Sustainable leaders don’t just ‘manage’ stakeholders, they include their views and beliefs in decision-making and consider the implications of decisions on all stakeholders across the value chain. From employees to customers, suppliers to stakeholders, governments to communities, sustainable leaders proactively seek to comprehend the widest cross-section of viewpoints to inform their decisions. Only by developing an understanding of all stakeholders’ needs and requirements, can you drive truly impactful decision making. Effective stakeholder management is crucial if leaders are to successfully implement corporate sustainability initiatives. By involving relevant stakeholders in the planning, development and execution of these initiatives, companies can ensure that their sustainability efforts are well-targeted, comprehensive, and support the long-term needs of the majority.
For a business to successfully achieve it’s sustainability ambitions (and we’re not just talking environmental sustainability, but the very longevity of the business itself), the organisation requires sustainable leaders who exemplify empathy and authenticity in their daily leadership. By acknowledging and embracing the opinions of diverse stakeholders with different experiences and varied viewpoints, leaders can better understand organisational challenges, make more informed decisions that reflect the broader impact of their actions, reduce risk and open up opportunities for large-scale impact. Where traditional leadership has taken an exclusive and one-dimensional approach to stakeholder engagement, sustainable leadership gives a voice to all stakeholders. By doing this, leaders by default align the organisation with ethical business practices, and by demonstrating a commitment to fairness and social responsibility, they in turn promote the organisation as a positive place to work and do business with.
It's fascinating assessing stakeholder engagement as a leadership competency during executive interviews and over the decades, we’ve seen the good, the bad and the ugly, but what distinguishes those candidates who truly embody sustainable leadership in their responses, are those who describe engaging stakeholders through a relational, empathetic approach. Engaging with stakeholders in this way, whoever they are, from board to shop-floor, internal or external, helps foster transparency and trust, enhancing the reputation of an organisation and building strong, loyal relationships. We’ve seen some incredible examples of how open dialogue like this has led to powerful employee engagement, closer customer relationships and even community support for the business.
So, in the context of an increasingly turbulent leadership landscape, where leaders juggle the everchanging pressures of climate, economic, social and political effects on the business, for the organisation to thrive, we also need leaders who can drive innovation and new approaches to tackling these challenges. A strong sustainable leader can drive innovation and improvement by listening to the diverse insights and feedback provided by stakeholders, with collaborative engagement leading to creative solutions to complex sustainability challenges. By addressing the interests of all stakeholders, leaders can ensure the long-term success and resilience of the organisation, maintaining positive relationships with stakeholders and granting the organisation a social license to operate, something that has become more and more crucial for long term viability.
Neglect your stakeholders at your peril…
During the Covid lockdowns of 2020 and 2021, we interviewed a large group of CEO’s for a book we published about how the pandemic had impacted their organisations and how their leadership had made a difference (see ‘A Time Like No Other’). Not every leader we interviewed made the final cut, but what was so telling at the time, was how those who demonstrated a strong commitment to stakeholder engagement and corporate sustainability really went on to enhance the company’s reputation among customers, investors, and other key stakeholders. Fast-forward four years and the increased brand loyalty and investor confidence has been palpable.
A piece on stakeholder engagement as a core competency for sustainable leadership wouldn’t be complete without talking about the impact on talent acquisition and retention. It’s well documented that Gen-Z prioritise sustainability credentials when job-seeking, but we’re seeing it more and more at the most senior levels too. It’s not rocket-science to work out that those organisations who have built a reputation for sustainable and stakeholder-inclusive practices, are going to be more attractive to top talent who value ethical and sustainable business practices. The most important first step on this journey is to prioritise recruiting leaders who intuitively seek to build an understanding of stakeholder views as part of their decision-making. Crack that, then the rest should follow organically.
Our Five Tips for Effective Stakeholder Engagement:
- Identify key stakeholders.
- Develop a stakeholder engagement plan.
- Communicate openly and transparently.
- Foster a culture of collaboration.
- Monitor and evaluate stakeholder engagement.
At Sherrington Associates, we recognise how essential sustainable leadership is to the success of an organisation. We use our 4A Model as a framework for assessing leadership candidates throughout the recruitment process. This helps us understand the candidate’s potential for developing a lasting culture of sustainable leadership.
To learn more about our services, talk to our team…
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