Stakeholder engagement is vital to gaining and maintaining access to valuable business resources. And in today’s world, where opinion and positions are becoming more and more polarized, gaining social acceptance for renewable energy projects, extractive activities, and oil & gas infrastructure has become increasingly challenging. In these industries, effective stakeholder engagement is critical to managing risks and ensuring the long-term success of projects.
While Customer Relationship Management (CRM) systems excel at managing customer interactions and sales, they often fall short in engaging external stakeholders like communities, regulators, etc. Integrating a Stakeholder Relationship Management (SRM) tool like Borealis bridges this gap, ensuring all critical relationships are managed effectively. This blog demonstrates why CRM alone fails at stakeholder engagement.
Stakeholder engagement challenges that no CRM can tackle
Growing pains those sectors have seen emerged are:
- NIMBYism (Not in My Back Yard) and community opposition: Local communities are more vocal and organized in opposing projects they perceive as harmful.
- Increased regulation around providing appropriate grievance mechanisms: Companies must comply with stringent regulations that mandate processes for addressing grievances effectively.
- Stakeholder fatigue: Businesses are often facing diminishing engagement and support from stakeholders due to frequent consultations or prolonged decision-making processes. This challenge is increasingly affecting renewable energy projects due to the sector’s rapid growth and the complex, multi-stakeholder approval processes required for development.
- Complex regulatory landscapes: Navigating the varying and often stringent regulations across different jurisdictions can be challenging and can delay project timelines.
- Resource competition: Projects often face opposition due to competition for local resources, such as water or land, which can lead to conflicts with local communities and other stakeholders.
- Transparency and trust Issues: Lack of transparency in project planning and implementation can erode stakeholder trust, leading to increased resistance and opposition.
- Environmental concerns: Heightened awareness and activism around environmental issues can lead to increased opposition, particularly from environmental groups and NGOs concerned with the ecological impact of projects.
- Cultural and social considerations: Projects may face resistance due to cultural and social concerns, especially in regions with indigenous communities or where projects impact historical sites and traditional lands.
Using the right tools to support your business in addressing all or at least most of those challenge can be a real game changer and can significantly impact your ability to manage risks as well as improve cross-functional collaboration across your organization.
CRM vs Stakeholder relation management
CRM and stakeholder management systems fundamentally different and not interchangeable. Leading CRMs like Salesforce, Microsoft Dynamics, and HubSpot focus primarily on customer interactions and sales processes. A quick glance at their documentation reveals a gap when it comes to addressing the unique challenges and use cases associated with stakeholder engagement. They lack built-in indicators or reports that can help community relations, public affairs, or land management and permitting teams answer critical questions such as:
- Who are your key stakeholders?
- Which ones support your project or are strongly against it?
- What are the most discussed topics with them?
- What are the issues most often raised in a certain region or around a specific asset?
- What commitments have been made?
- How many land agreements have been recorded?
These questions are essential for any project development manager or community relations and public affairs manager, especially when projects have significant impacts or present opportunities for stakeholders.
Despite the clear mismatch between CRM goals and stakeholder relationship management (SRM) needs, many IT teams are still tempted to tweak their existing CRM systems to handle stakeholder management. This approach often fails because CRMs are not designed to manage the complexity and dynamics of stakeholder relationships, leading to inefficiencies and unmet expectations.
See a side-by-side comparison to quickly understand the difference between Borealis and a customized CRM.
Why CRM customization fails at stakeholder engagement
There are a couple of main reasons why a company might consider customizing a CRM to manage their stakeholders. First, the relatively widespread implementation of CRM systems means that these systems are already part of the existing application portfolio of many organizations and therefore may be seen as a possible shortcut. Second, the data tracking functionalities of CRM and stakeholder management systems are somewhat similar.
Unfortunately, this tweaking exercise is all but doomed to fail from the start – for several reasons.
1. CRM implementation has a high risk of failure
CRM systems have an implementation failure rate that can reach up to 69%. This rate can only be in the higher end spectrum when customized for other business goals then sales
If a CRM can’t succeed in its own backyard, how can it possibly cope with – let alone excel in – the increasingly complex world of stakeholder management? Customizing CRM to handle stakeholder engagement only adds to this risk, often resulting in significant downtime and operational inefficiencies.
2. CRM systems are not built with stakeholder management in mind
CRM systems are designed for streamlining the key aspects of customer interactions, not for visualizing project infrastructure and identifying key stakeholders. Asking a CRM to handle stakeholder engagement will only increase the risk of engagement activities not being properly targeted and social risks not being adequately managed. These inefficiencies will, in turn, increase community engagement costs.
Remember that while most customers will be stakeholders to varying degrees, not all stakeholders will be customers. They have different needs and interests. Including stakeholder engagement in the CRM only increases the risk of not meeting the expectations of users and management.
Ausmasa, a leading industrial company, chose Borealis over a CRM to enhance their stakeholder management capabilities. You can read more about their successful transition in this case study.
3. Configuring CRM for stakeholder management is a long, uphill battle
The languages, processes, functionalities, analytical tools, and dashboards in CRM systems are all designed with customer relationships in mind, not stakeholder management. Because of this, CRM systems are poorly suited to the needs of community relations or external affairs agents, and even less so to field activities. With highly developed stakeholder engagement systems already available, there’s little to gain from trying to reinvent what’s already a nearly-perfected wheel.
4. Customizing a CRM is extremely costly and often unsuccessful
The cost of customizing a CRM to bring it to an acceptable level for stakeholder engagement purposes is often prohibitive. For most organizations, this will be vastly frustrating and an unnecessary waste of internal resources that could otherwise go to more productive use. It’s not unusual for organizations to invest one or two years in customization only to reject the final outcome because the tweaked system simply did not meet their needs.
5. Lack of fit-for-purpose solutions leads to user adoption issues
A not-fit-for-purpose solution almost always brings user adoption issues. When a CRM is customized for stakeholder management, it often fails to meet the specific needs of the users. This results in low adoption rates as users find the system cumbersome, unintuitive, and ineffective for their day-to-day tasks. Poor user adoption leads to incomplete data, mismanagement of stakeholder relationships, and ultimately, project failures.
6. It takes a system solidly built around best practices to optimize processes
As stakeholder engagement becomes increasingly sophisticated – and pivotal to project success – organizations realize they need much more than a basic contact register. They need a system designed to encompass all aspects of engagement activities, such as planning and monitoring engagement activities, minimizing unexpected risks, ensuring compliance, managing grievances and commitments, tracking consultations, and maintaining social license to operate.
Build a solid business case to demonstrate the risk of customizing and explain why CRM fails when it comes to managing stakeholders.
Building long-term stakeholder relationships in the rail industry
Consider this case in point. A national railway that manages thousands of kilometers of rail tracks passing through hundreds of towns and villages found itself rethinking its approach to stakeholder engagement. It has an entire team dedicated to handling the multiple incidents that occur each day along these tracks. That’s a colossal infrastructure to oversee, not to mention many stakeholders to engage in to adequately address their concerns and expectations.
Even though the railway was spending a fortune on stakeholder relationships, its efforts were not delivering the desired results. Like many other organizations, it initially looked at adapting its CRM system but soon realized that all the coding would be too cost- and time-prohibitive. It would also require a significant amount of internal training. Rather than trying to fit its CRM to its needs, the railway shifted its thinking and began looking for a stakeholder engagement management system built from the ground up to optimize their stakeholder relationships.
Among other things, it wanted:
- Better reporting (at different levels, such as project vs. corporate)
- Accurate indicators of community concerns and company perception
- Mapping of all assets (both existing and planned)
- Visually compelling information available in just a few clicks
- Improved internal processes and the ability to link engagement with company commitments
- Institutional memory of interactions per project, area, stakeholder, etc.
- Most importantly, a stronger engagement strategy
A stakeholder relationship management system offered all this and much more, right out of the box. Deployment was quick and seamless, and training only took a few days.
Comprehensive corporate social responsibility management with borealis
Unlike traditional CRMs, Borealis stakeholder management software includes embedded functionalities to manage all aspects of corporate social responsibility. Our platform features a social investment module, an issue and complaint management module, a compliance module, and a land access and acquisition module. These tools allow you to comprehensively manage your CSR initiatives, ensuring that your organization meets its social and environmental responsibilities efficiently and effectively.
The right tool means better results
In summary, stakeholder relationship management and its collateral social performance goal has become a highly specialized field requiring specialized tools. These solutions have evolved greatly in recent years, integrating public participation tools, online engagement, social media, etc. The best stakeholder engagement systems out there offer flexible configuration options that can be integrated into your environment with minimal effort, enabling you to efficiently support your existing strategy and processes.
Is It Worth the Risk?
One of the biggest mistakes organizations can make is failing to recognize all key stakeholders and cultivate productive relationships with them. The right stakeholder relationship management system can help you optimize analytics and KPI tracking, giving you a better picture of how well you’re succeeding in your engagement activities.
Working with Borealis means leveraging over 20 years of dedicated experience and expertise specifically in data management around stakeholder engagement and social acceptance. Trust Borealis to deliver the tools and support you need to build and maintain strong, lasting stakeholder relationships.
