Organisations engage with stakeholders for a variety of reasons. Building trust is an important goal.
What we are learning
- Our research shows that trust is likely to be more than 10% higher for directly engaged stakeholders than those not directly engaged. Directly engaged stakeholders will have more trust in the organisation than those similar stakeholders who are not directly engaged.
- An organisation’s reputation is more volatile and vulnerable to crises than organisations’ reputations underpinned by trust. Those not directly engaged may still admire and respect the organisations just as much as those not directly engaged.
For example, QBE, a leading Australian insurer, has a history of being very well regarded but not directly engaging with the media for many years. While this has reportedly changed in more recent times, its reputation has been more volatile than other similar companies that have engaged effectively with stakeholders.
- Trust is important for long term reputation, but as we will show, trust alone doesn’t activate the emotional responses that drive strong support and advocacy as reflected in a high NPS® (Net Promoter Score).
Goals of stakeholder engagement
Effective stakeholder engagement is widely recognised as critical to the success of the organisation. Without support, the organisation can’t meet its goals and indeed survive. Organisations engage with stakeholders for lots for reasons, for example:
- To protect the organisations social license to operate with the general public, government, and regulators,
- To build confidence in future actions with investors, business partners, and clients,
- To promote a sense of pride for employees current and future,
- To increase trust with regulators and others, or
- A sense of relevance and newsworthiness with the media.
However, stakeholder engagement is a discipline of emerging and increasing knowledge unlike branding and marketing, which has an immense, albeit changing, body of knowledge.
The above findings are based on research conducted by Inside Story Research and Knowledge Management. For over 20 years, Inside Story has been tracking the trust and reputation of hundreds of companies and organisations in Australia and the quality of their relationships. This research is still a work in progress and will be released as it emerges on this website.