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Stakeholder feedback is crucial for setting direction
By Kim Harrison
Author and Principal of www.cuttingedgepr.com
Whatever your political views, there is no doubt the US Presidential election result will create much uncertainty around the world. As President-elect Trump has never held political office before, and as his views are volatile, no one really knows what will happen from here.
In such a climate of uncertainty, employers and communicators need to revisit communication activities to adapt to these changes. This article reminds us that genuine listening to stakeholders is more crucial than ever. Recent experience has shown what happens when politicians and employers don’t listen to stakeholder concerns.
Inequality leading to major disruption
Although the consequences of the election are now suddenly thrust at us, signs of uncertainty and volatility were already apparent. Analysis by CEB found that the proportion of organizations experiencing major change (defined as M&A, significant restructuring or senior leader change) rose to 91% in 2015, which was even higher than the 81% of businesses dealing with major change in 2009 after the start of the global financial recession in 2008.
Income and wealth inequality has become a key cause of unrest in many western countries as statistics reveal the rich have got richer and the lives of most others have not improved much. For example, Nobel Prize-winning economist Paul Krugman observed in The New York Times on 24 November 2011 that in the 25 years to 2005 the inflation-adjusted, after-tax income of Americans in the middle of the income distribution rose 21% while the income of the top 0.1 percent rose by 400%.
In the past decade, employees have seen CEO salary packages skyrocket, often to around 70 times the level of the average worker in their company, sometimes even to 300 times (!). Company profits have risen sharply at the same time, but the pay of workers has stagnated during this period, and many jobs have been lost in traditional industries.
This led to the Brexit movement in the UK, the Presidential election result in the US, and political unrest in various other countries this year following previous unrest such as the Arab Spring and the Occupy Wall Street movement.
PR publisher Paul Holmes quotes Christopher Storck, head of a large German consultancy and professor of communication management and strategy at a Berlin university: “Business leaders have to reconnect with society again. Companies have to create value for all stakeholders. They have to establish and maintain mutually beneficial relationships with all individuals, groups and communities who provide resources that the organization wants to deploy in its value creation process.”
Holmes also quotes Richard Edelman, head of the largest PR firm in the world: “It is time for business to move beyond words to action if it wishes to restore trust. In the absence of trust and credibility, anything companies have to say will be treated with scepticism, if not downright hostility. Only actions will matter. When people trust nobody, they will turn to anybody.
Top-down management inefficient and unsatisfying to workers
Uncertain economic conditions, unpredicted business challenges and pressure for organizations to be more agile has led to further uncertainty for business leaders. Most business leaders work through all this in the traditional way – by managing from the top down.
However, 64% of employees surveyed in a CEB survey of 6,686 employees in 2016 said a top-down approach lowers their level of trust and confidence in their leaders. Workers say they hesitate and wait for direction before changing their work methods. They report that they are doing too much unproductive work and they tend to resist change.
Genuine dialogue vital
CEB consultants conclude that the organization should push decision-making and accountability closer to the frontline. Management should use a two-way conversation strategy, not just a communication strategy. The best leaders engage employees in a dialogue rather than increase the volume of communication delivered to them, ie they should listen with more respect.
In their 2016 survey, the CEB consultants found two-way communication makes employees less anxious (29% compared with the top-down-telling approach causing anxiety among 51%), increases employee hope (35% compared with 17%), reduces employee anger (5% compared with 24%) and builds organizational pride (59% compared with 27%).
One very clear thing is that governments and companies in recent years haven’t been listening enough to their constituents – their stakeholders. The recent upheavals are a result of this.
Alon Feuerwerker, head of the political practice at Brazilian firm FSB, says: “In a world with easy access to multiple sources of information, it is not enough to repeat the message…You need to dialogue and interact to obtain attention and trust from those affected. You need to avoid arrogance.” Social media is only a partial solution to enable people to feel their views are being taken seriously and acted upon.
Companies also need to recognize that as the credibility of mainstream media declines - third-party endorsement from that source has weakened, and companies need to learn to use new channels that involves genuine interaction with their stakeholders.
Within organizations, due employee recognition is one way to increase satisfaction and engagement, but management need to approach this activity with authenticity and respect to their employee stakeholders. The worst thing is to use employee recognition as a way to increase worker productivity at minimal cost. Employees will see through fake management attitudes and will respond negatively. The core of employee recognition is genuine two-way interaction between the organization and its employees.
Avoid the ‘post office’ method
Communicators need to minimize the one-way communication mentality. Management consultant and former Harvard University fellow, Elizabeth Doty says the approach of too many organizations is based on an outdated mental model: “It’s a model best described as a ‘post office.’ They view themselves as the sender of a message, and others as the receivers.” These leaders are preoccupied with their own message, which leaves them ignorant about the larger context and the views of their stakeholders.
Effective listening to stakeholders should be built into organizational behavior
In a 2013 paper on organizational listening, Australian communication professor Jim Macnamara said, “Other than for strategic planning and targeting purposes, organizations listen to stakeholders sporadically, often in token ways, and sometimes not at all.”
In his pilot study, Macnamara found the job descriptions of heads of communication and public relations “contained no reference to functions related to listening, such as systematically collecting and evaluating feedback, doing formative research, or responding to stakeholder opinion or concerns…There was no mention of changing organization behavior to meet stakeholders or publics’ concerns…only reference to achieving organizational concerns, interests and objectives…The only function that seems to make any sustained effort to listen and respond directly to publics or stakeholders is customer relations.” Check your management and communicator’s job descriptions. To what extent is a listening or intelligence role apparent?
The intent should be to explore issues or opportunities together with stakeholders. This two-way dialogue is powerful for creating breakthroughs. Professor James Grunig’s concept of symmetric two-way communication returns – taught to all PR students as the perfect model! This model recognizes that others have something worthwhile to say and we should be willing to listen.
Develop one-on-one listening skills
Strong face-to-face listening skills can make a critical difference to the performance of senior executives, but few are able to cultivate these skills because they are more intent on pushing their own preconceptions than absorbing the perspectives of others. This matters because listening is the surest, most efficient way for senior executive to come to the judgments they must make.
A useful formula incorporating some key recommendations by former McKinsey consultant Bernard Ferrari in his 2012 article “The executive’s guide to better listening” are:
Forthcoming articles in www.cuttingedgepr.com will discuss in detail how to identify, listen to and relate to key stakeholders. Apart from business relationships, the political movements of recent years around the world dramatically underline the importance of stakeholders to your personal and professional future. One thing is clear from all this – firms need to establish ongoing relationships with stakeholders, not just pay attention to stakeholders who might be perceived as the cause of problems.