Finding your stakeholders’ tolerance level

Understanding the different and conflicting stakeholders’ views, priorities and tolerance levels is key to driving positive results for the long term and developing trust. Zivit Inbar looks at how to identify the fine line between the conflicting needs and priorities of the different stakeholders.

How do you find the stakeholder’s tolerance level?

Effective governance means that boards must look beyond the short-term interest of the shareholders and consider the long-term organisational impact.

Stakeholder management is much more than mapping and understanding how the management communicates with key stakeholders. Boards need to take into consideration stakeholder’s voices as part of decision-making processes. However, they do not need to agree with the stakeholders’ views- but must understand these views to make the right decisions.

The Adaptive Leadership framework provides the tools for boards and executives to identify and then work through complex stakeholders’ management.

When does the Board need to get involved?

Studying at Harvard University, we learned the difference between technical and adaptive challenges. Technical problemsare those where there is already expert knowledge on how to solve them. They require authority, expertise, time, money and resources.

Adaptive challenges, on the other hand, are more complex; their novelty involves the building of new capacity and restoring of trust. They involve stakeholders with conflicting values and priorities.They touch the hearts, minds, loyalties and deeply-held values of the people involved. They require effort, attention and collaboration, because they are complex and beyond the leadership’s current expertise.

The management cannot solve these problems on its own; the Board can’t either. These problems require trade-offs by the different stakeholders of the organisation. Here is where the Board’s governing role is critical- in stakeholders’ management of adaptive challenges.

One of the signs of adaptive problems is a lack of trust (internal or external). The easy way out is to ignore the adaptive challenge and provide short-term solutions that buy time or wrongly attempt to apply pre-existing answers to problems that require new solutions.  The role of the Board in such cases starts with understanding the situation on its complexities.

Understanding the problem

A fundamental change can only happen if we consider the adaptive issue’s complexity- the different stakeholders, values and priorities.

• Get on the balcony and diagnose the challenge– Zoom out from the scene and look at it from a distance to receive perspective. See the big picture, detached from your emotions and personal views, pause and reflect. Getting on the balcony helps in framing the problem accurately. What exactly is the problem? What is the work at the centre that the management needs to lead?
• Understand the stakeholders’ perspectives– while it is the management’s responsibility to create the stakeholders mapping, to make the right decision, Boards must understand and consider the different views of all the stakeholders and subgroups. We do not need to agree with the stakeholders. Still, we need to understand the collective problem, not just one agenda of a particular stakeholder that we currently perceive as the dominant. What is the competing moral/values and trade-offs of the different stakeholders’ groups?
• Govern– it is the management role to address the adaptive problems by mobilising people to experiment and progress together. The Board should be briefed on the implementation of the different interventions, especially those that could potentially affect critical stakeholders. Did the management consider all the relevant stakeholders during the implementation?

Navigating the work at the centre

 Adaptive problems often require our attention because they are complex and beyond the management and board current expertise. As mentioned above, each stakeholder group has their values and priorities. Successfully implementing change occurs when organisational activities are within the productive range of distress- the boundaries where the company’s activities are relevant to the stakeholders yet don’t push above their tolerance level.

Source: Prof. Ron Heifetz, Harvard Kennedy School

Organisational activities above the tolerance level are catalysts for blow-ups of relationships and damage the organisational reputation. Activities below the threshold of learning tend to be ignored by the stakeholders and hence don’t build value in the relationships. Boards need to ensure the management holds an accurate understanding of the tolerance boundaries of stakeholders. Has the management identified the fine lines between productive collaboration and limit of tolerance?

“Leadership is about disappointing people at a level they can tolerate.”(Professor Ronald Heifetz, Harvard Kennedy School).  While the management conducts the stakeholders’ mapping, understanding the different and even conflicting values and priorities of critical stakeholders and their tolerance levels for trade-offs is vital for ethical and efficient decision-making in the boardroom.  A new way of thinking, a more holistic view, a new way of leading is required to see stakeholders’ relationships thriving sustainably for the long term.