This episode accompanies Module 10 of the course, which is about acquiring evidence from stakeholders – the people affected by our decision or the people who are able to influence it. The appraisal of this evidence is covered in Module 11 and its corresponding podcast episode.
In this episode we explore the nature and extent of stakeholder individuals and groups – from governments and regulators, to organisational shareholders, the people implementing the decision and those that will live with the consequences. Rather than assuming that we know how these groups will react to our plans or solutions, we have to consult them.
In the experience of the guests, there is much to be learned which will inform and enrich the decision making process – including gaining an understanding of the complexities of implementing solutions and unearthing consequences we might not have anticipated.
Stakeholder engagement, assessment and management are all critical aspects of successfully implementing change – and understanding their points of resistance can help to unblock obstacles or just make the process smoother and the outcome more effective.
Host: Karen Plum
Guests:
Find out more about the course here: https://cebma.org/resources-and-tools/course-modules/
This episode accompanies Module 10 of the course, which is about acquiring evidence from stakeholders – the people affected by our decision or the people who are able to influence it. The appraisal of this evidence is covered in Module 11 and its corresponding podcast episode.
In this episode we explore the nature and extent of stakeholder individuals and groups – from governments and regulators, to organisational shareholders, the people implementing the decision and those that will live with the consequences. Rather than assuming that we know how these groups will react to our plans or solutions, we have to consult them.
In the experience of the guests, there is much to be learned which will inform and enrich the decision making process – including gaining an understanding of the complexities of implementing solutions and unearthing consequences we might not have anticipated.
Stakeholder engagement, assessment and management are all critical aspects of successfully implementing change – and understanding their points of resistance can help to unblock obstacles or just make the process smoother and the outcome more effective.
Host: Karen Plum
Guests:
Find out more about the course here: https://cebma.org/resources-and-tools/course-modules/
00:00:00 Karen Plum
Hello and welcome to the Evidence-Based Management Podcast. This episode accompanies Module 10 of the course, which is all about stakeholders - the people affected by our decision, or those that have the power to influence it. There's more on stakeholder evidence in Module 11 and its corresponding podcast episode.
Module 10 concentrates on identifying stakeholders, either individuals or groups, and gathering evidence from them in a robust and reliable way.
I'm Karen Plum, a fellow student of evidence-based management, and in this episode I'm joined by Eric Barends, Managing Director of the Center for Evidence-Based Management, Professor Denise Rousseau from Carnegie Mellon University; and Dr Lisa Griffiths, CEO of Australian childcare organization, OzChild. And this time we're joined by Steven ten Have, an organizational consultant at TEN HAVE Change Management. Steven is also a Professor of Strategy and Change at VU University Amsterdam.
Let's hear what they have to say.
00:01:19 Karen Plum
As a change management consultant myself, I felt that I would be on firm ground with the stakeholder modules. My practice has always been to identify, consider and manage stakeholders, but as usual there was a lot more to learn from these modules! To kick us off, here is Steven to explain the importance of stakeholders.
00:01:39 Steven ten Have
Well, I think the most important consideration is to take them into consideration. I think it's very well illustrated by the French Macron, because he has written a law and there is a lot of attention for stakeholders in his explanation and he uses the French terms ‘en consideration’ and that is to take into account all the stakes at stake and to see and respect all the stakeholders.
And I think in the Netherlands respect is in some ways misused - the word - because people talk all the time about respect. But as you may know, they respect means seeing everybody, anyone, time after time in a real good way and I think respect is a valuable word / concept, but you have to use it in the proper way. And I think it is the heart of stakeholder management - having respect, taking into consideration all the stakes at stake.
00:02:42 Karen Plum
The need for respect is a central theme that runs through the stakeholder episodes. If we don't respect their position, their views, their power, or the impact the decision may have on them, then there could be a world of pain lying in wait for all of us.
In the course we identify two broad types of stakeholders, as Eric explains.
00:03:03 Eric Barends
There are two types of stakeholders. One are stakeholders that can affect the outcome of the decision. For instance, supervisors or the employees that don't go along with the decision or are against the change or whatsoever. And the other type of stakeholders are the stakeholders that are affected by the decision, so there are ethical considerations there.
I always, as an evidence-based manager and sometimes change manager, try to figure out what is the power and the position of the stakeholders. Especially when you work in organizations with professionals, highly trained, highly educated professionals, those people have a lot of power and are very important for the outcome of the decision.
00:03:51 Karen Plum
We'll pick up many of these themes during the two stakeholder episodes. For now, here's Lisa Griffiths, who you may remember from previous episodes. Lisa and her leadership team at OzChild have done the course and are busy putting the learnings into practice. Here she gives an example of how the role we have often determines the type of stakeholders that we tend to focus on.
00:04:14 Lisa Griffiths
Yes, they absolutely do fall into the two groups in regards to stakeholders and those that do have the power to influence and those that are affected by the decision. And the conversations or engagement with those different types of group kind of really aligns to the role you have within your organization.
In my role as a Chief Executive Officer, I would spend most of my time working with stakeholders that have the power to influence the decision. They could be my board, who may want to understand the funding application, they want to understand the risks around a new service offering. So you know they’re key, stakeholders and I would need to engage with them and it's the CEO or job to do that.
But equally it could be a government stakeholder where we might want to deliver a service, or there might be a partner agency that we're looking to work with on delivering a service. And often because of the nature of the work that my organization does in working with children and families that experience vulnerability, I would you know, heavily engage with a minister to advocate to invest in particular services that would help particular cohorts of children and families.
And it doesn't mean to say that I personally don't listen to those that are affected by the decisions. In my work I often will meet with foster carers and kinship carers who support children in our care, but we do have a lot of robust data collection mechanisms internally within the organization so we can collect information from our clients such as surveys. With children there is a requirement for our workers to meet with them at least fortnightly to check in how they're doing.
00:06:09 Karen Plum
Denise reinforces the importance of our role, but also the role of the stakeholders. People that are on the receiving end of the decision aren't always affected in the same way, and it's important to recognize that.
00:06:21 Denise Rousseau
Often the issue when we think about stakeholders is their role. Are they in enactors and implementers of all or part of the decision? Are they support players - you know they need to be present in helping others who are the major implementers (IT might play that role)? Or are they in effect, recipients of the effects, are they the people or the communities or the departments that are going to feel the gain or feel the pain?
And one of the things that's we have to take as a given is that gains and pains are not equally distributed. And that's one reason why we pay special attention to stakeholders, is to be aware of the potential effects, positive and negative, because it's early in the process where we have the most opportunity in making a decision to kind of optimize gains and minimize losses.
00:07:21 Karen Plum
This is one of the many reasons why taking the time to identify different stakeholder groups is so vital. I think a lot of the time we're quick to decide whether a particular group is worth the time and effort that we'll need to expend on it, to truly understand their position, their feelings and concerns. And so they're overlooked in favor, perhaps of concentrating on those stakeholders that have the power to block or influence the decision.
Here we return to Steven’s comment about respect. If we don't respect each group then we're almost certain to disenfranchise a potentially powerful group or one which stands to feel more of the pain than the gain, as Denise put it.
Both Steven and Denise spoke about the difficulty of analyzing stakeholders at an individual level. In fact, in Denise’s experience, stakeholders are far more heterogeneous in their thinking than we give them credit for. We lump everyone together at our peril.
Here's an example from Denise about how even those versed in evidence-based medicine can overlook stakeholders when it comes to evidence-based management.
00:08:27 Denise Rousseau
Most managers have a relatively narrow view of who the stakeholders are. They're very attentive to who sponsors the decision or who they answer to. They may be paying attention to the implementers because they're practical people, may not be paying attention to the downstream implications of the decision, in part because managers make many decisions and that information is not easily available to them.
I recently had the experience of working in evidence-based management training, with a very tiptop intellectual group of people. They were physicians, very well educated physicians who were seeking advanced executive training. And we were working on evidence-based decision making, which of course they already do in medicine, but they're training to be executives in healthcare organizations, so the decisions will be of an organizational nature.
And as we work through a process, the one thing that struck me repeatedly - they regularly went to the research evidence to find the latest findings or the systematic review on some treatment effect or program. They would look at the organizational data on the problem they were trying to solve and look at its trends. They talked to other knowledgeable people, because of course they're in a world of professionals themselves and consultation is a common model in medicine.
But when it came to the stakeholder evidence, they pulled their ideas out of their head, of what they thought the IT folks, the community, the marketing people would believe. Not a single one - this is 30 people - actually went and gathered information even of the most general, qualitative kind from any of their stakeholders.
00:10:19 Karen Plum
It seems that there's a tendency to imagine what the stakeholder positions are, drawn from what's inside our heads, rather than having conversations with them. I guess also, once you've asked people and you really have to pay attention to what they've said Beware what you ask, you may not like the answer!
00:10:36 Denise Rousseau
I learned a long time ago, it's probably true for many people, but it's certainly true for managers, that if they don't think they have a way for dealing with a problem they don't want to hear it.
Helping people have ways forward for dealing with the issues that stakeholders raise - is an aspect of evidence-based practice.
00:10:57 Karen Plum
I think that's another trick we have up our sleeves as evidence-based practitioners. This also starts to ease us into the discussion about change. If we don't understand the issues and concerns that stakeholders have, or if we rely on our own thoughts about what the issues might be, then we won't plan an effective implementation or prepare people well for the change, assuming that they aren't the ones who are in the position to influence the decision in the first place.
So for me, the stakeholder engagement is essentially the start of the development of important working relationships, which will inform and enrich the implementation and change journey, and some of those relationships need time and sensitivity to develop. Ask a nervous stakeholder that's been poorly treated in the past, to tell you the truth about a situation and don't be surprised if they don't trust you enough to give you the real story. Here’s Steven.
00:11:54 Steven ten Have
I think from a change management perspective, that you are involved with stakeholders already before you start the new project and process. So I think we have to provide the foundation to build relationships and to do, for example good interventions because from a consultant’s perspective we always say you cannot intervene effectively without having credits.
And sometimes the credits are already there because they know you are an expert, but in most cases you have to build relationships as a basis for good interventions. So without contact and without attention, most interventions are not working.
So maybe if you look for example from an autocratic position in which you have the form of power to do things and then the credit is related of course to the formal position. But normally in social systems you need to build the relationships as a good foundation and building those relationships asks for very well developed stakeholder management.
00:12:59 Karen Plum
I also discussed the development of relationships with Lisa, particularly because in her world, cultural respect and understanding are yet further dimensions when seeking to understand stakeholder perspectives. Lisa shared her experience in shortlisting candidates for grant applications and talked about the importance of privileging the client voice.
00:13:21 Lisa Griffiths
One of the shortlisted candidates (I was on the panel to decide who could get the grant) was sharing about the importance within her organization (and she works with victims of family violence) of privileging the client voice and ensuring in any sort of service design to support the needs of a victim of family violence, that the client voice is privileged and understood.
But of course to hear the client voice, you have to first build a relationship. So whether you're dealing directly with a client that's impacted, all of our staff members receive training and support in dealing with trauma and also in building relationships and respectful relationships with clients of all ages and with working with our First Nations people.
Cultural training is really important so you're culturally respectful. And for the leaders in the organization that are charged with making sure that we continue to be viable, we continue to be available and we are customer focused and be that receiving a service or be it the Government that pays us to deliver a service that we really do have very strong relationships with them.
And I always approach my senior kind of stakeholders in government with you know - what is the problem that you are trying to solve. - what really are you struggling with right now that we as a provider can help you with.
00:15:07 Karen Plum
I think one thing that really strikes me from talking to the guests is that as with so much in evidence-based management, the important things are to ask questions, listen carefully to the answers and be prepared to keep learning and adjusting your perspective. You can't possibly know everything. And giving her voice to stakeholder groups enables you to learn, to empathize and to work towards a better decision.
I suggested to Steven that opening yourself up to stakeholders is to invite the identification of opportunities, but also of risks.
00:15:42 Steven ten Have
I think it's very important to see them both as a risk and opportunity. Because if they are not respected in the right way, they will block all kinds of processes. And that can be on the level of supervisory board, can be on the level of society and all in between, so to speak. But they are indeed, also an opportunity, because you can also learn a lot from stakeholders.
So for example, in the Dutch context, works council is a very important institution within companies and a lot of CEOs are thinking well of course they have legal rights, they have the right of consultation and that's very clear - there is a very clear law everybody knows the law, of course. There's so many people see it as something which is a necessary point but necessary and nothing more.
And my experience being consultant but also being in boards is that they give you a new and good perspective in addition to the perspective which may be dominant on a CEO level or from a consultancy perspective. So they are providers of group insights and also they know very good what atmosphere and also what the heartbeat of the organization is.
And if you talk about evidence-based management and stakeholders, the heartbeat but also the climate and organization is very important if not decisive.
00:17:09 Karen Plum
So if you take the view that works councils or trade unions cause nothing but trouble, you may not seek to involve them or learn from them. I suggested to Denise that if we aren't willing to listen to stakeholder groups, it may be that there's a certain level of arrogance which makes us think that we know best.
00:17:28 Denise Rousseau
I hesitate to take to call it arrogance, because we're all capable of self will and self-affirmation beyond maybe our due. I think over confidence is a decision maker’s disease. Any of us can have it and we get it from different sources.
I have to be careful not to be too smug, because I do know the scientific literature and I'd be very happy to tell you about it if you just give me a little opening in the conversation! But that's not necessarily always what is kindest or most appropriate for the situation and for the other people involved.
So, we all have our own arrogance, you know, our own, perhaps ways in which we downplay the knowledge and contribution of others. One of the features in taking stakeholder evidence into account is lowering the salience of our own frame of reference, and our own self-interest and confidence that we know what's what; and opening up to potential uncertainties and unknowns, things that right now we can't know from our vantage point that might be very powerful if we could understand.
What impact this decision might have on others, and how could it be made in a way that actually would have a more constructive impacts on many. I think the stakeholder evidence is an opportunity to reflect - what else is there that I'm not aware of from my vantage point? There's some humility here.
You can still be confident. Be confident in your process because you're following a good process but humble to say I don't know and to give others the opportunity to provide information. The doctors I was describing to you, when they did talk to their stakeholders - few of them did in the time we had together - all voiced surprise at their heterogeneity. And so the issue is, what do you do when stakeholders are telling you different things?
Well, you break it down to the issues and you say what are the themes I'm picking up and our critical issue and stakeholder evidence is how representative is the information we have about the broad set of people in that category And that's important, you know, one person’s voice is a squeaky wheel. Several people’s voices - that's a more powerful message and that's what we're looking for.
00:19:55 Karen Plum
So we've talked about various stakeholder groups, those that have the power to influence the decision we're making, and those affected by it. Those affected by the decision can extend well beyond the bounds of our own organization into society, government bodies and also regulatory bodies. We talked about the influence of regulators in Episode 9 and I thought it was worth picking up that theme again here.
I wondered if Eric felt that organisations took the opportunity to hide behind the regulatory requirements, claiming that the impact on stakeholders aren't down to them, but are the fault of the regulator.
00:20:33 Eric Barends
My idea was that oh, executives and board members, organizations make stupid decisions. There are a lot of silly, stupid, irresponsible people at the top off organizations until I had a chat with some of those big shot boards of big corporations.
For instance, banking firms or financial organizations. And they told me, Eric, you seem to think that we're stupid and ignorant about the evidence and ignoring all the evidence. But you should know this is not our decision. We're doing this because the regulators want us to do this, so it's not us, it's the regulators, and you can't expect from us that we stand up to the regulators, to the Financial Stability Board or the Bank of England or whatsoever and say oh, by the way, what you want us to do is not evidence-based, so we're not going to do it. No, that's how it works, Eric.
So yes, I see that point. This is also in healthcare, insurance companies demand or require healthcare companies to collect data. For instance, on employee engagement or whatsoever, and we know these are BS data - that they are not really reliable, not very trustworthy and it's very unclear how you should use them, but they collect them anyway.
And actually the outcome of these data have consequences when your employee engagement is low. Maybe it has financial consequences from the point of view of the insurance company, I don't know. But I think it's underestimated how often regulators are responsible for organizations doing weird, non evidence-based crazy stuff.
To give you an example very popular right now or for quite some time is agile, agile working, it's a way of working that is a sort of a flexible approach, etc. It's very popular and I know one large firm, it was a banking firm, and all the competitors, all the other banking firms were taking an agile approach and running agile projects And the Board of Supervisors pressed the Board of Directors like are you already into agile? No. But look at all the competitors they're working on agile. And you should really seriously consider taking an agile approach to your operational processes.
Same with talent management. Like do you already have a talent management project in place? No. No, but you should really, really, you know, take more care for your talented people because look at your competitors. They're all working on it. You should do too.
So regulators really are very powerful and also responsible for a lot of fads and fashions in organizations. And what can you do? Well, I don't know, have a chat with them and explain to them that what they are suggesting and what other people are doing is actually not very evidence-based and maybe not a good reason to decide either way and you know, get into the conversation with them.
But yes, regulators are very powerful. And sometimes responsible for a lot of unhealthy un-evidence-based decisions.
00:23:55 Karen Plum
So you're between a rock and a hard place if you're in this situation, and it's something that we can probably only chip away at over time. Time to send the regulators on our course, I think!
The final thing I wanted to cover in this episode is whether we as managers adopt a different approach to stakeholders, the more senior we are in the organization. I'm interested in this not just from the point of view of organizational politics, but whether this is just as much a reflection on how we were treated as we made our way through the organization.
I asked Denise and Eric for their perspectives on this. Do more junior managers listen to stakeholders more? Are senior managers more powerful and therefore feel less need to be more open to stakeholder inputs?
00:24:39 Denise Rousseau
It's been replicated time and again that the more senior people are in the organization and the more power vested in their position, the less likely they are to even be interested in information that comes from lower levels.
The idea that I am confident in the information I possess, my level of certainty and confidence is often higher when I have more decision latitude because of my senior role. So that I think does cause people to discount the role of stakeholders.
The other aspect of this issue of kind of the orientation or potential bias of senior leaders to stakeholder information is the kind of credentialing and training that senior leaders can have. So, there was a recent study that is in line with other research that's come out over the years about the effect of having considerable training in economics.
In this case, the recent study was on having an MBA. And the fact that managers who have MBAs are less likely to want to share the gains from productivity and profit in the company with lower level employees. More comfortable with a wider disparity in rewards based on profit and organizational success than are managers without MBAs.
Part of the ethos of neoliberal economics is sort of this idea that the people who are making the decisions, who have a great deal of power, deserve to be compensated but deserve more than people who are in other roles. And we see that kind of, actually since Reagan and Thatcher, this rise in the disparity between what the senior managers are paid and what the lower level workers are paid was 35 to 1, before 1980. And now that number is sometimes 250 to 1, 560 to 1.
Huge disparities that have become more tolerable and at least at senior levels. And I think that is related to a shift in focus to what is legitimate nature of the organization and what kind of returns should come to those who make decisions. So they were in a danger, I think, of discounting because of the training and maybe some of the ethos of MBA programs (and I teach in an MBA program and I have for 40 years!), some of the framing of value and contribution that leaders are trained in.
I see the issue of attending the stakeholders as being a more balanced view of who and what contributes to the performance and effectiveness and efficacy and success of an organization and recognizing the contribution that's made by people in various parts of the organization and in the community, many of whom bear costs for the actions the organizations take, as well as may get some benefits. And we have the opportunity in the decisions we make to better execute the ark of justice, to be more reflective of the broader needs and interests of people.
00:28:24 Eric Barends
I would argue that maybe seasoned executive, experienced decision makers are more likely to consult stakeholders because they have learned the hard way from decisions in the past. And I would not be surprised when junior managers, decision makers are maybe more inclined to just make the decision because they know it will have a positive impact and it's the right thing to do, it will save money etc., without consulting the stakeholders.
Because they want to be tough and be this decision maker and get things done, kind of mentality and then it turns out that actually things go completely South because they overlooked ethical or impact on groups that they never realized or people don't understand exactly the rationale behind your decision and therefore won't support it, and you've got all kinds of resistance to change.
I would not be surprised that people with a lot of experience in decision making in companies have learned the hard way and are therefore more likely to have a check with the people that are affected.
00:29:36 Karen Plum
And that really broadened my perspective and understanding of the challenges not only of stakeholder engagement in evidence, but the drivers and motivations of decision makers. Even with all the tools and techniques the course teaches us, there really isn't an easy fix in any of this.
But here's the thing, being aware of the potential minefield at the very least allows you to manage your expectations and see where you can make a difference. Even if you can't fix all the ills in one fell swoop. Consulting stakeholders in advance will also identify harms or pain that might not have occurred to the decision maker. Those unforeseen consequences that are forever coming back to bite us.
Eric mentioned resistance to change, which is an important consideration when implementing our decisions or solutions with stakeholders. I'll leave Steven to wrap up this episode by explaining why it's so important to have a good handle on resistance, what it is, what it means, and how to think about it. And we'll continue our exploration of stakeholders in the next episode.
00:30:39 Steven ten Have
The resistance perspective is a very fruitful one in looking at behavior and stakeholders, and I think there are two classic positions with regard to resistance which I don't like in the end, but they are there. One is resistance is blocked energy and you need to unblock it and then those people will give their energy to your change.
And the other one is resistance is indeed a blockage and you need to break it in a well, soft way, and if it's necessary in a hard way. But I think O’Toole gives us examples of more than 30 courses for resistance and his meta message is you need to know the real source or course of resistance and then you can apply interventions and pay attention in the right way.
Because some people really don't understand the direction of change and then explanation and the transfer of information will help. But some people are cynical because they have lived, I think, through five or six or seven reorganizations, restructurings and became of course cynical and then giving them more information will not help.
Then you need to build trust in other way and then all the leadership skills come into play. So I think it is indeed very important to understand the character of the specific resistance and also here I think talking about resistance and stakeholder management, one stakeholder within a group of stakeholders can have another source or course related to resistance than other people.
So I think that of course leaders need to convey their message by telling the larger story of change, so to speak, but they need also to have a lot of attention for the small stories of each individual or each subgroup, so I think that stakeholder management is of course about broadcasting your message, but it's also about in particular narrowcasting, knowing your audience, knowing the sub audiences and also calibrating your message in order to deliver the right thing to each and everyone.