Gap Inc, and stakeholder engagement, lessons from a crisis

My friend Sean Ansett, former Gap executive, and more recently of Burberry, has penned an article that’s a decent and worthwhile read for anyone in sustainability management.

The piece is about the lessons learned at Gap about stakeholder engagement from various past allegations made around labour standards.

It’s in the latest MIT Sloan Management Review.

Here’s a direct link.

And here’s some key lessons from the article:


What are some key lessons from Gap’s experience with stakeholder engagement?

Be a partner. The traditional reactive, risk-avoidance approach to labor and environmental issues leads to more activism, weakening the brand and draining employee morale. Acting as a partner with stakeholders can lead to better crisis resolution and remediation and help prevent more crises from developing in the
first place.

Don’t rely solely on compliance. Through stakeholder engagement, Gap management realized that the future was not in solely policing factories. It learned that savvier and influential stakeholders, many with years of practical
experience observing conditions in the factories, had come to realize that the impact of monitoring was often negligible and that capacity-building, training and purchasing practices are also key factors. Much of the information regarding serious violations often came from external stakeholders rather than through internal factory auditing, so engagement was critical.

Go deep. Today, when the media report labor rights violations such as the India child labor example, they typically find them in the second-tier suppliers or beyond, where there is less oversight and sophistication than in first-tier suppliers for major fashion companies. Reaching deeper into the supply chain requires collaboration with new stakeholders who have greater understanding, including familiarity with local languages and the capacity to take on an advisory role.

Hire boundary spanners. Gap created a global partnerships team that could assume a “boundary spanner role” within the company. Such “boundary spanners” are professionals who are good at maintaining one foot firmly in the
organization with the other outside in the stakeholder community.

Leverage your partners. Sustainability dilemmas are often far too complex for any one company or stakeholder to resolve alone. Developing sustainable approaches to tackling some of the world’s most challenging issues — such as climate change — will require multistakeholder partnerships with companies, NGOs and governments.

Measure success. Criteria for evaluating the depth of stakeholder engagement generally evaluate management processes and procedures. While such measures are critical to engagement, management should also look at metrics such as media stories, employee recruitment and retention and brand value. Other clues to effective stakeholder engagement include product quality, worker turnover and declining order reject rates.

Ask first. Engagement can be most effective when the company is considering changes to products, processes or organizational strategies. Input from a variety of stakeholders enables management to have a fuller picture of risks and opportunities.

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