by Michael Blowfield, D.Phil., Senior Researcher, The Center for Corporate Citizenship at Boston College
 
Companies interact with their stakeholders every day, which makes stakeholder engagement a basic component of corporate citizenship. One of the places that these interactions can go wrong, however, is when there is a mismatch between corporate actions and stakeholders' expectations.

Companies should not see an expectation gap as a weakness. Rather, it is a reality of doing business globally. Good citizens are not necessarily good friends, and understanding what can and cannot be dealt with may serve a company better than creating false expectations and, ultimately, disenchantment.

In interviews conducted for The Center's "Going Global" research project, managers recognized the benefit of trying to narrow gaps whenever practical, saying that overlooking certain expectations can also mean missed opportunities for building reputation or new markets. Some added that in extreme cases it can add to a climate of general unrest, including the threat of strikes, sabotage, and political action.

Equally, there are tangible benefits from getting the balance right. Examples cited by overseas managers include reducing the cost of litigation, building better business partnerships, developing successful new product lines and increasing productivity.

In order to narrow, or at least understand, gaps between stakeholder expectations and company responses, managers offer a variety of examples of stakeholder engagement. Common to each approach is the challenge of identifying and listening to different voices, some making competing and perhaps conflicting demands, projected with differing intensities. Consequently, in trying to address the challenge of identifying and responding to multiple expectations, managers confront two important issues: how to listen and how to respond.

There are clear benefits to building mutual understanding between companies and stakeholders. An awareness by managers is essential before the process of identifying expectation gaps. Managers gave five reasons they felt gaps had arisen:

• Global solutions to local challenges: There is a growing trend toward the use of international standards as a way of defining and managing aspects of the relationship with society (for example on human rights, environmental management and corruption). Managers see benefits in this but are also cautious. "We fall into the trap of using culturally biased thinking to try to find out a solution," said one manager, "rather than allowing local communities to come up with solutions which might not necessarily be anywhere close to the realm that we would think of for that particular situation."
  
  
• Only the loudest voices get heard: Managers, especially at headquarters, feel pressured to meet the expectations of those with the greatest influence on the company rather than of those upon whom the company has the most impact. For example, an issue that matters most to an international NGO or a U.S. investor may take precedence over what has the most significant impact on workers or communities overseas. One of the biggest challenges U.S.-based multinationals face in managing global citizenship is recognizing how, as one manager said, U.S.-culturally biased thinking results in U.S.-type solutions that leave local expectations unaddressed.
  
  
• "We get too good at one thing": Companies that are considered leaders in particular aspects of corporate citizenship, such as labor conditions in supply chains, may stop asking questions about what other expectations society has and end up, as one overseas manager put it, defining corporate citizenship "around what we are doing, not what needs to be done."
  
  
• Mismatch with company goals: Some stakeholder expectations are ignored because they are not a priority for the company and do not relate to its material interests. Managers may feel they have no right to get involved in areas such as governance or the provision of education, health care, or other public interests because this is the responsibility of others; and this, indeed, may lead to criticism of the company. One manager said that he avoided issues beyond the core competencies of the company, pointing out that an energy company or a high tech manufacturing facility, for example, has no special skills in housing or nutrition.
  
  
• Technical challenges: An overlap between what communities desire and what a company can deliver may still go unnoticed because of the way corporate citizenship is being managed. For example, the company may have inadequate mechanisms for listening to communities or may depend too much on those who claim to represent others. 

It is also not enough to give stakeholders the opportunities to be heard, because many will not have the capacity to participate effectively. Building the capacity of stakeholders to participate is an important lesson from company experiences to date.  An essential part of the shift from policing to engagement in global supply chain monitoring involves increasing worker participation.

One manager praised the kind of participatory research approaches often used in community development as a way of learning what stakeholders are feeling rather than simply what they demand. As important is the recognition that learning about stakeholders' expectations is like peeling an onion, and that true understanding is something that is revealed over time rather than anything voiced in one-off direct statements.

» Learn more about stakeholder engagement in The Center's newest executive education program, Stakeholder Engagement: Building Trust Through Communication, which will be offered November 16-18, 2005 in Scottsdale and April 19-21, 2006 in San Francisco. Learn more.

» Plan to call in for our October 20 TeleConvening, Stakeholder Engagement and Dialogue: Applying Systems Thinking to Stakeholder Relations (members only).

» This article is based on research conducted for The Center's report, Going Global. To download the complete report, click here.