Stakeholder Engagement—Creating and Sustaining Advocacy
Michael Fernandez, Matthew Gonring, and Sally Benjamin Young
This chapter provides a case-based understanding of stakeholder engagement as a strategic, organized, and structured approach to managing relationships with key constituencies that can influence enterprise business. A stakeholder is a particular individual or group of individuals who influence or are influenced by the enterprise. As such, stakeholders may be customers, employees, stockholders, investors, and governmental and nongovernmental organizations (Michaelson and Stacks 2017).
Stakeholder Engagement is an emerging strategic role played by the public relations/corporate communication function in managing environments, processes, relationships, and methodologies in which enterprises operate. This chapter includes an analysis of pharmaceutical company Lundbeck’s dealings with stakeholders regarding uses of its former drug pentobarbital, along with the findings from a 2014 report by the Arthur W. Page Society titled, Authentic Advocacy: How Five Leading Companies are Redefining Stakeholder Engagement.
The need for a refreshed look at stakeholder engagement is clear in the Arthur W. Page Society Report The New CCO released in 2016:
The Chief Communications Officer (CCO) of today is at a critical inflection point. The environment in which enterprises operate is fraught with challenges: emerging competitors reinventing traditional business models; changing demographic, regulatory, and sociopolitical conditions; new modes of work; and an ongoing paradigm shift in how individuals engage with one another and with organizations.… Evolution of the enterprise in the face of these new realities is required, and CCOs increasingly will be central to their ability to do so. (p. 5)
Any one of these factors could have a profound and lasting economic impact on the enterprise, its operations, and its policies. Taken collectively, they underscore the complexity of today’s environment and the need for a more conscious and conscientious effort for engaging stakeholders with a vested interest in how the enterprise operates.
With virtually every stakeholder having access to the public stage via multiple communication channels, even small voices magnified by the power of social networks can wield influence. Long gone are the days where enterprises could operate with a degree of autonomy, making policy decisions in a vacuum or boardroom far from the ears of customers or even internal stakeholders. Enterprise graveyards are littered with examples from Enron to Lehman Brothers, whose demise was hastened in part by a failure to listen to or recognize influential stakeholders and the impact they can have on business. Today’s hyper-connected and hyper-competitive global marketplace means that effectively managing stakeholder engagement has never been more important. And, in a world where the pace of change will likely only accelerate, the need to anticipate and monitor trends and interests emerging from a diverse set of global stakeholders must not be overlooked.
The power of diverse stakeholder constituencies to influence enterprise brands and reputation is heightened by the fact that many stakeholders want to influence how brands and organizations operate on issues they care about. In the global marketplace, issues of prominence that might previously have been confined to a local market can go viral overnight, having far reaching and dramatic political, social, economic, and ethical consequences. This has prompted many enterprises to become more transparent, with many reporting more information about their operations relative to their environmental and social impact. Even some privately held enterprises have commenced reporting quarterly earnings, even though such reporting is not required by any legal entity.
Until relatively recently, many enterprises concentrated primarily on inner circle stakeholders (customers, employees, investors), investing little time and effort in building broader relationships. Enterprise communication traditionally focused mainly on the media and easily identifiable key influencers.
While there is broad acknowledgement today that business should be engaged with external stakeholders, this has not always been so. Historically, there were starts and stops to broader corporate engagement, notably in the late 19th and early 20th centuries as populist and progressive responses to the “gilded age” prompted community chests (which became the United Way), philanthropies, and nonprofits to form with corporate support. In the post-World War II era through the 1960s when civic action on behalf of civil rights, the environment, and the equality for women changed government policies and promoted enterprises to create diversity initiatives and health, safety, and environment initiatives coupled with broader community engagement. But for most of the 20th century the view forwarded by Adolf Berle (1931) in the Harvard Law Review that business should be solely focused on shareholders is what prevailed. In the wake of the 1960s, one of the founders of Hewlett-Packard, David Packard, argued that business had a responsibility to make “a contribution to society”; and the Research Institute at his alma mater, Stanford University, in 1963, was among the first to define “stakeholders.”1 But by 1970, conservative economist Friedman (1984) was arguing that the only responsibility of business was to make a profit, and Jack Welch of General Electric in 1981 was arguing for a focus on shareholder value (1981), a concept that dominated the business thinking of the 1980s. During that decade, though, Darden Professor Edward Freeman (Freeman and Reed 1984) articulated the merits of a broad stakeholder approach. Through it all, an unwritten social contract emerged that essentially held that business could meet its obligations to society if it produced quality products and services at reasonable prices, provided steady employment in a healthy and safe environment, and offered reasonable support for community institutions.
Toward the end of the 20th century and early in the 21st, that social contract was threatened by multiple forces—the perceived greed of business leaders and shareowners as leveraged buyouts, layoffs, and dramatic reductions in employee benefits became commonplace; the malfeasance of the Enron/WorldCom era, during which a number of corporate leaders were incarcerated; and the dramatic breakdown of trust in business during the global financial meltdown in 2008 that led to the Great Recession.
During the same period, responsible enterprises were exploring corporate social responsibility, actively engaging their workforce, and establishing concerted philanthropic and sustainability efforts. Nongovernmental organizations (NGOs) were becoming more assertive and adversarial in opposing corporate policies, and social media made it possible to access information more easily, organize people with similar interests to form connections, and unite them to advocate for change.
These developments hastened the drive for greater transparency. In 1997 the Global Reporting Initiative (GRI and CDP n.d.) was launched out of Boston with the intent to have a comparative reporting tool for enterprises to share metrics and status relative to their impact on the environment, health, and society. In 2000, the Carbon Disclosure Project (CDP) was established in the United Kingdom to assess how business was impacting global climate change. By 2015, 7,500 organizations were using the GRI guidelines, and more than 5,500 companies across the globe were supplying data and metrics to the CDP.
These reporting projects illustrate the dynamic new environment of stakeholder engagement captured in the 2007 Page Society report, The Authentic Enterprise: “In addition to the familiar constituencies with which corporations have interacted in the past, there is now a diverse array of communities, interests, nongovernmental organizations and individuals—all far more able to collaborate…around shared interests and…reach large audiences” (p. 12).
An implicit license to operate or a social contract that an enterprise must meet to be sanctioned to operate with various societal stakeholders has never been more relevant and simply reinforces the wisdom of Arthur W. Page that, “All business in a democratic society begins with public permission and exists by public approval” (http://awpagesociety.com/site/historical-perspective).
Stakeholder Engagement Defined
A stakeholder is defined as any constituent who has a “stake” or interest in the activities of an enterprise. As noted, traditional key stakeholders for public enterprises are employees, shareholders, and customers (http://investipedia.com/terms/s/stakeholder.asp n.d.). Today, practicing communication executives often define stakeholders far more broadly (McCarthy 2016) including bankers, suppliers, prospective employees, communities where one operates or seeks to operate, governments, consumers—as distinguished from business-to-business customers, NGOs or “civil society,” and intergovernmental organizations (IGOs) such as the World Bank and the International Monetary Fund (IMF). Professional communicators often include the media and depending on context may qualify media as a distribution channel to reach stakeholders.
In Neil Jeffrey’s 2009 report from the Cranfield University School of Management, he points out,
Stakeholder Engagement is crucially different to stakeholder management: stakeholder engagement implies a willingness to listen; to discuss issues of interest to stakeholders of the organization; and, critically, the organization has to be prepared to consider changing what it aims to achieve and how it operates, as a result of stakeholder engagement. (p. 380)
In fact, channels of communication and stakeholder groups are so broad and sophisticated that they are beyond management, thereby requiring more thoughtful engagement. Dialogue and monitoring then become key tools with which enterprises seek to influence and understand perceptions and behaviors.
The logic of stakeholder engagement is that stakeholders have the ability to influence the enterprise’s success and the decisions that underlie them. Jeffrey’s (2009) report in many ways underscores the two-way symmetrical public relations model envisioned by Professor James E. Grunig and Todd Hunt in 1984, which holds that organizations use research and dialogue to negotiate with publics, resolve conflicts, and promote mutual understanding and respect.
Deloitte’s 2008 AccountAbility 1000 Stakeholder Engagement Standard (p. 2) report defines stakeholders as “…groups who affect and/or could be affected by an organization’s activities, products, or services and associated performance.”
Approaches to stakeholder engagement will continue to evolve as new technologies, globalization, and other forces further transform the way organizations operate and engage. As the enterprise moves from “talking at and monitoring” and closer to “partnering with” stakeholders, the nature and dynamic of the relationships are shifting toward one of cooperation, collaboration, and, importantly, interdependency. This has also prompted a shift in enterprise orientation from issues management to relationship management where enterprises work with foes and friends alike and impacting how trust is won or lost.
Functional Development from Channel Owner to Problem Solver, Business Leader, and Collaborator
The professional practice of public relations/corporate communication is shifting away from the traditional functional one-way communication directed to specific stakeholders. According to that same Deloitte 2008 report, with the rise of social media, and stakeholders having equal access to the same technology and becoming influencers in channels, corporate communication professionals are bringing external information and dialogue inside the enterprise, as well as developing new, sophisticated approaches to issues management, stakeholder engagement, and thought leadership. Today’s CCO is not just a communicator; he or she is a problem solver and relationship builder using the latest technologies and communication channels to both better understand and connect with stakeholders.
According to the USC Annenberg 2016 Global Communications Report less than one-third of the average enterprise corporate communication department’s media budget is being spent on earned media—the traditional focus for corporate communication. Slightly more is being spent on owned media, such as websites and blogs.2 It projects that, by 2020, slightly more than a quarter of media budgets will be focused on earned channels. This trend toward a balance of earned, owned, and social media recognizes that effective stakeholder engagement requires a balanced approach along with investments in digital-based programming.
The 2016 Page Society report The New CCO cited technological and demographic changes affecting the functional development of managing stakeholder relations. The report indicated that enterprises have become a builder of social value and a partner with governments and NGOs.
Increasingly, stakeholders, including consumers, activists, even some investors, and the general public, expect business not only to act responsibly but to actually solve global problems and create social value.
Changing expectations of business and the enterprise demands a more direct approach to engagement with stakeholders as the following case from Lundbeck illustrates.
Case: Lundbeck’s Collaborative Dialogue Helps Address Complex Challenges
Having one’s thinking challenged by stakeholders with a different perspective than your own frequently expands the initial thinking of what’s possible, pressing a search for alternatives that might never have been explored, and ultimately driving outcomes never thought possible. That was the case for Lundbeck when the company learned, much to its surprise, that in January 2011 one of its medicines had been co-opted by American prisons for lethal injections used in capital punishment.
Pentobarbital was part of the company’s portfolio of epilepsy therapies used to treat a serious and life-threatening emergency epilepsy, called status epilepticus—the cause of approximately 42,000 deaths a year in the United States.3 But when a previously used drug in lethal injections became unavailable, prisons began turning to pentobarbital as a replacement in the lethal cocktail administered to prisoners on death row, overnight thrusting Lundbeck into the debate on capital punishment. Withdrawing the product from the market was not in the best interest of patients who needed it for emergency use, yet misuse of this product was generating intense criticism of Lundbeck.
Meaningful Stakeholder Engagement Begins with Corporate Character
Lundbeck adamantly opposed the use of its drug for executions because ending lives contradicts everything the company is in business to do: provide therapies that improve people’s lives. Patients are at the center of everything Lundbeck does—defining its purpose and driving its behaviors. Enterprise leaders ensure that its character resonates with every employee by encouraging them to focus on the individuals behind the disease, engage with patients directly, and understand their specific needs. This personal connection not only reinforces the relationship it has with patients, but also contributes to better company decision making.
While deploying pentobarbital for lethal injection was in direct conflict with its core beliefs, Lundbeck had to assess what means it had to prevent this unexpected use. Once a drug is approved in the United States, nothing prevents physicians from using it as they deem appropriate, though Lundbeck expects its products to be used in a safe and appropriate manner. Moreover, to Lundbeck’s knowledge no pharmaceutical company had ever succeeded in thwarting a prison’s use of drugs in lethal injection, which remains legal in 34 states.
That said, the use of its drug by prisons was deeply problematic for Lundbeck from an enterprise corporate character standpoint (see Chapter 4) and a human rights perspective. The Lundbeck case highlighted a vexing dilemma: how to prevent a nonmedical use it did not condone while preserving access to the medicine for those patients who needed it.
Building Shared Belief
Almost immediately, Lundbeck was contacted by Reprieve, a legal action charity that works to prevent the misuse of medicines in executions. Reprieve asked Lundbeck to stop the flow of the drug to prisons. While Reprieve and Lundbeck were in full agreement on this point, there was lack of alignment about how this could be achieved. Nevertheless, actions matter. Lundbeck needed to find a way to simultaneously uphold its commitments to patients and to society—and for its stakeholders to understand the importance of keeping the needs of patients at the forefront of its decisions. Lundbeck brought its case straight to the states using or considering the use of pentobarbital for lethal injection, writing letters to Governors and departments of correction to urge them to discontinue this use. Those pleas fell short of changing the outcome.
Aligning Decision Making with Corporate Character
Despite having no clear path forward, Lundbeck continued to engage in a constructive dialogue with human rights advocates to discuss and evaluate ideas to prevent prison use. Not only was Reprieve asking the company for a solution but activist investors, European policy makers, other NGOs, individuals, and even its own employees, especially in Europe, asked the company to do more. Soon there were calls for Lundbeck to withdraw its product from the market. Yet, what seemed obvious to these stakeholders contradicted Lundbeck’s principles. While withdrawing the product from the market appeared easy from a business perspective—the product represented only about 1 percent of global sales—it would have been unethical and a tragedy for patients who needed this important therapy.
Even Danish physicians questioned the need to treat status epilepticus4 with pentobarbital because Danish medical practice differed from that in the United States. In order to gain an objective view on the medical need for pentobarbital in the United States, Lundbeck commissioned two leading independent research firms to field a blinded survey of more than 200 hospitals and physicians that validated the importance of this therapy in medical practice. Ninety percent of the respondents stated that options for treating patients requiring emergency control of certain acute convulsive episodes would be compromised if pentobarbital were no longer available. Furthermore, 95 percent reported that it is very important for their institution to have continued access to pentobarbital for potential use in patient care. All survey respondents were from academic institutions, large community hospitals or epilepsy centers in the United States.
Further dialogue with medical experts reinforced the survey data. One U.S. epilepsy thought leader stated:
Pentobarbital is the ultimate gold standard in North America for controlling seizures in patients with refractory status epilepticus when other medications fail…if pentobarbital were not available, many patients would suffer, likely having additional brain damage from uncontrolled seizures, and possible higher mortality. (Hirsch April 29, 2011)
Another noted that “There is no equivalent barbiturate…limiting or discontinuing the supply [of pentobarbital] could have a significant negative effect on patient care” (Frost March 25, 2011). With the importance of this medical therapy confirmed, Lundbeck faced the challenge of addressing how to sustain access for physicians and their patients to this life-saving medical treatment while ensuring it could not be used in executions.
Action
Continuing Dialogue to Find the Most Effective Solution
Lundbeck explored a broad range of potential remedies to restrict access by prisons, involving bodies such as the U.S. Food and Drug Administration, the wholesalers to whom Lundbeck directly sold the drug and who are then responsible for selling to end users, and physician associations to find the least disruptive way to ensure appropriate use of pentobarbital. None of these avenues proved effective. Still, stakeholders from Reprieve and other human rights organizations, relevant government officials, health authorities, and third-party experts all lobbied Lundbeck to go further, leading it to test its long-held assumptions about how to manage its supply chain.
Lundbeck announced in July 2011 that it would no longer sell pentobarbital through its wholesalers. Instead, it adopted a restricted distribution “drop ship” program based on a binding agreement with distributers of the product that it would only be sold to legitimate medical customers. Under this program, hospital customers would need to sign a form stating that the purchase of pentobarbital was for their own use and would not be used for lethal injection. After appropriate paperwork was completed, the product would be sent directly to the customer. This solution required collaboration across Lundbeck to brainstorm how this system could work, gather the appropriate data needed, modify systems and processes, and drive implementation of a complex, but necessary program.
Advocacy
Access Preserved and Misuse Prevented
Lundbeck’s new system was hugely successful. While pentobarbital remained available for patient care, prisons started reporting shortages. Reprieve began pointing to Lundbeck as an example of how pharmaceutical companies could cut off supply of their products to prisons. Praising Lundbeck’s intense effort, Maya Foia of Reprieve said,
Lundbeck’s action has changed the landscape of corporate social responsibility in the pharmaceutical industry. Many pharmaceutical companies lament the use of their medicines in executions—Lundbeck didn’t just lament it, they took active steps to prevent it. In doing so, the company proved that pharmaceutical manufacturers don’t have to be complicit in capital punishment; they have a choice as to whether they facilitate executions by supplying prisons with lethal injection drugs. In short, they were true to the values of their profession (Reprieve 2012).
Amnesty Denmark tweeted, “#DeathPenalty in the USA is in decline as states wrestle to find drugs for lethal injections usat.ly/1k-G5WKJ @LundbeckUS.”
Lundbeck remains a leader on the misuse of medicines in executions. It was the first manufacturer to sign the Pharmaceutical Hippocratic Oath, signaling its commitment to making medicines for the health and benefit of mankind. Lundbeck also became the first recipient of Reprieve’s new Corporate Social Responsibility Award for Ethical Leadership in the Pharmaceutical Industry, in recognition of the steps the company took to prevent the use of its medicines in executions in the United States.
Analysis
As noted in the Arthur W. Page Society’s (2013b) report on The CEO View: The Impact of Communications on Corporate Character in a 24×7 Digital World: “Adversity can be a chance to articulate and reinforce for all stakeholders the company’s values at a time when unusual attention is focused on them” (p. 16). Difficult as the pentobarbital situation proved to be for Lundbeck, its innovative solution presented an opportunity for it to demonstrate its unwavering commitment to patients.
Drawing on a commitment to transparency and authenticity, including its responsiveness to media inquiries and continuous public updates on its efforts, Lundbeck persevered in developing a unique solution to a global problem that has since been replicated by other drug manufacturers. It could have divested the product without having a tested solution in place to avoid the challenges of controlling the use of its product in a free market. But its commitment to focusing on the person behind the disease served as its moral compass, as noted in Chapter 4. No patient facing the dangers of status epilepticus would be left behind.
By collaborating with its stakeholders, Lundbeck blazed a trail to impose restrictions on distribution, reinforcing that there is always a way to do the right thing. Six months later and only after ensuring that its restricted distribution program to prevent misuse would continue to be effective over the long term, the company divested pentobarbital and contractually obligated the buyer to continue the process that remains in effect today.
Findings
An analysis of the Lundbeck case provides nine related insights regarding an enterprise’s corporate character. Further, six additional action steps were identified as important to establishing enterprise authentic engagement with its stakeholder constituencies.
The Fundamental Importance of Corporate Character
One of the more intriguing learnings from the case suggests that enterprise corporate character is, indeed, at the heart of effective stakeholder engagement.
Finding 1: Clear, Compelling Character Promotes Belief and Engagement
Although enterprises express their corporate character in various ways, many regularly review, update, and/or revalidate their identity, beliefs, values, and/or purpose statements. Avoiding corporate and business jargon, the companies favor language that is clear, concrete, specific, memorable, and even inspiring.
As a mission-driven organization, Lundbeck has given extensive thought to its corporate character. Lundbeck is driven by its patient-driven purpose and dedication to those it serves—people suffering from psychiatric and neurological disorders. The company is guided by three principals: focus (on innovation in four key areas of brain disorders while creating value for all our stakeholders), passion (to help patients and communities the company serves), and being responsible (demonstrating respect, open-mindedness, and integrity).
Lundbeck, 70 percent owned by a foundation that contributes nearly $100 million annually to scientific research, could have made science the centerpiece of its enterprise corporate culture expressions. But with insights first discovered by the communication team in its U.S. operations, the company chose a more humanistic approach that oriented employees toward patients and their families.
For Lundbeck, the words at the heart of its culture statement ring clear and true, making it easy for stakeholders to grasp enterprise intent and for employees to consistently demonstrate behaviors and design experiences that engender customer trust.
Finding 2: Broader Span of Control Aligns Culture and Intensifies Engagement
Functions with a broader span of control and/or influence are better positioned to concentrate enterprise attention and resources on common stakeholder engagement strategies and tactics. Such enterprises use organizational structure and disciplined collaboration processes to align their corporate culture with behavior, thereby enhancing relationships with crucial stakeholders.
Finding 3: Corporate Character Shapes Business Outcomes
Lundbeck’s expansion from a rare-disease-focused American neurology business to therapy areas involving significantly larger patient populations facing diseases like depression, schizophrenia, and Alzheimer’s and Parkinson’s diseases required a major expansion of its workforce. Using the platform of a clear and compelling culture, Lundbeck knew it could swiftly integrate new recruits, create belief, and drive advocacy. Lundbeck’s vice president of public affairs, Sally Benjamin Young, believes understanding and working within the framework of corporate culture is “not just a nice thing to do, but a way to drive strategic focus and business success.”
Finding 4: Stakeholder Engagement Today Is a Rigorous, Disciplined, and Data-Driven Process
Thanks to greater access to information, high levels of transparency, and other forces, stakeholder engagement is now a more rigorous, systematic, and data-driven discipline.
Finding 5: Employees Can Be a Company’s Best Resource for Building Belief with External Stakeholders
An “inside-out” approach to engagement has helped some enterprises turn employees into a potent resource in gaining the trust and support of external stakeholder constituencies. At Lundbeck, employees take enormous pride in their work. This is particularly evident in their close personal engagement in patient communities. Young notes, “These stakeholders—patients and their families, physicians and nurses—need to know that you care before they care about what you know.” Lundbeck’s Starfish Story (http://lundbeck.com/us/our-commitment/community-involvement/your-partner-in-epilepsy), a parable about a boy questioned about the impact of saving a single starfish that washed up on a beach when there are so many to save, resonates with employees whose mantra is “making a difference, one patient at a time.” The story is part of a broader “We are Lundbeck” campaign that focuses on seeing the person behind the disease by putting real patients front and center in a wide range of initiatives and communications. From efforts like these, many Lundbeck employees get to know patients and their families personally, learning about their needs and what it means to live with their diseases. This empathetic perspective and personal connection contribute to better corporate decision making, Young says.
Finding 6: Partnerships Are the Basis for Sustained Belief and Engagement
Most enterprises concur that corporate philanthropy continues to play a role in building stakeholder belief and advocacy. They believe close, long-term, two-way partnerships are quickly becoming the more valuable currency in establishing trust and activating advocates. Lundbeck’s approach is illustrative. A few years ago, it realized that the norm for pharmaceutical companies—underwriting research, events, conferences, and the like—had its limits. The approach was largely transactional, derided by some as checkbook philanthropy or worse. While financial support is needed, Lundbeck’s investment of time was equally critical. As a smaller and younger enterprise in the United States, Lundbeck saw an opportunity to extend its reach and impact on patients by forging close, long-term engagements with patient organizations across all of its disease areas in epilepsy, mental health, Alzheimer’s, and Parkinson’s disease.
Lundbeck’s approach started with a listening ear, not a corporate check. Executives consistently meet with patient groups to review their existing needs and future priorities, collaborate on various initiatives, and to conduct programs in communities to help patients and their families. One initiative led to others, earning Lundbeck a reputation among patients, doctors, and others in the health care community as actively supporting and engaging with patient communities, and genuinely caring about making a tangible difference.
One illustration of this is PatientView’s (2016) 2015 Corporate Reputation of Pharma study, which reflects the views of 106 American patient organizations and about 28 pharmaceutical companies. Lundbeck in the United States not only ranked first in overall corporate reputation and first on all six attributes (patient-centricity, information, patient safety, usefulness of products, transparency, and integrity), but according to the report, “the percentages awarded Lundbeck by U.S. patient groups stand among the highest ever recorded in PatientView’s Corporate Reputation surveys” (p. 46). By building shared belief with patient advocacy organizations, Lundbeck has seen stakeholders take concrete actions—from advocating policy change at the state and federal level, to advancing research, even driving change within communities to benefit patients.
Finding 7: Advocacy at Scale Is Relative
When the Page Society released its volume on corporate character, Building Belief: A New Model for Activating Corporate Character and Authentic Advocacy (2012a), some members found the idea of advocacy at scale a bit daunting. However, scale is relative. Scale is not always large numbers of likes, follows, hits, letters, or phone calls from stakeholders—though volume can get results. Rather, it is about deep, mutually beneficial relationships that allow the enterprise and its stakeholders to achieve their respective goals over the long term.
Lundbeck’s interactions with its patient communities help establish Lundbeck as a trusted partner. This trust is both a significant source of pride and a serious responsibility that guides everything the Lundbeck team does. As is illustrated by this example, scale is relative to the issues at hand and the business and stakeholder impact.
Finding 8: Engaged Stakeholders Can Help Companies Mitigate Business Risks and Identify New Business Opportunities
Partnerships with patient organizations help Lundbeck monitor the pulse of emerging issues and needs that impact the patient communities affected by its disease areas.
Finding 9: It Is Essential to Sustain Stakeholder Engagement
Leadership and Ownership Matter
Young (2016) observed that even in enterprises like Lundbeck, where collaboration is exalted, colleagues in other functions are not sitting around waiting for the CCO to curate corporate culture and drive stakeholder engagement. Rather, the commitment to patients is so deeply embedded that employees across Lundbeck participate in patient events even on weekends and evenings. Stated simply, stakeholder engagement is an enterprisewide accountability.
Seven Action Steps for Enterprises to Build Authentic Engagement
1. As a prerequisite to building strong stakeholder relationships, build a strong corporate character. Being authentically worthy of trust is a necessary prerequisite to building trust among stakeholders. The New Model for Enterprise Communication articulated in Building Belief is clear about the relationship between deserving trust by having a strong corporate character and building trust through authentic stakeholder engagement. To be effective this must be more than a collection of words labeled as “credo,” “purpose,” or “vision,” it must be backed by consistent actions and behaviors across the enterprise.
2. Using organizational structure and collaboration processes to create an enterprisewide commitment. As derived from research and articulated in The New CCO (2016), the CCO must be an integrator (for more on this, see Chapter 7). Corporate communication functions with a broader span of control and/or influence are better positioned to concentrate organizational attention and resources on common stakeholder engagement strategies and tactics. In reality, the scope of responsibility of corporate communication functions varies widely. But all CCOs and communication departments should be conscious of the need to exercise broad influence across the C-Suite to drive an enterprise-wide commitment to activating corporate character and building deep, meaningful, and lasting stakeholder relationships. CCOs today must be adept at exercising influence, whether they have specific line authority or not. As noted by Harrison and Mühlberg (2014), this requires strong peer-to-peer leadership skills and the ability to create and win support for processes that effectively marshal enterprise resources.
3. Build a rigorous, systematic, and data-driven methodology. Enterprises consistently address stakeholder engagement through rigorous, disciplined, systematic approaches that rely heavily on data analytics and new technology—sometimes sophisticated, sometimes simple. These approaches analyzed both stakeholders and the issues that motivate them, allowing the enterprise to lay a strong foundation for building shared belief and encouraging supportive actions.
4. Empower and enlist employees as a resource for building belief with external stakeholders. Enterprises have long understood that engaged employees can be their best ambassadors. But the level of engagement made possible by new social media tools, combined with a marked trend in which publics have less trust in authoritative figures, makes the power and potential of employee advocacy even more potent.
5. Focus on developing partnerships with stakeholders, not “one-off” transactions. True stakeholder engagement is about building relationships that last. Enterprise corporate philanthropy can play a role, but authentic relationships are two-way. That requires moving beyond transactional activities—underwriting research, sponsoring events, and the like—to long-term agreements based on shared belief and mutual commitments. Two-way partnerships (c.f., Grunig 1987) require true listening and a willingness to change to build mutual benefit. Viewing stakeholders as potential partners instead of adversaries is a mindset that has transformed the way progressive companies approach building relationships.
6. Recognize that scale varies depending on the nature of your enterprise, the stakeholders you work with, and the scope of the issue. The advent of social media has changed the nature of advocacy. Today, enterprises often build shared belief with thousands or millions of people who become committed partners and feel they have a shared stake in the success of the enterprise. Today, everyone is an influencer. For some enterprises and issues, the interested and affected stakeholders can be much smaller. But building advocates is no less important. CCOs accustomed to using mass communication to reach large audiences sometimes need to recalibrate their approach to build shared belief and advocacy one stakeholder at a time, determining which channels to use, and gauging the level of effort for each stakeholder group and each issue. Regardless of size, nothing replaces face-to-face engagement and relationship building, which together with online outreach can enable considerable advocacy and influence at scale.
7. Be committed for the long term. Creating meaningful stakeholder relationships is hard work that must be sustained over time. Enterprises that do not make the long-term commitment risk at best becoming irrelevant and at worst an unreliable partner. The best enterprises marshal a steady commitment that is reflective of changes in the external environment and within stakeholder constituencies. Just as strategy and operations require sustained dedication and established processes, so too do enterprise corporate character and stakeholder engagement. Over time, approaches will evolve as the enterprise learns and grows, but what must never change is the commitment to invest the energy of the enterprise in building relationships that matter—to help solve problems, provide an outside-in perspective, and confer an implicit license to operate.
Summary
While CCOs can and must take a leadership role, they also recognize that, when their peers work with them to own stakeholder relationships, the entire organization benefits. Leading the way in the important area of building culture requires the maturity to share ownership and involve everyone necessary in the process and share credit for success.
In a massive global enterprise, stakeholder engagement is dispersed across business units, functions, and geographies. There may be 50 to 100 employees in a given business unit with some responsibility for stakeholder relationships, and, increasingly, a significant percentage of a country manager’s time may be devoted to stakeholder engagement and social risk management. That is why some enterprises are developing corporate centers of excellence to ensure global consistency across business, functions, and geographies. It is also why several of these are using extensive training, development, and people management tools, including job rotations and succession planning, to ensure coverage and retain institutional knowledge in effective stakeholder management.
Communicating aspects of culture and engaging stakeholders are two sides of the same coin. In today’s increasingly volatile world, both must be present to assure value.
1 As quoted in Freeman, R.E. 1984. Strategic Management: A Stakeholder Approach. Freeman is particularly known for his work on stakeholder theory.
2 Earned media is that which the enterprise has received when its actions are reported in the media by “reporters” who often receive leads from the enterprise’s media relations department. Owned media, such as websites and YouTube videos, are created and transmitted by the enterprise. While both are more aligned with push information (from enterprise to stakeholder), social media is a push–pull strategy that operates on what was earlier defined as two-way symmetric communication—or the establishment of a dialogue in which either the enterprise or the stakeholder can initiate the communication and/or respond to a social media communication.
3 The company announced the divestiture of this product, along with a host of other noncore products, on 12/22/2011—after having effectively resolved the controversy surrounding the drug use in prisons.
4 Status epilepticus (SE) is a medical emergency associated with significant morbidity and mortality. SE is defined as a continuous seizure lasting more than 30 minutes, or two or more seizures without full recovery of consciousness between any of them (Cherian and Thomas 2009).