FROM PURPOSE TO PERFORMANCE: A RADICAL APPROACH TO STAKEHOLDER ENGAGEMENT
• Historical learnings from the telecoms and nuclear industry
• Current thinking from thought leaders
• Future practical model for meaningful stakeholder engagement
Learnings from the American telecoms industry
The pioneering work of American Telephone and Telegraph Company (AT&T) makes a useful benchmark for public engagement around organisational purpose. In October 1927, W.S. Gifford, President of AT&T made a speech to the National Association of Railroad and Utilities Commissioners which was one of the few instances in which a major corporation publicly stated the bases on which it hoped to serve the public.
In his speech, Gifford stated: “The fact that the responsibility for such a large part of the entire telephone service of the country rests solely upon this Company imposes on the management an unusual obligation to the public.”
Recognising public relations was a management discipline, he appointed Arthur W. Page as the first public relations executive to serve as an Executive Officer and Board Director of a major public corporation.
Page’s appointment was in response to public resistance to its monopolisation efforts and his role was to increase the public’s appreciation for AT&T’s contributions to society. Page believed that the purpose of public relations was to find a place where the public’s interest and their company’s interest coincided and to engage around it. It was his thought leadership and lifetime practice that earned him his reputation as being regarded ‘the father of public relations’ and laid the foundations for The Arthur W. Page Society.
In his time at AT&T, Page was fortunate to work with Chester Barnard whose 1938 book, The Functions of the Executive, pioneered thinking in management theory and organisational studies.
Barnard viewed organisations as systems of cooperation of human activity and summarised the function of leadership in organisations as:
• Defining the organisation’s purpose and objectives
• Establishing a system of communication to improve effectiveness
• Engaging employees in their work to improve efficiency
• Partnering with suppliers to secure essential services
Learnings from the British nuclear industry
With a heavy focus on improving reputation, the PR function at BNFL had moved BNFL from tabloid headlines to the business pages, rebranded the company and created its first above-the-line marketing campaign.
The objective was to create universal support for the company strategy to achieve private-public partnership (PPP). Favourability and familiarity of the BNFL brand had never been so high - BNFL was on course to become a flagship PPP. A journey that was deemed unstoppable but it proved to be a titanic task, in more ways than one.
In pursuit of growing the brand and delivering the strategy to achieve commercial freedom from the shackles of the DTI, the leadership team hit an iceberg.
They had become so blinded to significant cultural issues that lay under the surface of the corporate facade, their reputation had got ahead of their performance. A major safety related scandal resulted along with some of the most ferocious criticism ever heaped on a British commercial organisation. Four workers lost their jobs. Regulators, government, MPs and NGOs poured scorn on its leadership and, under growing pressure from a major Japanese customer, the CEO, FD and HRD eventually had to abandon ship.
Ironically, the crash in stakeholder confidence came two years after the introduction of, arguably, the most intensive, consistent and difficult engagement with stakeholders ever undertaken for a European organisation and a first for the industry.
BNFL’s National Stakeholder Dialogue involved a wide range of individuals and organisations interested in or concerned about nuclear issues and aims. When it began, it was a groundbreaking exercise for the Company, from an international viewpoint as much as for external stakeholders.
I captured the learnings from the process in a paper ‘Stakeholder dialogue - a new paradigm for a new millennium’ submitted to the World Energy Council 18th Congress in Buenos Aries in 2001. It flagged the risk of discontinuous or too frequent involvement resulting in involvement fatigue and drop-out of stakeholders in the follow-up processes.
A couple of years into the BNFL process two high profile NGOs – Greenpeace and Friends of the Earth – left the dialogue. A key learning.
Current thought leadership
Today, executive leaders in boardrooms and conference rooms across the world are talking about purpose beyond profit.
These discussions have topped the agenda at the World Economic Forum Annual Meeting at Davos and has spawned new service offerings from leading consultancy firms. There appears to be a disconnect between these conversations and consultations and leadership action.
In his recent book ‘Connect’, Lord Browne addresses the significant disconnect between organisations and the public they serve. He proposes a four-step virtuous cycle for ‘Connected Leadership’:
1. Map your world
2. Define your contribution
3. Apply world-class management
4. Engage radically
A bold shift from the conventional four step vicious cycle of unilateral decision making epitomised by Lord Browne’s counterparts in Shell UK over their handling of Brent Spar:
4. Defend (or abandon)
Lord Browne’s book was clearly influenced by Page’s work and his rebranding of BP was seen as a way to strengthen a common sense of purpose and symbolised their commitment to values including safety, respect and excellence. Subsequent events like Texas City Refinery and Deep Water Horizon raise concerns about the culture behind the brand and suggest the rebranding of BP was a triumph of style over substance.
A future model for stakeholder engagement
Stakeholder engagement can be defined as the positive intellectual, emotional and behavioural state of stakeholders directed toward enhancing reputation and performance. Three universal enablers to reputation and performance are strategy, culture and brand - none of them are mutually exclusive and none of them can claim bragging rights for eating another for breakfast. Just as was demonstrated by BNFL and BP, you ignore any one of them at your peril.
This is where the power of purpose proves invaluable. By defining a purpose that is both compelling and true, you create an organising principle and a common platform for engaging with stakeholders to develop your strategy, culture and brand. Stakeholder engagement becomes a simple three-step process:
1. Identifying potential innovators, collaborators and advocates
2. Mapping their level of emotional, intellectual and behavioural states
3. Planning interventions for informing, inspiring and involving them appropriately
The purpose of this chapter was to highlight the gap between the theory and practice of corporate public relations over the past century. Despite the title, there is nothing radical about the model or the thinking presented, what could be radical is the application of the wisdom of Arthur W. Page and PR grasping the opportunity to take a leadership role.
There has never been a better time to focus on three of the seven Page Principles: listen to your stakeholders, manage for tomorrow and conduct public relations as if the whole enterprise depends on it. Wise words indeed.
Sean Trainor is an independent change communications and employee engagement consultant. A professional engineer by background, his career in communications has spanned over 15 years with senior in-house roles for BNFL, BBC and Network Rail. Sean has also acted as senior counsel for brands including Barclaycard, Nissan, British Gas and British American Tobacco. He is a former CIPR Board Member and Chair of CIPR Inside.