This feature article discusses stakeholder dialogue and the importance of listening to your employees and other stakeholders when building an employer brand. It is written by Jane Fiona Cumming

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A kind of democracy is suddenly rife in the corporate corridors of some of the world’s leading companies. What should we do about human rights? Ask the people. What environmental issues should we be worrying about? Ask the people.

In this case “the people” are “stakeholders” and the process is known as stakeholder dialogue. It means consulting groups affected by a company’s actions – employees, customers, communities, suppliers and ngos representing environmental and other non-specific communities.

Stakeholder dialogue has become the Holy Grail of corporate social reporting. Any company faced with the challenge of reporting its impact on society picks up this tool.

It can be a crucial element in helping companies understand what society expects from them, and hence key to underpinning their legitimacy. But this approach also has value beyond social reporting, on issues normally thought of as relatively routine management tasks, such as staff motivation and retention.

Both in social reporting and in these other areas, however, there is a serious danger of stakeholder dialogue being mistaken for market research.

Traditional research aims to understand reactions to ideas and concepts developed within the company: why do you work here, what is your response to these questions? Dialogue is a much more fundamental approach. It obviously implies a two-way communication, but more importantly than that it is about stepping back from corporate preconceptions.

Research just looks for responses to questions which have been determined within the company. Managers begin by identifying the issues they want to investigate. Dialogue is about asking what the questions should be. It goes beyond the company’s own values and norms to discover those of the stakeholders.

This fundamental approach is essential if stakeholder dialogue is to generate serious social reports. Otherwise the exercise will be seen as putting on merely a display of openness rather than seriously allowing stakeholders to influence policy. There is a danger that the whole notion of opening up to the views of key stakeholder groups will become discredited if it becomes seen as “greenwash” which actually changes nothing.

That would be disappointing, because the concept is vital to social responsibility, and can be used more widely.

The idea has been developed as part of the modern approach to social auditing, which is based on a company seeking the judgements of those who are most affected by its actions. This “dialogue” approach was developed by the New Economics Foundation in conjunction with Traidcraft and Body Shop during the mid 1990s, following earlier attempts at “social audit” which concentrated purely on external assessments. It has now been adopted by the growing number of companies seeking to produce social reports.

The first stage in seeking to assess a company’s social performance is to discover what each stakeholder group considers are the important issues on which it should be judged. Once the issues have been identified, members of each group are then asked for their judgements on the company’s performance.

It is a valuable tool, but there is a danger it will be misused as market research rather than as a serious tool for questioning a company’s priorities, policies, and performance.

The danger for the business world is that the stakeholder dialogue is not taken seriously. To be serious, a company has to ask its stakeholders to define the issues, not merely to comment on the company’s view of the world. And to be serious, a company has to be ready to modify its behaviour in the light of what stakeholders say.

Exactly the same applies beyond the boundaries of social auditing.

At Article 13 we have used the principles of dialogue in a number of management tasks. The companies have benefited from the diversity of views which emerge. Whether the stakeholders are employees, suppliers or charities, the process involves managers talking to people they would not normally engage. It teases out different perspectives and values and helps managers understand a broader point of view than they are usually exposed to.

Managers may initially feel that this is “fluffy” navel-gazing about matters which are not their responsibility and have no impact on measures they are judged against such as bottom line profits. But most will quickly see that there are bottom-line benefits from increased staff motivation, improved corporate reputations stemming from a better understanding of issues, and possibly even cost savings from more effective operating practices.

To make this process work effectively, it is important to move beyond safe areas where vague debates about principles mean little and change nothing. Companies’ cosy assumptions must be challenged, usually by involving advocates from ngos who will give any dialogue a hard edge.

Discussion also needs to move quickly from principles to practicalities, from generalities to specifics. For example, it is easy enough to talk in principle about protecting human rights; it is trickier to consider real dilemmas such as paying “contributions” to government parties when the alternative is pulling out of a country run by an evil dictator.

If these conditions are satisfied, this approach to dialogue can yield valuable insights and ensure a wide variety of projects – as well as social reports – benefit from the wisdom of those most affected by them.

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Jane Fiona Cumming is the Director of Ethical Consultancy with Article 13, a consultancy which works to create sustainable business and brands by satisfying the wider stakeholder community.