Protecting social licence and building stakeholder trust seems to be on the agenda for business and their boardrooms and with good reason.
It is the government’s responsibility to protect peoples’ rights, ensure a fair distribution of benefits from our economic activity and balance competing interests in setting policy and developing legislative frameworks. However where government is perceived to fail on these responsibilities community players are increasingly holding businesses to account.
Securing a legal licence to operate and political support does not necessarily translate to legitimacy in the eyes of the community. Instead, the legitimacy of companies, and in some cases entire industries, increasingly rests on their ability to articulate and demonstrate they have a clear social purpose that extends beyond wealth creation. Further, this legitimacy, or social licence, is dynamic and needs to be constantly renegotiated as stakeholder expectations change and as the bar for social and environmental performance is continually raised.
This increasingly complex stakeholder context requires businesses to look beyond legal compliance; to have confidence they are adequately managing their social and environmental risks. It involves being prepared and willing to continually engage and account for both the positive and negative impacts associated with a business and its activities. This includes impacts that occur across the value chain or where there is an opportunity to influence the decisions and actions of governments or other organisations
This is not an easy task and it can be even more challenging when an organisation feels the concerns threatening its social licence are unfair, unreasonable or the result of misinformation. Often the first response in this situation is to state the facts clearly in an attempt to correct the public record and counteract the misleading claims. Yet most of the time this approach fails to resonate.
What should you do?
Anticipating and responding to stakeholder issues in a way that will strengthen your relationships and protect your social licence requires a shift in perspective. You need to step outside your organisation and look at it from the outside in.
Your stakeholders do not experience their relationship with you as isolated incidents but as a series of interrelated events occurring, and often accumulating, over time.
A complex picture emerges when you take this holistic stakeholder view and can be both confronting and overwhelming. Many organisational leaders who get to this point find it hard to identify the capabilities required to navigate a way forward.
What capabilities do you need?
Over the past decade, I have worked with global miners, energy providers, property companies and financial institutions seeking to understand and respond to these challenges. Over this time it has become increasingly clear that proactive management of threats to your social licence requires a number of different skill sets that are still not well recognised or understood within the business community. So what is the skillset?
Firstly, you need sensemakers to help you ‘structure the unknown’.
Sensemakers can help you create a framework that breaks down and gives structure to the underlying events, concerns and perspectives present in your particular stakeholder context. Drawing on the core skills of social researchers, they can interrogate this framework and help you identify patterns and linkages, explore surprises and ultimately construct meaning (or make sense of) the issues in a way that helps you anticipate how they might unfold in future.
Secondly, you need changemakers.
Changemakers know how to identify and affect the changes needed to address your stakeholder issues. Those changes may need to occur within your organisation or may involve seeking to influence external changes. Changemakers are strategists and innovators skilled at helping you articulate your desired outcomes and identify the processes of social and organisational change that provide the best pathways for achieving your goals.
Finally, but equally important, are the story tellers.
Storytellers are strong communicators who can construct a compelling narrative that ties together your social purpose, your stakeholder priorities and your plans and actions. They can help you share this story in a way that skilfully responds to your critics, but more importantly cuts through the noise and reaches your real audience, those who are most impacted or concerned, whether they are your investors, customers, employees, suppliers, host communities or other stakeholders.
Together with these three critical friends by your side, sensemakers, changemakers and storytellers, you can be confident that your organisation will be able identify the most salient and emerging issues affecting your business and respond decisively and appropriately. In doing so you will also strengthen your stakeholder relationships, build trust and gain insights that will enable you to navigate the ever changing winds of societal expectations.
 This use of the term sensemaking is influenced by Karl Weick who first introduced the concept of sensemaking to organisations in the mid 1990s. Weick attributes the idea of ‘structuring the unknown’ to Waterman (1990), in Weick, K. 1995. Sensemaking in Organizations. Thousand Oaks : Sage Publications.