Nov 7, 2013

Stakeholder’s Engagement as a Key to Sustainable Growth in the Arab Region

Having strong, honest and mutually beneficial relationships with local community groups ensures that all issues are approached openly and collaboratively and improves the effectiveness of companies’ development efforts. 

Companies have about as much ability to choose their stakeholders as children have to choose their parents”; the location, scale and nature of operations are main factors that determine who is supposed to form the stakeholder group of a particular company and with whom organizations have to engage in dialogue to find out what social and environmental issues matter most to them about their performance in order to improve decision-making and accountability.

In the last three years, Arab citizens’ demand for voice and participation in decisions that affect their lives has grown in intensity. Most of the countries are suffering from political and macro-economic instability. Those are two major factors influencing all aspects of human existence and have a major impact on people’s quality of life in the region. 

Consequently, governments in the Arab region and private sector organizations have been putting efforts to respond to those growing public expectations and pressures by establishing more frequent and flexible forms of stakeholder engagement. However, as major stakeholders in these countries, companies have a responsibility to foster sustainable development and improve the societies in which they operate. This will not be successful without reengineering their engagement process. 

So what exactly are companies operating in Arab markets doing in terms of stakeholder engagement? What are the risks and benefits they associate with engaging with “non-traditional” stakeholders? (i.e., stakeholders other than employees, suppliers, business partners, or customers), and, most importantly, what does the future of stakeholder engagement look like from practitioners’ perspective in order to realize a sustainable development in the Arab region?

Practitioners in the region consider stakeholder engagement to be important to their organization’s success; they even think that is extremely important. Reading sustainability reports coming out of the region, it is obvious that the scope and scale of stakeholder engagement activities are expected to increase dramatically in the next five years. Yet, there are still major challenges associated with it.

  • Fear of Engagement

Some companies in the region are still uncomfortable about opening up for engagement for fear of criticism.  Listening to critical views of stakeholders may not be very pleasant and perhaps it could be hard to take, but it does provide firms with an opportunity to learn more about perceived problems, and can be the basis for constructive action. It also represents a valuable source of information that helps companies cope with the unexpected changes and market turbulence happening in the region. 

Companies in the Arab region have to believe that an effective stakeholder engagement is likely to reduce public criticism, therefore contributing to a positive view of their brands in the eyes of all their stakeholders, as well as saving time and resources spent on fighting negative campaigning. I have personally seen big companies operating in the market taking a defense approach and clashing with the public in social media channels. Consequentially, this created lasting negative perceptions that are difficult for the company to later overcome.

  • Early Engagement

I believe that most of the issues related to stakeholder engagement are far more likely to occur when people are engaged later in the process.  Taking a pro-active approach and trying to initiate contact with concerned stakeholders will help minimize risks and expose opportunities available by ensuring that all who need or wish to know about an issue can do so. This could also set the base for a potential collaborative research that integrates stakeholders in stages in order to enhance the relevance of the work to the end users.

  • Embedding Stakeholder Engagement

We often talk about embedding sustainability into the core business and we never tape into the issue of embedding the stakeholder engagement process itself. One of the most challenging aspects of the engagement is ensuring that stakeholder engagement is sustained within the organization’s staff, systems and processes especially if key individuals leave or if there is a change in the leadership. Stakeholders will look at the company as a whole and not individuals working there. 

  • Prioritizing Stakeholders

Care must be taken to ensure that the weight given to stakeholder views is representative to the level of support conveyed by an organization.  For example, the most vocal stakeholder group with the most effective lobbying techniques may not necessarily be the most representative of the community likely to be affected.  Care should also be taken to ensure that all groups concerned and minority groups are included in the debate.

  • Online Engagement

Online collaborative platforms are the future of stakeholder engagement techniques. They are used to generate ideas, promote discussion and get feedback on critical decisions. “Our focus has been on enhancing our traditional stakeholder engagement processes with the integration of online portals and social media outletsAramex Sustainability Report. Online communities are used to recruit participants for idea generation, to elicit feedback on product development, and to disseminate research findings; they allow for frequent feedback by a forum facilitator and a feedback loop to keep stakeholders aware of how their input is being used.

  • Evaluation of Engagement

Throughout the last few years of my work with companies in the Middle East, I found very little that described the evaluation of stakeholder engagement processes or outcomes related to stakeholder engagement activities. The most common evaluation method companies do is conducting interviews with stakeholders or distributing evaluation sheets at the end of a social event. Other companies (i.e. Emirates NBD Bank, Aramex and Al Futtaim Group) have invested into new techniques and models related to the measurement of the return on engagement and investment with stakeholders.

  • Conclusion

The outlook for sustainable development in Arab countries, as it is related to job creation, poverty alleviation, and the environment, will depend primarily on companies’ abilities to actively engage with key stakeholder groups and contribute to the broader improvement of their societies. This is so critical for the region’s long-term prosperity and stability. Dr. Fatih Mehmet Gül, the chairman and founder of CSR Middle East, said “We ourselves have to define what the right CSR model will be for the region. We need a better understanding of local stakeholders and their needs”.  Companies have to align themselves with these government’s goals and stakeholders’ expectations that are built around sustainable development using the powerful tool of CSR initiatives to help achieve them.