Navigating Stakeholder Relationships: The 6Rs and Charles Handy's Negative Power

A few months back I was invited to San Francisco by a healthcare focused organization with operations in several African countries to discuss a potential engagement. The organization's African operations were grappling with low asset/capacity utilization and poor collections from primarily African government clients. During a two-day interaction with various executives, it became evident that these challenges were symptomatic of a broader issue—poor stakeholder management.?

This was confirmed in a conversation with an executive who spoke about a meeting with the President of an African country which he said, the country’s minister of health attended “without invitation” from his team or the President’s. He spoke with disdain about the minister of health, and it seemed he considered that a relationship with the President would assure the success of his team’s intervention in the country’s healthcare sector.

As a healthcare management consultant and entrepreneur, I have witnessed firsthand how stakeholder management is critical to the success of any project in the private or public sector. While cultivating relationships with the top dog or strong man such as the President or Governor might assure you of a contract, be rest assured that the implementation of the contract and collections (payment for services) will be dependent on the actions and inactions of several seemingly minor players in the legislature, civil service, community, and media.

Charles Handy (Management Theorist and Author), conceptualized this as negative power. Charles Handy's concept of negative power highlights the influence stakeholders can exert without relying on formal authority. Stakeholders, including politicians, civil servants, employees, customers, and community members, may employ negative power by withholding support, cooperation, or resources to shape organizational decisions or outcomes. Recognizing and understanding the dynamics of negative power within stakeholder relationships is crucial for effective stakeholder management, as it emphasizes the importance of addressing concerns and maintaining positive relationships to avoid potential resistance or opposition from influential stakeholders.

Stakeholder management is a critical aspect of organizational success, requiring a strategic approach that goes beyond traditional business practices. In navigating the complex landscape of stakeholders, the 6Rs – Reason(s), Recognition, Respect, Responsibility, Results, and Resources - serve as a comprehensive framework to guide organizations in building and sustaining meaningful relationships with their diverse stakeholders.

1.??? Reason(s) i.e. Purpose, Meaning:

At the heart of stakeholder management lies the need to establish clear reasons for the existence and actions of an organization and associated projects. Leaders must articulate a compelling purpose and meaning that resonates with stakeholders. This involves transparently communicating the organization's goals, values, and societal impact, aligning the objectives of the stakeholders with those of the organization. Leaders must align their purpose and meaning with stakeholders, and with an understanding of negative power, anticipate potential resistance. Transparent communication about the purpose of decisions helps mitigate scepticism and fosters a shared sense of direction ad purpose.

2.??? Recognition:

As humans we love to be seen and acknowledged. Recognizing stakeholders goes beyond mere identification; it involves acknowledging their unique perspectives, needs, and contributions. Stakeholders encompass a broad spectrum, including employees, customers, investors, and the community. Effective stakeholder management requires a deep understanding of each group's interests and concerns, ensuring that no voice goes unheard. Recognition of stakeholders extends beyond mere identification to include an awareness of their potential negative power. Acknowledging dissenting opinions and addressing concerns proactively helps organizations navigate potential obstacles, ensuring that all stakeholders feel heard and valued.

3.??? Respect:

Respect is the cornerstone of positive stakeholder relationships. Acknowledging the diversity of stakeholders and treating each party with fairness and integrity fosters trust. Respect involves valuing different opinions, fostering an inclusive environment, and appreciating the cultural and ethical nuances that shape stakeholder expectations. Respect remains a fundamental aspect, and understanding negative power emphasizes the importance of respecting stakeholders' autonomy even when there might be dissent. It involves acknowledging diverse perspectives, fostering an inclusive environment, and maintaining integrity, even in the face of disagreement.

4.??? Responsibility i.e. Agency, Autonomy:

Stakeholder management is a shared responsibility that extends beyond organizational boundaries. In the public sector, such boundaries might extend across ministries such as health, finance, budget and planning, works etc. Empowering stakeholders with agency and autonomy enhances their sense of ownership and commitment. This involves engaging stakeholders in decision-making processes, giving them a meaningful role in shaping the project's direction, and fostering a collaborative partnership that transcends hierarchical structures. Utilizing the RACI framework, you not only identify but also assign roles and responsibilities clearly. RACI helps distinguish Responsible parties, those who must take action, from those who must be Consulted, Informed, or, in some cases, hold the authority to make decisions (the Responsible role in RACI). The concept of negative power underscores the shared responsibility for stakeholder relationships. Empowering stakeholders with agency is crucial, allowing them a meaningful role in decision-making processes, potentially mitigating negative power dynamics by fostering collaboration and shared ownership.

5.??? Results:

Stakeholder management is ultimately about achieving tangible and positive outcomes for all parties involved. Organizations must align their actions with stakeholder expectations, ensuring that strategies and decisions lead to measurable results. Regularly assessing and communicating these results helps build credibility and reinforces the trust stakeholders have placed in the organization. Considering negative power dynamics, achieving positive results becomes even more critical. Organizations must align their actions with stakeholder expectations and market realities, continuously demonstrating the (positive) impact of decisions. Regularly communicating these results helps manage negative power by establishing credibility and showcasing the benefits of collaboration.

6.??? Resources i.e. Reward, Revenue, and Remuneration:

Recognizing the value contributed by stakeholders, both internal and external, is vital. This involves not only financial rewards but also acknowledging and appreciating non-monetary contributions. Whether it's providing fair remuneration for employees, ensuring a reasonable return on investment for investors, or contributing to the community's well-being, equitable resource distribution is key to sustaining positive stakeholder relationships. Recognizing the potential negative power held by stakeholders, fair resource distribution becomes paramount. Equitable resource distribution helps minimize potential sources of negative power and promotes a more cooperative stakeholder ecosystem. Bribery should not be tolerated however it is important to ensure that stakeholders especially public stakeholders receive transparent and equitable compensations in the form of regulated travel allowances and per diems during workshops preferably held away from their offices to minimize distractions and compensate them for time invested in project delivery.

Bonus “R”

7.??? Risk management

The 6Rs are not a talisman against project failure arising from stakeholder interference or negligence hence it is important to identify and mitigate project risks from the initiation to completion stages. Have proper contracts or MOUs in place and ensure that a revenue assurance system is in place. Reliance on public sector budgets can be mitigated by 3rd party payments from donors or end-users.

Conclusion

Incorporating the 6Rs plus 1 into stakeholder management practices establishes a holistic and sustainable approach that goes beyond transactional engagements. By focusing on Reason(s), Recognition, Respect, Responsibility, Results, and Resources, organizations can create a positive ecosystem where stakeholders are not just partners but active contributors to the shared success of the enterprise. Integrating Charles Handy's concept of negative power into the 6Rs framework enhances stakeholder management that anticipates and addresses potential negative power dynamics and cultivates a culture of transparency, trust, and shared success.

*Charles Handy discusses the concept of negative power in his book "Understanding organizations" first published in 1976. In this book, Handy explores various ideas related to organizational management, leadership, and the challenges posed by societal changes. The concept of negative power is introduced as a form of influence that individuals can wield without relying on traditional sources of authority. If you're interested in understanding Handy's perspectives on negative power in more detail, "Understanding Organizations" is available on Amazon.