How Stakeholder Engagement Improves Community Development (2024)

Engagement refers to the many ways in which companies connect with and involve stakeholders and the community in the development and implementation of community initiatives. Engagement covers a range of participation options, ranging from information sharing and consultation to active involvement in decision-making processes.
Engagement is not about public relations or marketing a particular view or decision, but involves key stakeholders and keeping the community informed and involved, and ultimately having ownership and responsibility in community development programmes.
Engagement works best between parties that have an established relationship based on trust and mutual respect. Nurturing and maintaining positive relationships ensures that engagement and consultation are as efficient as possible and misunderstandings are minimised.

An effective community engagement process:

is clearly scoped, influential and connected to decision-making
is simple, accessible and open
is inclusive, respectful and values the contributions of all
is informative, educational and contributes to continuous improvement
has clear and reasonable timeframes
builds relationships, collaboration and trust
provides feedback and accountability
is evaluated

In our interconnected world, companies frequently expand their business operations to new countries and explore emerging markets. Managing and engaging with stakeholders can include a spectrum of diverse groups, and this is a challenging process for many companies. Collaboration and partnerships are important business activities that can increase productivity and improve projects. To engage and manage stakeholder relationships is particularly vital for community development and social investment programmes and strategies.
For years, it has been standard corporate practice to invest and develop social investment and community development programmes with minimal engagement of those they materially affect – local communities – also known as their stakeholders. More recently, sustainability has become recognised as a growing area ofstrategic value creationfor companies. Nearly all listed companies report having a social investment and community development programme. Yet stakeholder engagement is often seen as secondary, even non-essential, to the social investment and development agenda. Most stakeholder engagement programmes today have tick-box approaches.
A realistic and holistic social investment and community development programme can help build and maintain a Social License to Operate (SLO) and ensure sustainable, positive development in project-impacted areas.
A stakeholder-based approach to social and community development programmes includes:

building an understanding of the local context, including stakeholder mapping and analysis
building relationships based on trust and transparency
ensuring consistency in stakeholder engagement and communication
managing stakeholder expectations through a graduated, phased and appropriate engagement approach
establishing an early, accessible and responsive grievance mechanism for conflict management
seeking “win-win” scenarios for the company and stakeholder groups
avoiding and mitigating social risks
minimising risks and maximising opportunities to create and protect value for the project and local communities

Good practice in stakeholder engagement continues to evolve. There is an increasing emphasis on the business case – on viewing stakeholder engagement and community investment through the lens of risk and opportunity, and on creating “shared value” by aligning business goals and competencies with the concerns and development priorities of local stakeholders.
In developing community investment and related stakeholder management plans, companies often first look through a risk-avoidance lens. Communicating early, often and clearly with stakeholders helps manage expectations and avoid risks, potential conflict and project delays. It also provides an opportunity to substantively build asset value, enhance company branding and create shared value for stakeholders broadly. It is with this comprehensive view that companies are developing more robust engagement programmes graduating into fully fledged sustainability policies and activities. This starts with acknowledging that the perspectives and perceptions of stakeholders often differ from those of the company.
It is essential to consider these multiple realities to find common ground and solutions. To that end, stakeholder consultation and engagement has broadened in scope and complexity, now extending to include company and contractor/supplier/customer behaviour, gender responsiveness and sustainable development.
Effective stakeholder consultation is a two-way process that should:

begin early in the process of identification of environmental and social risks and impacts and continue on an ongoing basis as risks and impacts arise
be based on the prior disclosure and dissemination of relevant, transparent, objective, meaningful and easily accessible information which is in a culturally appropriate local language(s) and format and can be understood by affected communities
focus inclusive engagement on those directly affected, as opposed to those not directly affected
be free of external manipulation, interference, coercion or intimidation
enable meaningful participation, where applicable
be documented

When companies work with others, it always increases risk, and stakeholder engagement can be a complex exercise, based on the diversity of stakeholders.

Managing and limiting risk require engaging with stakeholders on a regular basis during a community project. Stakeholder management in relation to project management should be a main priority for companies. Many companies do not understand the various groups of stakeholders they might impact and spend little time analysing stakeholders.

What is stakeholder analysis?

A “stakeholder” can be defined as:Any individual, group or institution who has a vested interest in the natural resources of theproject area and/or who potentially will be affected by project activities and has somethingto gain or lose if conditions change or stay the same.Stakeholders are all those who need to be considered in achieving project goals and whose participation and support are crucial to its success.

Stakeholder analysis identifies all primary and secondary stakeholders who have a vested interest in the issues with which the project is concerned.

The goal of stakeholder analysis is to develop a strategic view of the human and institutional landscape, the relationships between the different stakeholders and the issues they care about most. Stakeholder analysis can be a difficult task. Stakeholders will be different depending on the sector and industry a company operates in. The scale of projects and collaboration with other businesses will increase the number of stakeholders and companies must create and change engagement strategies as projects evolve.
Ultimately, all projects depend on selecting stakeholders with whom they can jointly work towards goals that will reduce or reverse the threats to projects.

A stakeholder analysis can help a project or programme identify:

the interests of all stakeholders who may affect or be affected by the programme/project
potential conflicts or risks that could jeopardise the initiative
opportunities and relationships that can be built on during implementation
groups that should be encouraged to participate in different stages of the project
appropriate strategies and approaches for stakeholder engagement
ways to reduce negative impacts on vulnerable and disadvantaged groups.

The full participation of stakeholders in project design as well as implementation is a key to – but not a guarantee of – success.

Stakeholder participation:

gives people some say over how projects or policies may affect their lives
is essential for programme sustainability
generates a sense of ownership over programmes
provides opportunities for learning for the project team as well as communities
builds capacity and enhances responsibility

When to use stakeholder analysis

Stakeholder analysis can be undertaken throughout all stages of the project cycle, but it definitely should be undertaken at the outset of a development project or programme. When project activities change, companies must rethink possible stakeholders they might influence. When stakeholders are analysed and companies are aware of the different categories and number of stakeholders, they can start engaging strategically. The various stakeholder groups require different attention and key stakeholders must be defined.

The value of stakeholder engagement to business

Including community stakeholders early on and during the course of a community project can be a valuable process. This is because community stakeholders sometimes have skills and expertise that companies lack and can provide important input on projects. Showing an interest in stakeholders and asking them to give input about programme design, implementation, management and evaluation also provide valuable learning opportunities. Inviting stakeholders to express ideas and opinions can impact relationships positively, as it can make stakeholders feel appreciated and valued.
Embracing collaboration and stakeholder voices is a strategic move that can impact companies in the long term. Collaboration invites a range of opinions from different stakeholders that lead to improved impact and return on investment. Recognising all stakeholder groups that can contribute to positive impact by embracing the opinions of external stakeholders is incredibly valuable for companies. Additionally, insights from stakeholders not only reduce risk, but contribute to increased sustainability.
Effective stakeholder engagement is about the quality of that engagement – and companies should ensure that they invest time and resources to further relationships with the specific stakeholders that can improve community programmes.
Successful stakeholder engagement doesn’t finish when the engagement ends. Companies must distill their stakeholder interactions into insights and actionable next steps. Getting value from engagement and deepening relationships depends on leveraging these insights to help redefine business strategies, innovations and partnerships. This follow-up is not limited to external stakeholders. Internal stakeholders should be engaged to build on the momentum and help incorporate the insights gathered. The list of tactics helps companies select the engagement formats that are best suited to each stakeholder’s role.
Engaging with communities and development partners will fuel the revision and improvement of a company’s social investment and community development approach. By testing programmes and services with the stakeholders who benefit from these solutions, a company can incorporate valuable feedback to make its solutions even better. Stakeholder interaction creates a feedback loop that informs strategy, tests the efficacy of innovations and refines how a company considers a community development internally and communicates its social development progress externally.
Next Generation has assisted numerous companies across Africa with stakeholder engagement and management strategies and processes. We provide end-to-end solutions from engagement to reporting, including stakeholder management.