WHY CORPORATE DIPLOMACY IS A SMART BUSINESS STRATEGY

Author: Witold Hinisz

Corporate Diplomacy is the strategic management of relationships with external stakeholders – not just canny PR - which creates real and lasting business value. The interconnected nature of communications, government affairs, risk management, and sustainability creates a compelling business case for an integrated, strategic approach to stakeholder relations.

Corporate Diplomacy Tools  

Due Diligence. Corporate diplomacy begins with a deep analysis of stakeholders and what they want. Absent that, managers are left with little more than guesses. Just as an oil field or gold mine begins with an analysis of geological and engineering studies, so must corporate diplomacy rest upon a foundation of stakeholder analysis. A smart manager or team must identify the stakeholders (that is, outsiders who have a financial interest in the project or who care about it for political or ideological reasons), the resources they control, and the reasons the project matters to them. This information can come from traditional sources, such as surveys, or social media monitoring. These data are the foundation for a stakeholder engagement plan.

Integration. Stakeholder data must be integrated into a firm’s broader business. A corporate diplomat has to secure the buy-in from colleagues in departments such as finance and marketing. An engagement effort will likely fail if, say, your CFO thinks it is a waste of money.

Personal. Corporate diplomacy reaches beyond the technical, calculating and analytical to incorporate interpersonal skills. A financial settlement can fail not only because it is cheap but also if it is offered grudgingly. Stakeholders should perceive a firm’s actions as having resulted from a transparent process in which everyone, both the powerful and the powerless, had a voice. They should see a firm that respects everyone’s views, rather than just ruthlessly chasing its own interests. Disputes will always arise, and they should be managed using conflict resolution techniques such as conciliation and arbitration.

Learning. Corporate diplomats adapt and change based on feedback from stakeholders. No plan or strategy is perfect, and none can be static. People’s power and preferences vary over time, as do political and economic conditions. Put differently, “decide, announce, defend” (DAD) is dead. The old-fashioned approach to stakeholder engagement was to decide on a plan, announce it to the world as a fait accompli, and defend it against all comers. Such an approach no longer works—if it ever really did. A savvy firm solicits feedback upfront and adapts. This does not mean that it always agrees or accedes. But it tries to understand and anticipate objections, not just react to them. Ideally, the firm can engage opponents up-front, demonstrate its empathy and understanding by changing its plan to address legitimate claims and grievances, and thereby trigger a similar shift to a compromise position by the opposition.

Openness. Perceptions matter. If stakeholders believe that your company is a secretive bully, then you become one—every interaction gets interpreted within that frame. The best way to head off that kind of perception is through a culture of openness. Openness entails conveying information in a manner that reinforces trust and reputation, ensures accountability and creates realistic expectations.

Mindset. Corporate diplomacy requires a new way of thinking within corporations. Everyone, from top executives to entry level workers, should recognize that short-term financial wins can lead to medium- to long-term political losses, which, in the long run, end up being more costly. Without the right mindset, the interactions between a few employees and external stakeholders can undermine a firm’s overall goals. Achieving this collective vision requires ongoing training and corporate communications that feature diplomacy as prominently as other central corporate values, such as safety, customer orientation and innovation.