Developing an Effective Infrastructure to Govern Global Stakeholder Relationships* Toni Muzi Falconi for Aberje- Sao Paolo 27-28 August, 2013

Developing an Effective Infrastructure toGovern Global Stakeholder Relationships*

Toni Muzi Falconi for Aberje- Sao Paolo27-28 August, 2013

One MAJOR Caveat Consciously or not, every organization adopts

a situational (specific) approach to global stakeholder relationships governance* that is influenced by:

the consolidated practices of the sector in which it operates

its own corporate culture and values (organizational epigenetics)*

its approach vis-a-vis the role interpreted by the stakeholder relationships functions, both in management and operations

For Example If the organization expands organically,

it will probably give preeminence to its own culture rather than to the local cultures where it plans to expand

If, instead, it expands through mergers and acquisitions, it will probably give preeminence to a preferably

… before-the-merger cultural due diligence* … to ensure that the integration process is sound, and will also develop specific cultures that integrate with those of the territories where it is to operate*

TWO STRATEGIC APPROACHES

INVOLVING AND ENGAGING

TWO STRATEGICROLES

WHERE YOU FIT BEST

LISTENINGDEGLOBALIZATION OR DECELERATION

GOREL

INTEGRATEDREPORTING

EMPLOYEERELATIONSHIPS

Two Prevailing Global Approaches*

1. Symbolic, Interpretive Management (dominant in practice)

2. Behavioral, Strategic Governance (dominant in the body of knowledge)

Symbolic, Interpretive Management The stakeholder relationships function manages

how stakeholders interpret the organization - to protect it from the environment

These interpretations include highly consolidated

concepts such as image, identity, impressions, reputation, and brand

Major emphasis is on publicity and media relations, while media effects and communication behaviors are mostly thought of in terms of messages and campaigns

Behavioral, Strategic Governance The function:

listens-to and monitors if, when, how and what stakeholders expect from the organization

interprets those expectations with management by participating in the decision making process as well as in the implementation of those decisions*

involves stakeholders in a thorough process of continued integrated multi-channel and multi-stakeholder reporting, facilitating and incentivizing their access and active feedback

ensures that each relevant management function is enabled with, and supported by, coherent communicative competencies and resources to create, develop and consolidate relationship systems with its own priority stakeholders

adopts and adapts an aware and programmed relationship policy of global specific applications and generic principles



TWO STRATEGIC ROLES

WHERE YOU FIT BEST


GOREL

INTEGRATEDREPORTING


Two Strategic Roles The existing global body of knowledge*

specifies two roles for strategic stakeholder relationships:

The Reflective Role The Educative Role

The Reflective Role Listening to stakeholder expectations and

interpreting them with management to improve the quality of the decision-making processes and to accelerate the time of implementation of the decisions taken

The Educative Role Providing competencies and skills to other

relevant management functions so that each may coherently develop relationships with its stakeholders



WHERE YOUFIT BEST


GOREL

TWO STRATEGICROLES

INTEGRATEDREPORTING


And You? Where do you think you stand along this

continuum? More on the side of the first or of the second?

Where, how and when will the two be able to integrate into an effective and do-able hybrid approach?

How can you help this to happen?

For Example, on one side … Integrating the reflective and the educative

strategic roles into a prevalently communicative-to approach, ensures a superior quality of the organization’s decisions and an acceleration of their time of implementation

Integrating the continued, integrated,

multichannel and multi stakeholder reporting policy into the communicating-to approach, ensures a smoother hybridization of corporate and marketing communication as well as a full stakeholder dialogue that reinforces the organization’s sustainability

Or, On The Other Side … Integrating the Behavioral Strategic Governance

approach with communicating-to and/or direct advertising programs to attract the attention of potential stakeholders, issue influencers and opinion leaders will probably con-vince at least some to migrate to an active stakeholder profile. This would greatly benefit in gaining consensus and active participation for a stakeholder involvement and engagement policy*



WHERE YOU FIT BEST


GOREL

TWO STRATEGICROLES

INTEGRATEDREPORTING


Listening (1) Listening is the process of receiving,

constructing meaning from, and responding to a spoken and/or nonverbal content

Listening is more than 50 percent, and an inherent part of, any communicative process and the front end of an organization’s decision making process

Organizations need define their own listening policies and periodically evaluate their dynamics*

The Relationship Building Process

The Stakeholders

The Organization

Objective Setting

Listening

Involvement

Analysis & Realignment

Listening

Engagement

The Cycle

The Environment in Which We Operate

MAINSTREAM & SOCIAL

MEDIA SYSTEM

ECONOMIC SYSTEM

ACTIVE CITIZENSHIP

SYSTEM

SOCIO-CULTURAL SYSTEM

LEGAL & INSTITUTIONAL

SYSTEM

POLITICAL SYSTEM

STAKEHOLDER RELATIONSHIPS

Many Diverse Ways to Listen Effectively (3)

Attentive deskbackground analysis

Careful study of the identity and the

influencing agents of the specific stakeholder

group

Identification of the specific stakeholder

group’s alliances and coalitions

The collection of direct and indirect positions

expressed by the specific stakeholder group on

comparable issues

One-with-one or one-with-few telephone, face-

to-face, ordigital conversation

Participant observation/immersion

Focus Groups

Interviews

Many Diverse Ways to Listen Effectively (4)

Application of networkanalysis techniques

On or off-line questionnaires

Applications of Tarot (trend analysis by relative opinion testing) and/or Delphi predictive models… of issues

management….a very wide range of quali/quantitative analysis paraphernalia…

But… (5) The organization needs to adapt these tools to a

true understanding of stakeholder expectations relevant to the specific potential consequences of each different option for the decision

In many cases, this will lead the organization to change itself, rather than, as many seem to believe, only to adapt its communicative behaviour to stakeholder needs

Listening (6) Implies: *

Temporarily remove all listener ideas, bias, stereotypes, fixations.. to objectively collect, animate, facilitate verbal, visual, written and experiential knowledge from the specific stakeholder group, that is believed to impact on the objective pursued by the organization

Seek approval on collected documentation from interlocutors... before…. reentering into one’s ideas ... and then

Interpret it



WHERE YOU FIT BEST


GOREL

TWO STRATEGICROLES

INTEGRATEDREPORTING


The Organization’s Stakeholders (1)

STAKEHOLDER

active stakeholder

potential stakeholder

INFLUENCERS

issue influencer

opinion leader

FINAL CONSUMER/USER

Power of orientation

of organizational

objectives’ achievement

Level of engagement in the relationship

with the organization

The Organization’s Stakeholders* (2)Type of

Stakeholder Definition Communicative Mode

Active

Aware of the organization’s strategic

objectives and interested in a

relationship to change or support them

Mostly Pull

Potential

Would be interested in a relationship with the organization if made aware of its specific

objectives and wish to change or support them

At least initially, mostly push

Issue Influencers

Subjects who influence the dynamics of the

priority issues driving the achievement of the organization’s strategic

and/or specific objectives


The Organization’s Stakeholders (3)

Type of Stakeholder Definition Communicative

Mode

Opinion Leaders

Subjects who influence the expectations from

the organization of both active and

potential stakeholders


Final Consumers/Users

Subjects who finally decide if, when, what and how to ‘buy’ the

organization’s product, service or idea

Remains mostly push

Evaluating the Quality of a Relationship with Stakeholders The existing body of knowledge* implies at

least four principal indicators that help evaluate the quality of a relationship: Trust (level of trust in the relationship by the subjects) Satisfaction (level of satisfaction in the relationship by the

subjects) Commitment (level of commitment in the relationship by

the subjects) Power Balance (level of perceived power balance in the

relationship by the subjects)

The importance and fundamental value of a pre-test

Evaluating the Quality of aCommunicative Effort The existing body of knowledge* implies tens of

different indicators that help evaluate the quality of a communicative effort. Yet three are essential and often overlooked: Credibility of the source (if the source is not credible for

the intended stakeholder group, it requires being changed)

Credibility of the content (same as for source) Familiarity of the content (if content is very familiar, the

effort can be useless. If it is not at all familiar then it is also useless)

The importance and fundamental value of a pre-test



WHERE YOU FIT BEST

LISTENING

INTEGRATED REPORTING

DEGLOBALIZATION OR DECELERATION

GOREL

TWO STRATEGICROLES


The Role and Benefits of anIntegrated Reporting Policy (1) Three global professional bodies (representing

accountants, auditors and communicators) are actively engaged in the International Integrated Reporting Council* (IIRC) – www.theiirc.org – that is leading the way to a globally accepted integrated reporting process

The IIRC is an interdisciplinary body led by stellar figures like the British Prince Charles, the South African Judge Mervyn King and scores of leaders of businesses, civil society and governments from all countries

http://www.theiirc.org/

The Role and Benefits of anIntegrated Reporting Policy (2) The rationale is that three professionals bodies

agree that one reason for the recent global economic disaster lies in the fallacy of generally accepted and legally required reporting procedures that misled markets

For Example: Only 20 years ago the average role of non material or

intangible assets of listed companies accounted for less than 40% of total capitalized value. Today, this percentage has become 70%. Yet, the accounting and reporting requirements remain more or less the same…

The Role and Benefits of anIntegrated Reporting Policy (3) The new reporting framework implies two major

changes:

Common procedures and taxonomies for governance, financial, environmental and social reporting

An agreed communictive infrastructure for a continued, integrated, multi channel, multi-stakeholder reporting activity*

The Role and Benefits of anIntegrated Reporting Policy (4) For stakeholder relationships professionals this

process implies that:

The board of directors needs to opt for a stakeholder governance model*

The professionals supply the board with stakeholder expectations analysis vis-à-vis the different issues requiring strategic decisions

Management implements the board’s decisions about which stakeholder expectations are to be met by adopting an active stakeholder involvement and engagement policy*

The Role and Benefits of anIntegrated Reporting Policy (5) The entire organization becomes entirely involved

in the continued reporting process and this requires a major coordinating effort

For Example: The marketing, human resources, IT, financial, sales,

production or supplier functions will need to constantly report their activities in a consistent, coherent and coordinated mode and using the same taxonomy so that the function responsible for the reporting process may make available this information to all stakeholder groups in a continued multi channel and multi stakeholder involvement and engagement mode



WHERE YOU FIT BEST

LISTENING

EMPLOYEE RELATIONSHIPS


GOREL

TWO STRATEGICROLES

INTEGRATEDREPORTING

The Increasing Relevance ofEmployees (1) The pervasive always-on syndrome, the many

indications from research that employee engagement directly contributes to business results*, as well as the increasing role of employees in forming other stakeholder opinions* imply active and sophisticated employee communication

In 2010, the Stockholm Accords* identified in this area two out of the six where stakeholder relationships created most value

The Increasing Relevance ofEmployees (2)

By successful employee engagement the british movement Engage for Success says that this is ‘a workplace approach designed to ensure that employees are committed to their organization’s goals and values, motivated to contribute to organizational success, and able at the same time to enhance their own sense of well-being’

The Increasing Relevance ofEmployees (3) A recent Gallup study in its “Q12 Meta-Analysis” white

paper* shows a direct correlation between employee engagement and the productivity of the specific department those employees work in, as well as the overall productivity of the organization

This white paper also tells of a formula to measure each employee’s productivity through his/her engagement level:

Per-person productivity =Talent x (Relationship + Right Expectation + Recognition/Reward)

Another study by AON Hewitt* shows that, over the last couple of years, employee engagement has decreased everywhere

The Increasing Relevance ofEmployees and Other Boundary Publics (4) Not all employees are equal, so one cannot

engage all employees in the same way

When planning a program to relate with a specific group of employees it is imperative to listen to them before and understand how they think, act and talk

The Stockholm Accords say that also consultants, agents, distributors, strategic suppliers, pensioned and part time employees are ‘boundary’ stakeholders



WHERE YOU FIT BEST


GOREL

TWO STRATEGICROLES

INTEGRATEDREPORTING


Deglobalization or Deceleration? Impacts on Global Stakeholder Relationship Governance (1)

The value of trade (goods and services) as a percentage of world GDP increased from 42.1 percent in 1980 to 62.1 percent in 2007.

Foreign direct investment increased from 6.5 percent of world GDP in 1980 to 31.8 percent in 2006

The number of minutes spent on cross-border telephone calls, on a per-capita basis, increased from 7.3 in 1991 to 28.8 in 2006

The number of foreign workers increased from 78 million people (2.4 percent of the world population) in 1965 to 191 million people (3.0 percent of the world population) in 2005

Deglobalization or Deceleration? Impacts on Global Stakeholder Relationship Governance (2)

Deglobalization or Deceleration?(3) The world today is less globally connected than it was in 2007;

9 out of the 10 most connected countries are in Europe, and Sub-Saharan Africa remains the least connected region even if the top 5 countries for connectedness-increases in the past year were all from that region

Distance and borders still matter – even online. Most international flows take place within rather than

between regions. Even online connections are mainly domestic and decline with distance*

Capital markets are fragmenting and services trade is stagnant Capital connectedness is on a declining trend and the

intensity of services trade has not risen since 2009*

Deglobalization or Deceleration? Reality and The Perception of Global Business Leaders (4) Of all the telephone-calling minutes in 2012, only

2% were cross-border calls. By also adding online calls, the percentage goes to 6% or 7%. Yet, when 400 readers of HBR were asked to guess the percentage in 2011, they estimated a much higher 30%*

We assume significant movement between countries, given that immigration is so widely thematised. Yet just 3% of the world’s population are first-generation immigrants. HBR readers estimated the percentage at over 20%*

Deglobalization or Deceleration? Reality and The Perception of Global Business Leaders (5) Less than 10% of all new investments in 2010 were direct foreign

investments. HBR readers overestimated the percentage to more than 30%*

In France, where tensions are high over immigration, people believe that immigrants make up 24% of the population. The real figure is actually 8%*

Americans believe that 25% percent of the federal budget is devoted to foreign aid and say that 10% would be “appropriate” Yet, just 1% of the U.S. federal budget goes to foreign aid*

People estimate their countries give large amounts of aid to the poor in other nations. A survey by the World Bank finds that the ratio of aid given per domestic poor person, when compared to aid given per foreign poor person, is 30,000 to 1*

People estimate that international shipping and air transport account for 20% of all energy-related CO2 emissions,. Yet it accounts for 2% to 3%*

Why Does All This Matter for Global Stakeholder Relationships Governance? (6) If the world is not as fast or flat as we believe (and

say) it is we who, more or less consciously, contribute to mislead the awareness of our stakeholders*

The two driving factors of this misleading are fear and expectations* and we bear great responsibility for both

Rather than insist in trying to dismantle the consolidated perception that ethics and stakeholder relationships is an oxymoron, we should more seriously engrain into our day-to-day activities the concept of professional responsibility (to oneself, to one’s profession, to one’s employer or client and to society at large)*



WHERE YOU FIT BEST

LISTENING

INTEGRATEDREPORTING



GOREL

TWO STRATEGICROLES

Revisiting the GOREL (Governance of Relationships) Scrapbook Approach*

Listening to active

stakeholders

Involving potential

stakeholders

Relating-with issue influencer

s

Envisioning

Planning & creating spaces and

contents

organizational

objectives

Roll-out

Post-test & Reset

IMPLEMENTATION

PLA

NN

ING

EV

ALU

ATIO

N

Con-vincing opinion leaders

Pre-test

communication & relationship

objectives

Discussion & Questions

Thank you!

Post scriptum The author is grateful to his six students from

NYU’s 2013 summer term Global Relations and Intercultural Communication course who dedicated much time, thought and effort to help him in the preparation of this presentation

The students are: Danning Bradley Stephanie Bower Muriel Hakim Elena Cano Garcia Marie Michelet Xinchao Jiang

Methodos (www.methodos.com) is a management consulting company established in 1978, with branches in Milan and Rome, and a representative in Brussels.

Methodos is leader in the design and implementation of cultural change programs based on socio-cultural analysis, stakeholder inclusion, co-participative action, change to integrate sustainability. Programs include integrated communication, skill and competencies development, innovative task force management.

Thanks to a cross cultural competence our clients’ portfolio is represented by prestigious national and multinational companies in different industries

More than 30 yearsof solid experience

Competence and professionalism

A prestigious client portfolio

ToniMuziFalconi ([email protected])

Senior Counsel of Methodos. Member of the editorial board of the Journal of Communication Management, teaches Global Relations and Intercultural Communication at the New York University and is Past President of the Global Alliance for Public Relations and Communications Management.

METHODOS - LEADING CHANGE

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Barilla, Boston Scientic Emea, Ferrero, Fiat, Finmeccanica, Luxottica, Pirelli, …Auchan, Barclays, Carrefour, Chanel, Louis Vuitton, Sky News Corporation, Tenaris Dalmine, …

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and advise Sustainability policy due diligence / benchmarking Employee (at all levels) engagement programs for

sustainability Facilitation and development of sustainability and

integrated reporting

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Developing an Effective Infrastructure to Govern Global Stakeholder Relationships* Toni Muzi Falconi for Aberje- Sao Paolo 27-28 August, 2013