Building Stakeholder Bonds

In these days of expensive corporate scandals, you’d probably trust your lawyer or corner auto mechanic before you’d put your faith in a CEO. And you wouldn’t be alone.

According Daniel Savas, Senior Vice-President at Ipsos-Reid, only one in five respondents to a recent Reader’s Digest poll ranked CEOs as trustworthy, just above local politicians and car salesmen.

Far from being devastated by the survey’s conclusions, many business leaders are trying to improve their efforts to be honest, respectful and responsible.

Business leaders who excel in the area of corporate social responsibility believe building strong, trusting, emotional bonds with customers, employees, community stakeholders and investors is key to success.

Companies that consider the impact of their products, practices and services on employees, customers, neighbourhoods, cultures, shareholders and the environment are rewarded by a healthy bottom line.

At a recent Vancouver Board of Trade leadership panel, CEOs and senior managers from the financial, energy, information, metal, high tech and other industries described how they nurture trusting and long term relationships with stakeholders and build business value in the process.

David Demers, President of Westport Innovations, Dave Mowat, CEO of Vancouver City Savings Credit Union, Richard Prokopanko, Director of Corporate Affairs BC at Alcan Primary Metal Group, and Bob Elton, Executive Vice-President and Chief Financial Officer at BC Hydro, said building emotional bonds with stakeholders contributed to their organizational success.

Participants identified five ways to foster the emotional bonds that build stakeholder trust:

1. Involve stakeholders.
Involve customers, communities, employees, and shareholders in the operation of the business. Dave Mowat, CEO at Vancouver City Savings Credit Union said the company is “consumed by listening to members” through monthly canvassing, semi-annual surveys and focus groups. He said loyalty is built by involvement with customers, especially when the organization helps save them money. VanCity recently telephoned 3000 members to tell them how to save on service charges. It was a time consuming move but a socially responsible act dedicated to caring for customers.

2. Abandon outmoded ways of doing things.
Going against the grain fosters emotional bonding with stakeholders. Richard Prokopanko of Alcan said his company’s shift from handling stakeholder issues in a generally legalistic, contract-oriented manner to valuing more dialogue and collaboration seemed to begin to help ease 48 years of tension between Alcan and local First Nations people. Collaboration increased between the two parties to the point where they joined forces on a forestry project.

3. Be values based.
Hydro’s Bob Elton said identifying company values and articulating one’s own values is key to being able to answer the question: “Are we applying our principles?” The answers drive the business. Hydro aims to translate the ideals of integrity, accountability, service and team work into a focus on delivering safe, reliable power, creating clean energy initiatives, promoting conservation programs and building healthy relationships with Aboriginal communities affected by the utility.

It’s important “to do more than what’s in our own self interest” and a clear set of values helps companies reach this ideal, said Elton.

4. Be transparent.
While it’s risky, being transparent helps companies increase trust with stakeholders who resent cover-ups when mistakes occur. Stakeholders want to analyze management decisions that affect them. David Demers, President of Westport Innovations, a clean engine technology company, said even with the competitive risk inherent in being transparent, Westport seeks and responds to shareholder questions, updates its business plan quarterly and posts it on the web site.

Demers says this degree of openness is better than waiting until it’s too late to disclose unforeseen changes or mistakes.

5. Engage employees.
Tapping employee interest in making a difference in the world is important to retention, according to Tracy Logan, Director, Crystal Community at Crystal Decisions, a Vancouver information management company. Crystal Community is a company program that provides support for employee community service initiatives. Employees at Crystal Decisions voted to support educational initiatives for poor children.

When employees have input into a meaningful company project, they begin to form a bond with the organization. That bond prevents high turnover, which affects customers negatively as well as depleting the organization of talented and competent personnel. Creating meaning at work helps people stay emotionally attached to their organizations – and stay at their jobs.

Increasing stakeholder trust and strengthening emotional bonds takes time, patience and the willingness to manage the conflicts that arise between profit making and socially responsible behaviour. It means companies decide that profit is not the only measure of success, but so too are strong relationships with the community, protection of the environment and good employee relations.

This can be easier said than done. According to Demers, many moral dilemmas faced by companies are due to the desire to take short cuts or be expedient in the face of time pressures.

And as Norman Schwarzkopf said when commenting on dealing with ethical conundrums: “The truth of the matter is that you always know the right thing to do. The hard part is doing it.”

Dr. Jennifer Newman and Dr. Darryl Grigg are registered psychologists and directors of Newman & Grigg Psychological and Consulting Services Ltd., a Vancouver-based corporate training and development partnership. They can be contacted at sunmail@newmangrigg.com

Identifying information in cases cited has been changed to protect confidentiality.

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