taken over time has changed significantly (see Figure 2.1) and is changing at an incredible pace now.

One of the big changes, which reflects a societal shift, is the rise of informality and the breakdown of hierarchical barriers. Not only is there a clearly declining use of the formal address, the German Sie and the Italian Lei, but the boundaries on what is acceptable to say to others are also coming down. Like it or not, this is a development that is here to stay and so we must all adapt. While it may raise issues around respect and hierarchy, the resulting authentic communication and open exchange between different seniority levels can greatly benefit companies. Needless to say, this exchange has to be actively encouraged by creating a safe and informal environment in which junior employees are exposed to senior managers and a conversation is encouraged. Many companies are enabling this through open-plan offices and company retreats, which are a good start. But if the company culture is one encouraging formal inhibition, none of these strategies succeed in their goal.

Figure 2.1 From physical to digital in 70 years – communication patterns

This mobile and flat hierarchy environment is one of the attractive features of start-ups for young people. Because of the enthusiasm for the product and common goal that transpires in them, employees feel actively involved in their success. The open communication culture enables them to voice their opinions and shape the company. And isn’t that what all companies want when they speak of engaging employees?