The Compelling Case for a Strong Board External/Stakeholder Relations Committee

by | Feb 1, 2022 | Board Savvy Transit CEO Blog Archive, Board-CEO Involvement in External Relations/Resource Development

“Incredible.  We must be talking about 40 or more stakeholders.”  This was one of the responses to the question I asked in the daylong governance work session I was facilitating, after the  breakout group dealing with stakeholder relations had completed its report in plenary session.  The group had made a list of critical stakeholders  – defined as external organizations with which it made sense for the transit authority to maintain a relationship because something important was at stake – and then identified strengths and weaknesses in each of what appeared to be the ten highest-stakes relationships.  The question I had asked was,  “What hits you in the face about the list of stakeholders you’re looking at?”  The stakeholders the breakout group had identified, by the way, included the largest chamber of commerce in the region, the local university campus, the board of county commissioners, the mayor’s office, and the regional planning commission, among many others.  In the ensuing discussion, everyone recognized that there was no way the chief executive could, alone, manage even the highest-stakes stakeholders.  There was wide agreement that a board external/stakeholder relations committee would make the best of sense since board members tended to be highly knowledgeable about many of the stakeholders, and in several cases actually sat on stakeholder boards.

Stakeholder relationship management is critical to an authority’s – and to its CEO’s – success at all times, not just during crises.  And since one size clearly doesn’t fit all in terms of managing stakeholder relationships, my readers will no doubt be interested in what experience has taught me are the three major categories of stakeholders.

  • There are top-tier stakeholders who always require close attention by your authority’s Strategic Governing Team (the board, CEO, and executive staff) because of the high stakes involved:  for example, your authority’s riders/customers; your board and staff; the authorities that appoint your board members; organizations that have the capacity generally to influence opinion about your organization, such as the chamber of commerce, the office of the mayor; an organization that is an actual or potential provider of significant resources, such as a community foundation; a government agency funding one or more of your authority’s programs; the electronic and print media; among others.
  • There are second-tier stakeholders which need to be monitored to determine whether the stakes have increased enough to merit closer attention, but which generally do not require explicit management; these are often “sleeping dogs” such as community organizations that might suddenly become energized over a particular action your authority is contemplating, such as a sales tax increase that might bring out the anti-tax forces.
  • There are also ad hoc stakeholders that are critical to your authority’s accomplishing particular strategic targets, such as a joint-ventured program, but which may fade in importance after the strategic target has been accomplished.

In recent years, I’ve seen growing recognition that a robust stakeholder relations function is critical to a transit authority’s success – in terms of both growing and diversifying services and securing local financial support.  And I’ve also seen an increasing number of transit boards make good use of a standing external/stakeholder relations committee to guide and oversee the development and implementation of stakeholder relationship management strategies.  In fact, experience has taught me that when I come across a transit board without an external relations committee, I’m almost certain to find that the authority is paying far less attention to the stakeholder relations function than it merits in light of the significant stakes involved.

About the Author: Doug Eadie

President & CEO of Doug Eadie & Company, Inc., Doug Eadie assists CEOs in building rock-solid partnerships with their transit boards.

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