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Outsource magazine: thought-leadership and outsourcing strategy | September 23, 2017

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Building Stronger Connections: Optimal Stakeholder Engagement

Building Stronger Connections: Optimal Stakeholder Engagement
Danny Ertel
  • On March 25, 2014
  • http://www.vantagepartners.com

Most companies have organisations that manage external relationships with key suppliers and service providers. These teams – be they part of a Vendor Management Organisation (VMO), procurement department, a governance or “stay back” team, or some other similar structure – are  charged with managing these external relationships. They are expected to become “keepers of the truth” about providers’ costs and performance; to enable the organisation to “speak with one voice” to top-tier suppliers and service providers; and to help manage a complex relationship that often requires both effective partnering and preserving some competitive tension.

But you cannot effectively manage a relationship with a third party without engaging internal stakeholders. For example, in a typical outsourcing deal – whether in IT, back office, customer care, facilities or other such function – without stakeholder engagement you rapidly lose control over demand, and user-driven change orders consume your targeted savings. When stakeholders either excuse performance failures, or get in the way and thus give the provider an easy out, service level agreements become impossible to enforce. Perhaps most damaging, internal changes in processes and behaviours necessary for real transformation, innovation, savings, or performance improvements are simply impossible to achieve without the active collaboration of the business.

Likewise, Procurement cannot really source, or successfully manage a category of goods or services, without getting some element of buy-in from their internal business partners. Whether the problem manifests as deliberate off-contract buying or the more passive delay in engaging Procurement until the supplier has been selected and the principal terms agreed, a sourcing team that is not actively helping solve business problems is seen as not adding value. And, of course, each time Procurement fails to achieve meaningful business value – even if it is because they were brought in too late to do anything – becomes further evidence that all Procurement can really do is “take care of the paperwork and cut the purchase order.”

Gaining Trust and Building Relationships

There is a part of stakeholder engagement that is about data and analysis. Effective methodologies, tools, and supplier market insights add significant substantive value. Without these, there is no point to engaging stakeholders, because we would have nothing useful to say once we had their attention.

But there is also a necessary part that is about engaging these individuals at a more human level, as colleagues in the broader organisation. To be able to influence their behaviour and to persuade them to listen to what we have to offer requires creating trust not just at an analytical level but also at an emotional level. If you are in a corporate function responsible for helping the organisation deal with suppliers and service providers, then your skill set must include some of the softer skills such as effective listening, influence, and joint problem-solving. The more removed you are from a stakeholder’s everyday business concerns and their own chain of command, the harder you need to work to connect with them and establish relevance and shared purpose.

“Hot Buttons” and Emotional Bridges

There is a useful framework that deals with the “core concerns” we as human beings have in almost any interaction. This framework, described in greater detail by Roger Fisher and Dan Shapiro in Beyond Reason: Using Emotions as You Negotiate, is built on a simple yet powerful thesis about what triggers both negative and positive emotions. Much like someone’s interests underlie his or her bargaining positions and if we understand those interests we can engage in more productive problem-solving negotiations, it appears that a set of five “core concerns” underlie many of the emotions that can surface in negotiations and other interactions between individuals. By understanding these core concerns, we can try to avoid impinging on them and triggering defensive, negative reactions; by actively seeking to address those concerns we can build more positive emotional bridges with our counterparts. To manage third-party relationships effectively, we need to be able influence internal stakeholders and build some alignment. Without such buy-in, we become irrelevant, or at best auditors and enforcers of corporate policies that don’t resonate with the business.

This framework consists of five core concerns, made easier to remember through the acronym AAARS:

Appreciation: that sense of recognition and gratitude that we all expect for our efforts. Be it that our counterpart has made time in a busy schedule, looked into a challenging subject, gathered and collated information, or even engaged at all, those are things that many stakeholders believe they didn’t have to do. When we take those things for granted and fail to acknowledge them in at least some small way, we are more likely to trigger negative emotions. They may feel disregarded, disrespected, or unacknowledged, and become defensive, short-tempered, or at least less generous in their judgments.

Affiliation: that sense of belonging and shared purpose that many of us seem to crave. Is it “us” vs. “them” or are “we” in this together? When we create distance between us and the stakeholder we are seeking to engage, when we treat them as if they were not part of us and our team, we make it that much harder for them to listen, or to want to be part of a joint solution to some challenge. When we start saying (or even thinking) “you people,” we should expect to alienate them and turn a potential ally into an adversary.

Autonomy: No one likes to be told what they “must do” and that they “have no choice.” They really don’t like hearing that from someone in another function. When we sound like we are instructing them, threatening them, requiring them to comply – as opposed to persuading them or jointly looking for the solution that meets their interests as well as ours – we should not be surprised to have them get upset and to trigger at least a mild version of a “flight vs. fight” reaction.  At best, they may disengage and disregard us; at worse, they may seek actively to thwart us or escalate.

Role: Whenever we prepare ourselves for a challenging discussion, we tend to assign a role to the other side, much like in a movie. In our own minds we are usually the hero, getting ready to overcome some difficult situation. But when we cast our counterpart in the role of the villain, obstacle, or unreasonable, obstinate, inflexible, selfish actor, it inevitably comes across in our interaction with them. But no one like to be the villain, and when we thrust someone into that role, we should expect them to react negatively, or perhaps actually to assume the role we have given them, and perform it even beyond our expectations.

Status: Whether we focus on it or not, most individuals are acutely aware of the status to which they believe they are entitled – be it due to their role in the organisational hierarchy, their knowledge, skill, experience, time on the job, etc. When we fail to recognise and acknowledge these factors, we risk making them feel disrespected, slighted, lose face, or seek to “prove” that they deserve the status that we have disregarded.

This simple framework can be used diagnostically, to try to understand a situation and the reactions we are experiencing. When you find yourself in a conversation with a stakeholder and they appear to be negative and hostile, or perhaps passively resistant and disinterested, ask yourself whether you may have triggered or fuelled that reaction by your own approach. Did your framing come across as unappreciative, assume an unnecessarily adversarial stance, constrain their choices, paint them into a corner, or perhaps disrespect their viewpoint and experience? Are there some ways to unwind some of those moves to bring the conversation back to a more centered, collaborative stance?

It can also be used prescriptively, to identify actions to avoid or steps to take to establish a more constructive relationship and engage stakeholders at both an analytical and an emotional level. As you prepare on the substance of your conversation and arm yourself with the data and analysis that you think is critical, take a moment to prepare as well for the interpersonal aspect of the conversation. Can you set a collaborative tone by acknowledging their participation and giving them a constructive role in the process? How can you make the conversation more of a joint exploration of possible options intended to meet their interests as well as obtain some savings, standardisation, risk mitigation or other corporate objectives? If you are taking the time to engage them, they must have some knowledge, expertise, or place in the organisation that requires that engagement – might you gain something by acknowledging that proactively?

As an example, consider Figure 1 below. Compare the two approaches a manager of such third-party relationships might take with an internal stakeholder, and think about how you would feel and react on the receiving side of each:

• I can’t believe how hard it’s been to get some time with you.
• Your resistance seems inappropriate.
Appreciation • Thanks for being straight with me about your concerns.
• Thanks for caring enough about getting this right to spend the time working through it.
• Your BU is not following the new process.
• We have an approved process with buy-in at the top.
Affiliation • We can work together to find answers to these challenges.
• We are both trying to help the company move forward.
• Users must comply …
• You cannot …
• You must …
Autonomy • I have some thoughts to share, based on best practice and experience.
• Let’s see what you think and how we can improve on them.
• By not complying you are costing the company money.
• Those who don’t follow the process are “rogue” and “bad actors.”
Role • We are each trying to meet some important objectives.
• Help me be more helpful to you.
• You don’t understand.
• Suppliers take advantage of unsophisticated buyers.
• We have a methodology.
• I’m very experienced in these things.
Status • You know your area and your team and your providers better than I do.
• I need your knowledge to apply some tools and processes in a sensible way.

 

The right hand side of the chart is not about being soft, failing to pursue important corporate objectives, or ignoring corporate policies. It is, however, the difference between taking a joint problem-solving approach and acting like the compliance police. The distinction is not one of substance; it is one about how we go about working with stakeholders to accomplish important objectives. There is absolutely no benefit, if we are trying to gain buy-in, to triggering strong negative emotions that lead stakeholders to delay, ignore, bypass, or escalate. There is a tremendous effectiveness dividend to building a working relationship that moves us to that “trusted advisor” role that gets things done that we could not really mandate (for example, early and effective engagement, real openness to change).

Building Relationships with Stakeholders

There is clearly more to building relationships with stakeholders than not pushing their emotional hot buttons. We also have to demonstrate our competence, actually add value, and prove ourselves trustworthy. And yet, we so often miss the opportunity to set the stage for effective collaboration, by failing to pay attention to emotions and the core concerns that underlie them.  When stakeholders resist our “assistance” they are often worried that we might:

  • Take all the credit for any value/savings/improvements.
  • Blindly inflict potentially irreparable damage to pre-existing relationships between the stakeholder and the provider in the name of obtaining enterprise savings, while paying little attention to the real needs of the affected business units.
  • Tell them they have no choice but to comply and force them to change providers, create new and cumbersome procedures, limit their ability to work things out with the supplier, and otherwise introduce risk and pain for no benefit except to our metrics.
  • Treat them like unsophisticated buyers, “cats to be herded,” errant children to be protected, or other characterisations of their inability to make effective choices on their own, without our processes.
  • Fail to take into account what they have learned, through time and experience, about what works and what meets the needs of their function or business unit.

If those are their expectations (possibly based on prior experiences), high on our list of priorities for building a relationship should be addressing those concerns with how we engage with them. The AAARS framework provides us with a simple checklist to consider as we head into these conversations, and a way to check ourselves as we go, if we are encountering different reactions than we expected.


 This article originally appeared in Outsource magazine Issue #35 Spring 2014.

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