Genuinely listening to stakeholders is more crucial than ever

Whatever your political views, there is no doubt there is much uncertainty around the world. In such a climate of uncertainty, employers and communicators need to revisit communication activities to adapt to these changes. This article reminds us that genuinely listening to stakeholders is more crucial than ever. A stakeholder is any person, group or organization who can place a claim on an organization’s attention, resources or output, or is affected by that output. They have a stake in the organization, something at risk, and therefore something to gain or lose as a result of corporate activity. Recent disruptive experience has shown what happens when politicians and employers don’t listen to stakeholder concerns.

Inequality leading to major disruption

Despite a strong global economy and near full employment,the 2021 Edelman Trust Barometer found there is profound global distrust of all the four societal institutions the study measures—government, business, NGOs and media. However, the trust in business rose a couple of points in 2021 from the previous year to be the most trusted of the four societal institutions.

Source: Edelman Trust Barometer 2021

Income and wealth inequality have 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:

The U.S. has the highest level of income inequality of any developed nation. The New York Times reported on 24 April 2021 that:

The gap between executive compensation and average worker pay has been growing for decades. Chief executives of big companies now make, on average, 320 times as much as their typical worker, according to the Economic Policy Institute. In 1989, that ratio was 61 to 1. From 1978 to 2019, compensation grew 14 percent for typical workers. It rose 1,167 percent for CEOs.

• 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 recent years, employees have seen CEO salary packages skyrocket. This has happened in other countries as well. For instance, in Australia in 2018, the highest paid CEO was paid 435 times the average wage. The chart below reveals the huge differences in pay between CEOs and average workers in a range of countries:

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 2016 Presidential election result in the US, and political unrest in various other countries.

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 Edelman, 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 skepticism, 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. The takeaway is that organizational leaders need to take more notice of their key stakeholders – their employees. This will help to guide them in setting organizational direction.

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.

Genuinely listening to stakeholders is more crucial than ever

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 involve 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 listening to stakeholders – two-way interaction between the organization and its employees.

Effective listening to stakeholders should be built into organizational behavior

In a 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 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.

Stakeholder consultation techniques

Some of the more common stakeholder consultation techniques include personal interviews, workshops, focus groups, forums, public or ‘town hall’ meetings, surveys, stakeholder panels, and participatory tools to engage stakeholders in the development of a project or policy. Macnamara’s views on stakeholder consultation are mentioned in my article, “How to calculate the importance of your stakeholders“:

Listening systems in organizations need to progress beyond polling…and structured surveys, which are the most widely used research method overall. Polling provides little more than a faint whisper of voice by limiting participants to a few “tick a box” questions and ratings. Surveys are also limited in enabling voice, with most predominantly made up of closed-end questions. Also, organizational listening needs to be much more than tokenistic feedback forms on websites and net promoter score (NPS) ratings—a widely overused method that asks people to rate the likelihood that they would recommend an organization, product, or service to friends or colleagues on a 0–10 scale.

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:

1. Slow down. If others find you stressed, overloaded or distracted, they will avoid disrupting your preoccupations. By being respectful to the presence of staff, you will create the opportunity for people to come to you with new information, questions and ideas.
2. Show respect by a willingness to be influenced. Create time and listen with an open mind.
3. Keep quiet. Try to follow the 80/20 rule – allow the other person speak 80% of the time rather than trying to speak over and past them. Ask open-ended questions to encourage the other person to think through solutions.
4. Challenge assumptions. We must be prepared to challenge long-held and cherished assumptions, as in item 2 above. Ferrari quotes the title of a book written by highly successful baseball coach Earl Weaver: It’s What You Learn After You Know It All That Counts.
5. Summarize and ask for commitment to the next move.

Another great guide is an article by Kate Murphy in the New York Times of 9 January 2020 – “Talk less. Listen more. Here’s how.” Well worthwhile.